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PRINCIPLES 


OF  THE 


Economic  Philosophy 


OP 


SOCIETY,  GOVERNMENT  AND  INDUSTRY 


BY 


VAN  BUREN  DENSLOW,  LL.D 


, ,  • . 

I     A        %    -  •      • 


CASSELL    &    COMPANY,    Limited 

104  &  lOG  Fourth  Avkni  i;,  Xkw   ^'ol;K 


Copyright, 

1888, 

By  O.  M.  DUNHAM. 


All  rigJits  reserved. 


Press  W.  L.  Mershon  &  Co., 
Rahway,  N.  J. 


TO 


OP  PITTSBURG,  PA. 


CO 
C_3 


O 


as 


^  4580S7 


CONTENTS. 


(Figures  preceding  sub-titlea  refer  to  sections  of  volume.) 

PAGE 

PREFACE xi 

PERSONAL  INDEX xix 

CHAPTER  I.— Scope  and  Method 1 

1.  Definitions. — 3.  Is  Political  Economy  a  Science. — 3.  Politi- 
cal Economy  also  an  Art. — 4.  The  Deductive,  a  priori,  or 
Metaphysical  Method. — 5.  Decline  of  the  Metaphysical 
and  Rise  of  the  Historical  Metliod. — 6.  Carey's  Corrective 
Influence. — 7.  The  Historical  Method  is  Not  a  History 
of  Opinion  Merely. — 8.  Limitations  on  the  Historical 
Method.— 9.  Relation  of  Economics  to  Ethics.— 10.  The 
Scientific  Method. — 11. — The  Philosophy  of  Statistics. — 

13.  The  Result  of   Statistics.— 13.  Utility  of  Statistics.— 

14.  Regularity  of  Phenomena  Shown  by  Statistics. — 15. 
Statistics  Taken  with  a  Bias. — 16.  The  American  Impulse 
toward  Economic  Progress. — 17.  The  United  States  as  an 
Economic  Instructor. 

CHAPTER  IL— Wealth 41 

18.  Wealth  and  Poverty — Social. — 19.  Savage  Life — Social 
Poverty. — 80.  Ownership  by  the  Tribe — Barbarism. — 21. 
Tribal  Ownership  Depends  on  Occupancy  and  U.se. — 33. 
Tribal  Precedes  State  Ownership. — 23.  Charitable  and 
Religious  Communism.  —  24.  Relative  Inducement  to 
Effort  under  Both  Systems. — 35.  Wealth  Dependent  on 
Exchange — How  Far. — 26.  Private  or  Individual  (Includ- 
ing Corporate)  Wealth. — 37.  The  Commonwealth. — 38. 
The  Family  and  Its  Wealth. — 39.  Social  and  Spiritual 
Wealth.— 30.  The  Wealth  of  Nations.— 31.  The  Evanes- 
cence of  Wealth. — 32.  Can  Poverty  be  Abolished  ? 

CHAPTER  III.— Values  and  Prices 79 

33.  What  is  Value  ?— 34.  Fallacy  of  Resting  Value  on  Labor. 
— 35.  Whence  Comes  Value  '? — The  Consumer. — 36.  The 
Consumer's  Place  in  Industry. — 37.  Karl  Marx's  Theory 
of  Value.— 38.  Why  Men  Exchange.— 39.  The  Theory  of 
Value. — 40.  Markets  are  the  Index  of  Values. — 41.  Free- 
dom in  Establishing  Prices. — 43.  Cornering  the  Market. — 
43.  How  Prices  are  Made. — 44.  Errors  Concerning  Causes 
of  Prices. — 45.  Tooke  on  Prices. — 46.  Prices  Rise  in  Dis- 
proportion to  Scarcity. — 47.  Permanent  and  Temporary 
Cheapness. — 48.  Relation  of  Prices  to  Freedom. — 49. 
Countries  of  Low  and  High  Prices. 


\\  CONTENTS. 

CHAPTER  IV.— Title  AND  Use 125 

50.  Title  and  Labor. — 51.  Title  Dates  from  Seizure  or  Appro- 
priation.— 52.  Private  Title  is  Monopoly. — 53.  The  State 
as  a  Form  of  Monopoly. — 54.  Title  the  Source  of  Ex- 
change, and  of  Division  of  Labor. — 55.  Titles  Becoming 
Private. — 56.  Tl'e  American  Land  System. — 57.  Effect  of 
Free  Land  on  Immigration. — 58.  Wasting  the  Land. — 59. 
American  Railway  System  in  Its  Unproductive  Infancy. — 
60.  The  Era  of  Consolidation. — 61.  Great  Land  Grants  to 
Railways. — G3.  Socialistic  Reaction  Against  Railways. — 63. 
Objections  to  Socialistic  Theories  Concerning  Railways. 

CHAPTER  v.— Profit  and  Loss 162 

64.  The  Beginnings  of  Industry. — 65.  Capital  and  Labor 
to  be  Partners. — 66.  Organization  of  Labor  by  Force.— -67. 
Adam  Smith  on  Wages. — 68.  Equivalence  of  Exchange  in 
the  Wages  Contract. — 69.  Instances  of  Equality  of  Divi- 
sion.— 70.  Productive  Industry  is  a  Form  of  Social  Gov- 
ernment.— 71.  Do  the  Indispensable  Means  of  Labor  Earn 
a  Share  of  the  Product  ?— 72.  Does  the  Risk  of  Loss  Give 
Valid  Title  to  the  Protit  ?— 73.  Loss  as  well  as  Profit  an 
Economic  Force.— 74.  The  Rate  of  Profit. 

CHAPTER  VI.— Capitai 196 

75.  Definitions. — 76.  Distribution  of  Wealth  Precedes  and 
Causes  Production. — 77.  Is  Economic  Distribution  Just  ? 
— 78.  Dispersion  of  Capital  is  a  ]\Iode  of  Destroying  It. — 
79.  How  Distribution  of  Wealth  Attends  its  Accumulation 
and  Getting  Rich  is  Doing  Good. — 80.  The  Greater  the 
Accumulation  of  Reproductive  Wealth,  the  More  Equal 
the  Diffusion  of  Enjoyable  Wealth. — 81.  Capital  as  a 
Laborer. — 82.  Forms  of  Capital. — 83.  Capital  as  an  Eman- 
cipator.— 84.  Re-distribution  of  Ill-used  Wealth. — 85. 
Distribution  by  Luxury. — 86.  Its  Humanity  Arraigned. — 
87.  Society's  Gain  b}'  Economy. — 88.  Society's  Gain  by 
Large  Accumulations. — 89.  Large  Capitals  Lessen  Con- 
sumption.— 90.  Effects  of  Large  Capitals  on  Rates  of 
Wages. — 91.  Constancy  of  Returns. — 92.  What  Makes 
High  Profits?— 93.  Malthus'  So  called  Law.— 94.  Fewer 
Producers — Less  Production. — 95.  Wages  are  Also  Capital. 

CHAPTER  VII.— Land 337 

96.  A'alues  of  Land.— 97.  True  Cause  of  Rent.- 98.  Rent  and 
Transportation. — 99.  Rent  as  a  Balance  to  Transportation. 
— 100.  Rent  as  a  Dispersive  Force  on  Population. — 101. 
Exhaustion  of  Soils. — 102.  Values  of  Land  Due  to  the 
Con.sumers  of  Land  Products. — 103.  Machinery  in  Farm- 
ing.— 104.  Effects  of  Releasing  Labor  by  Machinery. — 105. 
Tenant  Farms  and  Large  Holdings  in  America. — 106. 
Large  and  Small  Land  Holdings  in  England.— 107.  Land 
in  Ireland. — 108.  Evolution  of  Cultivated  Plants  as  Sources 
of  Food, 


CONTENTS.  vu 


CHAPTER  VIII.— Labor 281 

109.  Dutinitiou  of  Labor. — 110.  "Work  Differs  from  Labor. — 
111.  All  Labor  Can  Not  be  Agreeable. ^112.  Labor  Less 
Broad  than  Production.— 113.  The  "  Wage  Fund " 
Doctrine. — 114.  The  Rate  of  Wages  and  Margin  of  Prolits. 
— 115.  Is  Population  a  Check  on  Wages?  — 116.  Countries 
of  Higli  and  Low  Wages. — 117.  Labor-Saving  Macliines. 
— 118.  Labor  Combinations. — 119.  Arbitration  and  Labor 
Courts. — 120.  Labor  Agitations  for  a  Social  Revolution. — 
121.  Causes  wliich  Compel  Men  to  Work  for  Wages — 122. 
The  Organization  of  Labor  in  Industry. — 123.  The  Terms 
of  Partnership,  Labor,  and  Capital. — 124.  Effect  of  Impor- 
tation of  Competing  Products  on  the  Wages  of  Labor. — 
125.  Effect  of  Military  Protection  to  Foreign  Trade  on 
Home  Wages. — 126.  Diversity  of  Industries  Essential  to 
High  Wages. — 127.  Exclusion  of  Immigration  as  a  Measure 
to  Promote  Wages. — 128.  The  Barter  of  Domestic  Labor 
for  Domestic  Labor  Promotes  Domestic  Wages. — 129. 
Wages  of  Social  Labor. — 130.  Wages  of  Women. 

CHAPTER  IX.— Money 329 

131.  What  is  Money?— 132.  Origin  of  Money.— 133.  The  Form 
of  Money. — 134.  The  Substance  of  Coins. — 135.  Changes 
in  British  Coinage.— 136.  The  Standard.- 137.  The  Ratio 
between  the  Money  Metals. — 138.  Exchangeable  Credit  as 
Quasi  Money.— 139.  Bills  of  Exchange  and  Notes.— 140. 
Money  of  Account. — 141.  Bank  Deposits  and  Checks. — 
142.  Bank  Notes.— 143.  Government  Notes  and  Debts. — 
144.  The  Volume  of  Credit. — 145.  Relative  Cost  and 
Economy  of  Coin  and  Credit — Fiat  Money. — 146.  Variations 
in  the  Volume  of  Money. — 147.  The  Single  and  Double 
Standard. — 148.  Rate  of  Production  of  Gold  and  Silver. 

CHAPTER  X.— Crises 370 

149.  Crises  Defined. — 150.  Crises  Produced  by  Excessive  Im- 
portation of  Competing  Products. — 151.  Competing  Ira- 
ports  Again  the  Cause. — 152.  Exhaustion  of  Capital. — 153. 
Great  Wars  Seldom,  if  Ever,  Produce,  but  Often  Avert  or 
Remedy  Crises. — 1.54.  The  American  Crisis  of  1837. — 155. 
Crisis  of  1857.-156.  The  Crisis  of  1866.-157.  The  Crisis 
of  1873-9.— 158.  The  Balance  of  Trade.~159.  Doctrine 
of  the  Balance  of  Trade. — 160.  Are  Crises  Useful  or  Penal? 

CHAPTER  XI.-TiiE  State 398 

161.  Government  Is  Natural. — 162.  Interest  Organizes  Indus- 
try.— 163.  The  Motive  Force  in  Industry. — 164.  Forms  of 
Government  Dependent  on  the  Evolution  of  Occupations. 
— 165.  Governments  Classitied. — 166.  Parliamentary  and 
Representative  States, — 167.  Diversity  of  Fo'rm  in  Repub- 
lics.— 16S.  Diversity  of  Functions  and  Objects. — 169. 
Local  Govern  ment. — 170.  The  State  as  RelatcMl  to 
Industry. — 171.  Coercion  and  Attraction  in  the  State. — 
172.  Government  l)y  Force. — Voting  by  Males.— 173. 
Armies  and  Their  C!()st.— 174.  Crime  and  Its  Punishment. 
— 175.  Social  C!nmes  and  Insanities. — 176.  The  Recent 
Growtliof  Debt. 


viii  CONTENTS. 

CHAPTER  XII.— Taxation 452 

ITT.  Origin  of  Taxes. — 178.  Standards  of  Equal  Taxation. — 
179.  An  Ideal  Theory  of  Taxation.— 180.  The  Searcli  for 
the  Incidence  of  Taxation,  and  of  Specific  Taxes. — IHl. 
The  Practice  of  Modern  Governments  in  Taxation. — The 
United  States. — 182.  Taxation  in  Great  Britain. — Local. — 
183.  General  Taxation  in  Great  Britain. — 184.  India. — 
Taxation  by  Protits  of  Enforced  Foreign  Trade. — 185. 
Taxation  by  Profits  of  Enforced  Trade. — Turkey. — 186. 
Taxation  by  Profits  of  Enforced  Trade. — Ireland. 

CILVPTER  XIII.— Taxation  Continued 496 

187.  France.  —  Conditions.  — 188.  France.  — Revenues.  — 189. 
France,  as  Discassed  by  Smith. — 190.  Taxation  as  a  Cause 
of  Production.  —  Beet  Sugar.  —  191.  The  Sophisms  of 
Bastiat. — 192.  Modern  Germany. — Protective  Taxation  a 
Source  of  National  Unity. — 193.  Germany's  Present  System 
of  Taxation.  — 194.  Revenue  System  of  Russia. — 195. 
English  Colonies. — 196.  China  and  Japan. 


CHAPTER  XIV.— The  Free  Trade  Criticism 555 

197.  Methods  of  Argument  Concerning  Protection  and  So- 
called  Free  Trade. — 198.  Sidgwick  on  Protection  to  Native 
Industry. — 199.  Moffat  on  Protection  in  Growing  Coun- 
tries.—  200.  Devas  on  Protection. — 201.  Prof.  Perry's 
Free-Trade  Methods. — Does  or  Does  Not  Free  Trade 
Employ  Foreign  Labor? — 202.  Why  Canadians  May  Not 
Have  Free  Trade  with  Vermont.— 203.  The  Profit  Argu- 
ment.— Protection  Profits  a  Nation  or  Nations  Would 
Not  Protect — 204.  Cost  of  Labor  in  America  and  Europe. 
— 205.  Making  Taxes  Productive. — 206.  Collecting  Taxes 
from  Foreign  Producers. — 207.  Whether  the  Duty  Raises 
the  Price  on  the  Whole  Domestic  Product. — 208.  Getting 
Cutlery  by  Making  Buttons. — 209.  Must  a  Nation  Import 
Commodities  in  order  to  Export  Them,  or  Buy  Them  in 
order  to  Sell  Them?— 210.  The  Tlieory  of  Barter  Does 
Not  Aid  the  Free-Trade  Criticism. — 211.  Private,  Special, 
and  Public  Interests. — 212.  Protection  Universal. 


CHAPTER  XV.— Economy  of  Protection 009 

213.  How  a  Tariff  ]May  Protect  Producers.— 214.  When  Duties 
on  Imports  Protect  from  Taxation. — 215.  When  Protection 
Promotes  Production. — 216.  Protection  Promotes  Wages. 
— 217,  Protection  Promotes  National  L'nity  and  Peace. 


CONTENTS.  IX 

CIIAPTEK  XVI. — State    Action    in   Relation   to    Special 

Industries 631 

218.  Silk.— 319.  Decline  of  Silk  Manufacture  iu  England.— 
220.  Evolution  of  Glass  Manufacture. — 221.  Evolution  of 
Iron  and  Steel  Manufacture. — 222.  Rivalry  between  Great 
Britain  and  America. — 223.  American  Ship-Building, 
Coasting  and  Ocean  Ve.s.sels  and  Carrying  Trade. — 224. 
Evolution  of  Manufactures  in  Canada. — 225.  The  Sheep 
and  Wool.— 226.  Wool  a  Finished  Product.— 227.  Rate  of 
Consumption  of  Wool. — 228.  The  Protection  of  Wool  and 
Woolens  in  Europe. — 229.  Wool  Culture  in  America. — 
230.  Woolen  Industry  of  England.— 231.  The  Cost  of 
Protection  to  the  Woolen  Manufacture.— 232.  CJotton, 
Antiquity  and  Modern  Growth  of  the  Industry. — 233.  The 
Cotton-Gi'owing  Industry  of  the  United  States. — 234. 
Cotton  as  a  Power  iu  Politics. — 235.  The  Cotton  Famine 
of  1860-5. — 236.  Destruction  of  Quinine  Manufacture  in 
the  United  States.— 237.  The  Salt  Industry  as  Related  to 
the  Tariff.— 238.  Leather,  Boots  and  Shoes.— 239.  Indus- 
tries Mu.st  be  Unprofitable  as  well  as  Desirable  to  ]\Ierit 
State  Action. — 240.  Private  and  Public  Pui'poses. — 241. 
Post  Hoc,  Ergo  Propter  Hoc. 

GENERAL  INDEX 709 


PREFACE. 


Students  of  Political  Economy  are  more  often  the  old  than  the 
young;  and  more  largely  those  who  have  already  given  much 
time  and  thought  to  its  mastery,  than  those  to  whom  the  effort  is 
new.  I  am  satisfied  that  wliat  both  classes  desire  is  an  extended 
but  convenient  repository  of  accessible  facts,  avoiding  dogma  and 
abstraction,  but  allowing  human  experience  and  history  to  con- 
vey their  own  lesson.  In  the  work  of  teaching  Political  Econo- 
my to  young  men,  I  found  their  perceptions  generally  keener 
than  their  text-books  were  adapted  to  satisfy.  Still  more,  in 
responding  to  the  innumerable  inquiries  made  of  an  economic 
daily  journalist,  I  have  discovered  that  the  people  could  not  find 
in  the  books  of  current  discussion  of  economic  theories  any 
answers  whatever  to  the  practical  questions  on  which  they  sought 
light.  Or  if  the  questions  were  answered  it  was  easy  to  perceive 
that  the  answer,  in  many  cases  was  false,  partial,  or  obscui'e. 
Instead  of  the  book  being  above  the  student  or  the  inquiring 
])ublic,  it  was  either  below,  or  irrelevant  to  both.  I  have  there- 
fore assumed  in  preparing  this  book  that  society  contains  no  fact 
or  feature  which  its  reader  will  not  fully  comprehend  if  the 
story  be  told  clearly  and  simply.  I  have  tried  to  do  only  this.  I 
trust  my  work  may  prove  acceptable  to  the  students  of  Political 
Economy  in  this  and  other  lands,  in  the  degree  in  which  it  fairly 
reflects  the  opinions  of  statesmen,  the  wisdom  of  nations,  the 
views  of  practical  men  and  men  of  affairs — for  these  get  nearest 
to  the  truth  of  things. 

Tlie  fundamental  view  of  economics  which  may  be  said  to 
inspire  and  give  structure  to  the  book,  is  that  to  be  true  or  useful 
economic  science  must  be  no  longer  destructive  but  construc- 
tive. It  must  study  to  explain  how  things  actually  are,  before 
plunging  into  the  question  whether  they  are  as  they  ought  to  be. 
In  doing  this  it  must  make  ai)preciative  exposition  precede  criti- 
cism. The  history  of  the  battle  must  first  be  given  before  the 
generals  who  led  in  it  are  court-martialled  and  shot.  Political 
Economy  has  thus  far  been  conducted  in  a  way  that  makes  it  a 


xu  PREFACE. 

body  of  fault-finding  and  carping,  by  men  innocent  of  any  con- 
nection with  government  and  but  sliglitly  acquainted  Avith  busi- 
ness, as  to  the  effect  of  that  legislation  whose  responsibilities 
they  have  never  borne,  upon  that  industry  toward  which  they 
maintain  a  parasitic  rather  than  a  controlling  relation. 

However  political  economists  may  seek  to  dodge  it  by  their 
definitions,  Political  Economy  is  a  criticism  upon  statesmanship, 
so  long  as  it  continues  to  be  any  thing.  They  may  say  it  is  a 
"  science  of  sales  "  only,  and  that  there  is  nothing  of  a  political 
nature  about  it;  that  it  has  been  wrongly  named ;  that  it  should 
be  called  Catallactics,  or  Plutology,  or  the  like.  But  to  this  the 
statesmen  may  reply:  "Why,  then,  do  you  bore  us  with  it?  We 
have  no  time  to  do  more  than  acquaint  ourselves  with  those 
sciences  and  arts  which  have  a  bearing  upon  government. 
You  say  yours  has  not.  If  your  science  is  that  of  selling  and 
exchanging,  go  on  with  your  didactical  exposition  of  swapping 
and  trading.  It  has  no  more  to  do  with  us  than  a  treatise  on 
weaving  or  spinning." 

In  fact  the  men  who  define  Political  Economy  as  a  "science 
of  sales  "  mean  thereby  that  it  is  a  .science  which  teaches  that  the 
right  of  individuals  to  make  sales  is  superior  to  the  right  of 
government  to  affect  in  any  manner  by  legislation  the  nature  or 
quality  of  the  sales  they  shall  make.  They  show  this  palpably 
by  filling  their  volumes  and  speeches  with  comi)laints  that  gov- 
ernment is  interfering  with  sales.  Not  a  line  of  Perry,  Mill,  or 
Sumner  is  free  from  this  complaint.  Hence  their  definition  of 
Political  Economy  is  annulled  by  the  quality  of  the  thing  they 
put  forth  as  being  Political  Economy.  That  is  a  critique  on  the 
relation  of  government  to  sales.  If  it  were  scientific  in  its  quality, 
it  would  not  be  a  science  of  sales,  but  a  science  of  the  relations 
which  government  sustains  to  sales.  This  restores  the  name 
"  Political  "  to  their  "  Economy."  This  restoration  they  can  not 
escape  except  by  letting  govei^nment  entirely  alone.  When  the 
teachers  of  the  ''  sales  "  school  begin  by  saying  "  it  is  none  of  our 
business  as  economists  Avhether  the  government  interferes  with 
trade  or  industry  or  not  ;  our  .sole  duty  is  to  teach  the  principles 
on  which  trade  and  industry  will  proceed  after  government  shall 
have  adopted  such  interferences  as  it  thinks  proper,  and  the 
methods  by  which  the  industrial  mass  will  adapt  itself  to  the  ac- 
tion of  the  government";  then,  and  not  till  then,  will  they  have 
the  right  to  reduce  the  terms  of  their  definition  to  those  of  a  sci- 
ence of  sales  only,  with  which  government  has  nothing  to  do. 


PREFACE.  xiii 

The  true  logic  of  Laissez  Faire  will  only  be  reached  when  that 
Political  Economy,  which  consists  in  teaching  that  government 
and  sales  have  nothing  to  do  with  each  other,  shall  manifest  at 
least  its  sincerity,  by  conceding  in  advance  that  the  expounders  of 
sales  have  no  opinion  whatever  concerning  the  functions  of 
government.  But  so  long  as,  under  pretence  of  teaching  a  science 
of  sales  only,  they  in  fact  purport  to  convert  their  teaching  into  a 
complaint  against  all  action  of  government  that,  interferes  with 
sales,  lessening  them  in  one  direction  and  promoting  them  in 
another,  they  are  bound  to  begin  by  an  exposition  of  govei'nment 
itself ;  for  perad venture  the  right  of  the  individual  to  sell  may  by 
possibility  be  suboi'dinate,  as  a  fact  in  social  science,  to  the  right 
of  governments  to  regulate  sales.  It  may  even  appear  that  much 
of  the  economic  value  of  the  individual's  right  to  sell  may  depend 
on  the  fidelity  with  which  government  shall  govern  his  sales. 

But  supposing  the  contrary  to  be  true,  the  sales  school  can  not 
teach  it  to  be  so  without  teaching  the  functions  of  government, 
and  the  instant  they  do  this  they  cease  to  be  a  "sales"  school. 
Political  Economy  passes  from  a  science  of  sales  into  a  science  of 
the  relation  between  government  and  sales. 

Apprehending  that  Political  Economy  must  needs  teach  the 
functions  of  government  concerning  industry  it  next  follows  that 
the  economist  must  no  longer  be  a  member  of  a  mere  sect  of  anti- 
government  critics.  Political  Economy  can  not  attain  its  true 
dignity,  as  a  scientific  expositor  of  the  relations  of  government 
to  industry,  so  long  as  the  statesmen  of  the  world  monopolize  the 
ability  to  see  things  as  they  are,  and  to  do  things  in  a  way  that  is 
pi'acticable,  while  the  economists  indulge  in  the  mere  imagina- 
tive occupation  of  theorizing  in  the  subjunctive  mood  as  to  how 
they  might,  could,  would,  or  should  be.  It  is  time  that  the  econo- 
mists of  every  country  had  ceased  to  be  a  sect  antagonizing  the 
statesmen ;  especially  is  it  time  that  the  economists  of  America, 
France,  and  Germany  had  ceased,  in  antagonizing  the  statesmen 
of  their  own  country,  to  fall  into  a  species  of  disloyal  alliance 
with  the  statesmen  of  countries  whose  economic  interests  may 
not  be  in  harmony,  in  certain  important  and  vital  respects,  with 
their  own. 

A  second  fundamental  idea  of  this  book  is  that  nations  are  col- 
lective persons,  having  each  its  individuality  and  its  career  to 
pursue,  in  a  certain  logical  continuity  with  those  antecedents 
which  have  brought  it  where  it  is,  and  hence  that  any  given 
economic  expedient,  to  be  understood,  must  be  studied   in    tiie 


XIV  PREFACE. 

light  of  the  antecedent  career  of  the  nation  adopting  it.  An  im- 
port duty  of  $1.25  per  pound,  or  say  1200  percent.,  on  cigars,  or  an 
enactment  proliibiting'  the  domestic  cultivation  of  tobacco — both 
of  which  exist  in  England,  and  are  deemed  wise,  by  wise  men — 
would  not  even  address  themselves  to  the  discretion  of  an 
American  for  calm  consideration.  The  duty  would  here  be  too 
preposterous  to  be  jDroposed,  and  the  enactment  could  not  be 
passed  at  all  by  virtue  of  any  power  with  which  our  national 
government  is  clothed  by  the  written  constitution.  It  is  as  im- 
possible of  adoption  in  America  as  Herod's  decree  for  the  slaugh- 
ter of  the  Innocents  would  be  of  imitation  by  one  of  our  Collectors 
of  In  ternal  Revenue.  Hence  to  assume  that  in  a  college  class  room 
the  enactment  of  a  duty  of  5s.  sterling  on  cigars,  or  the  prohibition 
of  the  cultivation  of  tobacco,  can  be  discussed  on  the  cosmopolitan 
plane,  without  recognizing  nations  as  distinct  integral  persons, 
having  each  its  career  determined  largely  by  its  peculiar  antece- 
dents, is  to  incapacitate  ourselves  wholly  for  the  intelligent  ap- 
prehension of  the  subject.  The  revenue  legislation  of  England 
is  no  better  adapted  to  any  such  cosmopolitan  tests  than  that  of 
any  other  country.  Its  tobacco  taxes,  its  exemption  of  land  and 
capital  from  direct  taxation,  its  policy  of  aggression  among  the 
barbarian  races  in  behalf  of  its  manufactures  and  its  export  trade, 
are  all  as  impossible  in  our  national  economy  as  its  conquest  of 
India,  its  nobility,  or  its  church  establishment.  Hence,  to  take  a 
simple  act  of  legislation  concerning  one  point,  a  duty  on  wool  for 
instance,  and  discuss  it  as  if  were  the  same  thing  in  one  country 
as  in  another,  is  not  to  discuss  it  at  all.  Countries  must  be  studied 
like  careers,  as  continuous  and  consecutive  wholes,  and  to  this 
end  a  little  must  be  known  of  the  organization  and  structure  of 
each  before  we  seek  to  pass  upon  its  conduct.  If  it  have  fins  it 
will  not  climb.  If  it  have  claws  it  may  not  swim.  It  will  obey 
the  inner  law  of  its  constitution,  be  its  career  long  or  brief. 

Hence,  in  this  work,  the  prominence  given  in  the  chapter  on 
the  State  to  the  quality  and,  so  far  as  might  be.  the  true  inward- 
ness of  political  institutions,  is  in  harmony  with  the  first  funda- 
mental view  above  taken,  that  Political  Economy  is  an  exposi- 
tion of  the  economic  aspects  of  statesmanship.  But  a  state  is  a 
mechanism,  and  no  two  mechanisms  are  alike.  Each  engineer 
masters  only  his  own  engine.  The  others  would  explode  under 
him.  I  have  endeavored  to  lay  bare  chiefly  and  fairly,  in  discuss- 
ing the  workings  of  the  English  and  American  constitutions, 
those  features  in  both  which  their  own  most  fair-minded  states- 


PREFACE.  XV 

meu,  either  on  the  one  hand  admire,  or  on  the  other  deplore. 
For  the  people  of  either  country,  so  long- content  with  using-  such 
political  machinery  as  they  found  themselves  provided  with  to 
promote  their  material  interests,  may  at  any  moment  find  a  lull  in 
their  activities,  in  which  to  overhaul  and  seek  even  to  mend  their 
political  machinery.  Ancestor- worship  forms  but  a  small  pai-t 
of  the  intellectual  equipment  of  the  people  of  either  country  if 
they  come  to  believe  that  they  can  improve  the  political  mechan- 
ism in  its  actual  workings.  It  has  been  deemed  fitting,  therefore, 
to  make  clear  the  unity  between  the  national  mechanism,  which 
is  after  all  only  the  embodied  people,  and  the  same  peo])le  when 
viewed  in  their  industrial  aspects  as  producers  and  consumers. 
It  is  not  merely  that  the  Political  State  and  Industrial  State  are 
companions  on  the  same  road,  but  the  Political  State  is  shown  to 
be  the  apparel  of  which  the  Industrial  Life  of  the  people  is  the 
wearer. 

To  some  it  may  seem  that  certain  policies,  pursued  by  the 
governing-  powers  both  in  Great  Britain  and  America,  are 
treated  with  an  acerbity  that  throws  the  book  out  of  tune  with 
the  statesmanship  of  both  countries.  In  America,  the  drif ting- 
away  from  the  intent  of  the  framers  of  the  Constitution,  in  respect 
to  the  mode  of  selecting  the  President,  and  the  increasingly  auto- 
cratic tendencies  of  the  Presidential  office,  may  be  deemed  to  have 
been  so  treated.  In  discussing  economic  features  of  the  British 
Empire,  the  chief  points  of  criticism  are  the  very  unequal  degree 
in  which  the  various  populations  composing  it  have  found  it  pos- 
sible to  secure  the  friendly  regard  of  Parliament,  and  the  conse- 
quent voluntary  abandonment  of  the  farmers  to  UTiequal  compe- 
tition with  those  of  other  countries,  after  certain  classes  of  the 
manufacturers,  through  four  centuries  of  pi'otection,  had  ceased 
to  need  its  further  continuance.  The  judicious  reader  will  dis- 
cover, and  the  adverse  concede,  that  among  the  truer  and  higher 
statesmen  of  the  country  whose  legislative  or  administrative  ac- 
tion may  be  thus  criticised,  some,  of  note,  have  preceded  me  in 
the  utterance  substantially  of  the  views  here  enunciated. 

It  is  believed  that  the  fullness  of  the  indexes  and  the  simplicitj'- 
of  the  order  and  arrangement  adopted,  combined  with  its  ample 
presentation,  in  the  text,  of  the  facts  essential  to  guide  a  judgment 
on  most  economic  issues,  and  in  the  notes,  of  the  views  of  nearly 
all  economists,  may  make  it  convenient  as  a  book  of  reference  to 
that  very  large  number  of  persons  who,  if  amply  supplied  with 
facts,  find  it  not  difficult  to  arrive  at  their  own  co)iclusions. 


xvi  PliEFxiCE. 

Political  Economy,  so  far  from  being  a  dismal  science,  is  fas- 
cinating ni  all  its  parts  to  all  who  master  in  any  degree  the  clues 
to  its  right  apprehension.  It  is  even  entertaining  in  the  hands  of 
some,  every  blow  of  whose  fingers  upon  its  strings  evolves  only 
discord  and  misapprehension.  In  its  fairer  spirit  and  fuller 
apprehension  it  will  become  the  mediator  between  all  of  society's 
extremes  of  condition,  race,  and  culture— between  the  poor  and 
the  rich,  the  virtuous  and  the  criminal,  the  wise  and  the  un- 
learned, the  governors  and  the  governed,  and,  among  nations, 
between  the  monarchical  and  the  republican,  the  debtor  and  the 
creditor,  the  Christian  and  the  heathen.  It  reconciles  man  to 
hiuLself  by  acquainting  him  with  himself  in  others.  The 
proper  study  of  society  is  society.  No  other  study  can  be  so 
broad  or  so  enlightening.  I  do  not  with  Jevons  think  it  can  be 
greatly  helped  by  measuring  gains  and  lo.sses  of  pleasurable 
emotion  against  each  other  with  algebraic  signs  and  symbols. 
Nor  with  Mill  can  I  attach  profound  value  to  tenuous  specula- 
tions pervaded  by  metaphysical  subtlety.  Nor,  with  Senior,  am 
I  prepared  to  dispose  of  conditions  of  society,  past,  present,  or 
future,  wherein  wealth  arises,  of  kinds  that  are  not  exchangeable, 
and  in  modes  that  are  not  due  to  competition,  nor  measurable  in 
coin  values,  which  it  becomes  perhaps  impossible  or  even  criminal 
to  buy  or  sell,  by  saying  that  they  are  not  economic  conditions, 
and  that  the  society  in  which  they  arise  would  not  be  an  eco- 
nomic world.  It  is  sufficient  for  me  that  they  are,  have  been, 
and  may  long  continue  to  be,  a  part  of  actual  society,  govern- 
ment, and  industry,  and  that  they  have  economic  effects.  The 
family,  the  church,  the  state,  the  college,  the  literary,  artistic, 
and  social  world  are  full  of  priceless  values  that  do  not  arise  by 
competition,  hut  exchule  it  ;  society  is  in  part  organized  and 
held  in  place  by  means  of  these  unpurchasable  values  which  it  is 
proud  to  know  are  not  exchangeable.  They  create  cooperation. 
They  inspire  trust.  They  promote  united  action.  Honor,  Law, 
Patriotism,  Fidelity  are  as  much  parts  of  the  existing  social 
wealth  of  the  world  as  profits,  money,  and  exchange.  Hence,  to 
limit  economic  discussion  to  the  consideration  of  things  that  can 
be  bought  and  sold  may  be  to  emasculate,  disinspire,  and 
destroy  it. 

Finally  Economic  Science  is  a  continuing  inspiration.  It  can 
only  l)e  petrified  into  fixity,  after  it  has  lost  its  liviiig  pi'inciple. 
As  an  in.spiration  it  leads,  but  it  can  not  halt.  Its  future  can  not 
be  dwarfed  by  recognizing  its  present  state   as   final.     It  must 


PREFACE.  xvii 

migrate  to  new  fields  of  instruction  as  the  old  lose  tlieir  interest, 
by  the  same  law  by  which  its  cliief  factors,  profits,  and  wages 
avoid  the  declining  rate  of  compensation  in  old  investments,  by 
themselves  passing  on  to  new  efforts,  new  processes,  and  new 
places.  So  Political  Economy  will  find  its  new  rate  of  profit  and 
higher  wage  in  advancing  to  new  forms  of  tliought,  new  exposi- 
tions, new  fields  and  themes.  Its  spirit  must  keep  pace  with  the 
march  of  the  industries  and  the  governments.  In  its  present  stage 
of  development  it  is  not  unlike  the  early  systems  of  placer  mining 
for  gold.  The  one  rule  which  governed  finding  it  was  "  where 
you  find  it,  there  it  is."  In  judging  of  its  value  the  placer  sys- 
tem further  enriches  our  language  with  the  proper  test.  It  is 
"worth  what  it  pans  out."  The  ore  in  this  book  is  now  ready  to 
be  submitted  to  the  sieve.  The  reader  will  shake  the  sieve  and 
hold  the  pan.  Interested  vitriol  throwei-s  will  stand  around  and 
expi'ess  a  doubt  whetlier  the  glistening  grains  are  not  pyi-ites.  If 
so,  let  the  acid  thrower  have  free  fire  at  every  grain.  So  many 
as  remain  will  be  the  fine  gold  of  commerce  and  of  nations. 

Potter  Building,  New  York,  May  1,  1888. 


PERSONAL  INDEX. 


[Many  facts  of  economic  importance  stand  associated  with  the  names  of  actors  in 
prominent  events  rather  than  witli  those  of  economic  teachers  or  critics.  8uch  is  the 
connection  of  Colbert  witli  Frencli  manufactures  or  of  Cortez  wilh  tlie  increased  sup- 
ply of  silver.  As  the  purpose  of  an  index  is  to  give  ttie  reader  the  rleu  s  most  likely 
to  enab  e  him  to  find  wliat  lie  is  searchinEf  for,  it  is  believed  that  such  an  index  \\iil 
prove  more  valuable  than  the  tabulated  li-tof  authors  cited,  whicli  is  also  conven- 
iently included  in  it.  It  shades  outward  toward  names  whose  connection  with  the 
current  of  economic  history  is  slis^ht  or  trivial.  But  an  index  of  authors  cited  jiicks 
up  in  like  manner  many  whose  contribution  to  the  course  of  discussion  has  been  slight. 
The  present  Index  is  designed  simply  to  aid  the  reader  in  his  special  search  for  facts.] 


(In.stitiite    (le 


A. 

Abel,  603,  608 

Abraham,  166,  333 

Academy,    French 
France),  466 

"  x\.cademy,"  London,  490 

Achard  and  beet  sugar,  503 

Achilles,  334 

Adams,  Prof.  11.  C.  on  debts, 
353,  448-451;  on  special  in- 
terests, 6r,3,  653,  654 

Agricultural  Report,  96,  106,  252  ; 
of  Ohio,  254;  of  the  United 
States,  256 

Albert,  Prince,  215 

Alexander  of  Macedon,  276,  279, 
331 

Alison,  Sir  Archibald,  359 

Alton  farm,  269 

American  Encyclop.Tdia,  255 

American  Association  for  Advance- 
ment of  Science,  650 

American  Iron  and  Sfeel  Associa- 
tion, Btdletin  of,  555  ;  on  prices 
of  English  and  American  iron 
and  steel  goods,  590 

American  Wool  Growers'  Associa- 
tion, 669 

Annales  de  Chimie,  503 

An!!e,  coinage,  342 

Aristotle,  definition  of  political 
economy,  2,  405  ;  women  owned 


land,  61 
131 


on  value,  83  ;  on  title 


Archangel  Michael,  340 

Arkwright,  189,  681,  684 

Asiatic  Museum  in  St.  Peteisburg, 

334 
Atchison,    Topeka  and   Santa   Fe 

Railroad  Company,  157 
Atkinson,     Edward,      on      profit 

sharing.    179,    180  ;    decline    of 

profit,  195  ;  on  wag-es,  219,  294  ; 

on  product,  224,  229 
"Atlantic  ^Monthly,"  553 
Ailesbury,  Marquis  of, — land  of, 

270 
Augustus,  668 


Bacon,  Lord,  on  balance  of  trade, 

393 
Baird,  H.  C,  on  price,  117 
Bakewells  and  Co.,  glass,  640 
Baltimore      and     Ohio     Railroad 

Co.,  153 
Baring,  Sir  Evelyn,  on  India,  66 
Bastiat,  Frederic,  3  ;  definition   of 
political  economy,  16  ;  definition 
of  wealth,  42:  definition  of  value, 
8i>,  82;  on  declining  returns,  229; 
on  choice   between    wages  and 
profits,    234 ;    rent,     24i,    503  ; 
"  Sophisms  "  of,  reviewed,   50()- 
514;  " Harmonies  Economi(iucs," 
507 
liattersley's  "  Repealer's  Manual," 


XX 


PERSONAL  INDEX. 


Bayard,  "Stephen,  639 
Beaconsfield,    Lord,    20  ;  on   gold 
standard,    362  ;    ou    protection, 
558,  577 
Beaufort,  Duke  of,  land  of,  270 
Beccaria  on  value,  82 
Bedford,  Duke  of,  land  of,  270 
Beil,  G.,  22 

Behm  and  Wagner,  atlas,  548 
Bennett,  James  G.,  190 
Bentham,  Jeremy,  444 
Bentinck,  Lord  George,  558 
Benton,  Thomas  H.,  38,  629 
Berneville,  674,  681 
Bible  (Numbers)  138,  277,  379 
Bigelow,  Mr.  E.  B.,  678 
Bishop,  Hist,  of  American  Manu- 
factures, 694 
Bismarck,  Prince   von,    516,   524, 

577 
Blackstone,   Sir  AVilliam,  on  title, 
129,  130  ;  on   royalty  and  House 
of  Commons,  409,  410,  453 
Blaine,  James  G.,  38,423,  628 
Board  of  Trade  of  Montreal,  666 
Board  of  Trade  Returns,  679 
Bancroft  on  community  of  goods, 

53 
Banfield,  T.  E.,  ou  cause  of  value, 

94 
Bank  of  England,  335,  349,  370, 
871,    373,    374,    375,    389,  390  ; 
Imperial  Bank  of  Germany,  362  ; 
of  Austro-Hungary,  363 
Banks  of  St.    Petersburg,  France, 
Germany,  Austria,  Netherlands, 
and  of  the  United  States,   351, 
352 ;     of    Massachusetts,     New 
York,   Rhode  Island,  and  Iowa, 
352 
Bourne,  on  food  supply,  65 
Bourse,   Paris,   or  stock    market, 

108 
Bowen,  Prof.  Francis,  16 
Bowes,  J.  L.  and  Bros.,  678 
Bradstreets,  reports  of,  106 
Brassej^   Sir  Thomas,  on  exports, 
35  ;  on  Indian   wages,  337  ;  on 
labor  and  wage  fund,  291 
"Breitnian,  Hans,"  20 
Bremen  Line  of  steamers,  657 
Brewster  and  Co.,  313,  314 
Bright,  John,  on  protection  and  de- 
mands of  labor,  608 
British  Board  of  Trade  Returns, 
679 


British  Parliaments,  select  com- 
mittee on  .scientitic  instruction, 
596 

Broderick,  on  price,  117,  118,  251, 

Brougham,  Mr.  Henrj'  (Lord),  643, 
643 

Brownlow,  Earl  of,  270 

Brugsch,  Dr.,  334.  453 

Buckle,  10 

Bulletin  of  National  Association  of 
Wool  Manufacturers,  678 

Bureau  of  Labor,  314 

Burke,  Edmund,  337 

Burlingame,  Anson,  535,  548,  549 

Butler  ("Hudibras"),  441 

Byles,  Judge,  558 

C. 

Caesar,  Augustus,  454,  466 

Csesar,  Julius,  454 

Cain,  603,  645,  668 

Caird,  Sir  James,  on  corn  in 
England,  130 

Cairnes,  J.  E.,  definition  of  value, 
80;-share  of  capital,  180  ;  on  labor, 
390,  291  ;  on  wage  fund,  292, 
394  ;  on  protection,  556 

Calhoun,  John  C,  38  ;  on  repre- 
sentation of  capital  and  numbers, 
413,  415,  639 

Cambridge  University,  620 

Camden  &  Amboy  Railroad  and 
Transportation  Co.,  154 

Campbell,  Chancellor,  on  land 
tenure,  52 

Canadian  Manufacturer,  581 

Carey,  Henry  C,  3  ;  definition  of 
political  economy,  5  id.;  correc- 
tive influence,  11,  16  ;  definition 
of  wealth,  43  ;  criticised,  43-45  ; 
relation  of  wealth  to  civilization, 
48  ;  on  value  of  land  of  Great 
Britain,  71  ;  definition  of  value, 
79,  80,  83,  91  ;  on  perishability 
of  labor  time,  93  ;  on  price,  96, 
117  ;  on  population  in  Ignited 
States,  145,  180  ;  on  decline  of 
profits,  194,  195,  339  ;  on  security 
as  cause  of  rent,  334,  245  ;  ou  rent 
and  fertility,  239,  247  ;  on  labor, 
289  ;  money,  330  ;  on  crises,  374, 
383  ;  cotton  product,  397  ;  on  land 
values  in  India,  488  ;  Carey  rs. 
Bastiat,  507  ;  on  Pru.ssia,  519  ; 
ou  soils,  570,  577.  674,  687,  705 


PERSOXAL  INDEX. 


XXI 


Cart'V,  Matthew,  514 
Carlisle,  Earl  of,  270 
Carroll,  Charles,  of  Carrolltou,  ou 

railways,  152 
Carroll,  P.  C.  555 
Cartwright,  681,  685 
Cass,  Lewis,  38 
Cass  farm,  269 
Candor,  Earl  of,  270 
Catholic  Church,  53 
Cavour.  Count,  630 
Central  Pacific  Railroad  Co.,  157 
Census  of   1860   in  United  States, 

254  ;  of  England,  272  ;  of  United 

States,  312,  313 
Cernuschi,  373 
Chalmers,  Thomas,  330 
Charles  I.,  341  ;  execution  of,  42  ; 

effects,  407 
Charles  II.,  340,  342 
Charles  V. ,  669 

Chase,  Salmon  P.,  38,  221,  386 
Chalmers,  Mr.,  on  local  taxation 

and  government,    477,  478  ;    on 

price,  96 
Chambers'  Encyclopa-dia,  481  ;  on 


shoddy,  567,  672 


of  China, 


114 
of 


Chang  Kien,  Emperor 

276 
Chase,  Secretarj^  S.  P., 
Chen    Ming,    Emperor 

276 
Chenej'  farm,  269 
Cherbuliez,  on  value,  80 
Cheeseman,    Oscar,    importer, 

prices,  621 
Chevalier,  M.,  5)3 
Chicago  Board  of 
"  Chicago  Tribune 


China, 


ou 


510 

Trade,  106,  108 
"  the,  on  Cana- 


community    of 


dian  share  in  paying  American 

duties,  593 
Choate.  Rufus,  38 
Chow-King.  668 
Chow-tin-jin,  538 
Chrysostoin,    on 

goods,  52 
Clare,  Lord,  on  Ireland,  492 
Clark,  of  Greenbush,  632 
Clark,    jr.,  &  Co.,  John, 

manufacturers,  604 
Clav,   Henrv,   38  ;  compromise 

1832-3,  384,  577,  629,  652 
Clemens,  on  community  of  goods, 

52. 
Cleveland,  Duke  of,  270 
Cleveland,  Grover,  423 


foreign 


of 


Clinton.  DeWitt,  38;  ou  canals, 
150,  151 

Clive,  Robert,  Lord,  227 

Cobdeii  Club,  es.sav  on  land  tenure, 
52  ;  motto,  628  " 

Cobden,  Richard,  155  ;  ou  Chinese 
tarilf,  533  ;  on  Chinese  war, 
536  ;  on  free-trade  class  interest, 
604  ;  on  watres,  604  :  his  treaty 
witli  France';  636,  657 

Codman,  Captain,  662 

Colbert,  501,  510,  577  ;  on  glass, 
639,  673,  674 

Colburn,  Chancellor  of  Exchequer, 
657 

Colley,  Col.  Prof.,  430 

Collins,  E.  K.,  657 

Collins  Line,  657 

Colwell,  Stephen,  16 

Colton,  Calvin,  definition  of  politi- 
cal economy,  3 

"  Commercial  Bulletin  "  of  Boston, 
600  _ 

Commission  of  Parliament  on 
decline  of  silk  manufacture,  636, 
637 

Committee  on  Contract  Packets, 
657 

Commons,  report  of  Select  Com- 
mittee ou  Instruction  to  House 
of,  596 

Comte,  August,  classification  of 
sciences,  6 

Columbus,  Christopher,  24,  189 

Committee  on  Manufactures,  re- 
port of,  605 

Condillac,  82 

Confucius,  550 

Congress,  Committee  on  Manufac- 
tures, 605 

Congreve  &  Son,  steel  importing 
agents,  604 

Constantine,  455 

Constitution  of  United  States,  on 
monej',  330  ;  election  of  Presi- 
dent, 416,  426,  428  ;  ou  export 
duties,  460 

Consular  reports,  499,  523,  525 

"  Contemporary  Review,"  66 

Cooke,  Jav,  157,  391 

Cooper,  Peter,  190 

Copernicus,  323 

Cordier,  on  cost  of  wars,  70 

Corn  Exchange  of  Montreal,  665 

Cortez  in  JMexico,  50,  331,  631 

Cotton  Circular  (Liverpool),  664 


XXII 


PERSONAL  INDEX. 


Couriiot,  oil  market,  100 
Cossa,  Luig'i,  24 
Craig,  Isaac,  639 
Piuk.ston,  Eliza,  425 
Crompton,  681 
Cromwell,  Oliver,  340,  426 
Canard,  657,  658,  662 
Cunard  Company,  662. 
Cyclopedia  of  Political  Economy, 
American,  380 

D. 

Dalrymple,  farm  of,  270 

Darien  Canal  Co.,  871 

Darwin,  Charles,  487 

Davenant,    Dr.,    on  price,  95,  115 

Davenport  &  Bro.,  importers,  on 
prices,  621 

Davis,  John  Francis,  539 

De  Candolle,  origins  of  plants,  275- 
280 

De  Fontenay — on  rent,  242 

De  Guigues,  538 

De  La  Fayette,  514 

Delaware  and  Raritau  Canal  Co., 
154 

Delano,  C,  669 

Democratic  federation  in  England, 
272 

De  Parieu,  453 

Department  of  Agriculture,  L'nited 
States,  252,  256 

Derby,  Earl  of,  land,  270;  on 
national  debts,  448 

De  Tocqueville — on  American 
opinion,  425 

Descartes,  571 

Devas,  C.  S.,  on  condition  of  politi- 
cal economy,  9  ;  on  Mercantile 
School,  19  ;  on  labor,  282,  330, 
331  ;  on  protection,  556  ;  on 
navigation  laws,  557  ;  on  pro- 
tection, 568,  569,  570,  574 

Devonshire,  Earl  of,  land,  270 

"Deux  Mondes,  La  Revue  des,"  528 

Digby,  William,  on  famines  in 
India,  485 

Dillon,  Mr.,  9 

Diomede,  834 

Diodorus,  50 

Dio  Cassius,  50 

Dixon,  W.  Hepwortli,  on  Russia, 
526 

Dodge,  J.  R.,  256,  262.  265 

Dominion  Board  of  Trade,  6'J5 


Dorsey,    E.    B.,    29;    on   railway 

earnings,  174 
Douglas.^S.  A.,  38 
Downs,  F.  C,  on  famines  in  India, 

485 
Duhring,  Dr.,  16 
Dupin,  on  cost  of  wars,  70 
Dutcher,  Josiah,  plow,  264 
Dutcher,  W.  &  G.,  manufacturers, 

Sheffield,  Eng.,  605 

E. 

East  India  Company,  490,  670 

Eckhardt,  J.,  528 

Edison,  T.  A.,  189 

Edward  III.,  840,  669 

Edward  IV.,  340,  841 

Edward  VI.,  340,  341 

Eichbaum— glass-cutter,  641 

Elder,  Dr.  William,  definition  of 
political  economv,  3 

Elder,  Cyrus,  on  labor,  284,  286, 
323,  324 

Elgin,  Lord,  584,  553 

Elizabeth,      statutes 
labor,  303 

Elliott,  Captain,  534 

Encj'cloptedia  Britanniea — on  corn 
laws,  119  ;  on  distribution  of 
land,  138,  139  ;  corn  law  repeal, 
376 ;  cost  of  armies,  488 ;  on 
Chinese  and  opium  war,  584 

Encyclopedia,  Chambers',  481  ; 
on  shoddy,  567 

Engineers,  Brotherhood  of  Loco- 
motive, 510 

England,  Bank  of,  886 

England,  census  of,  272 

Erie  Railway  Co.,  156 

Esau,  808 

Etheridge,  Emerson,  88 


Fancher,  H.,  482 

Farley  on  Turkey,  489,  490 

Fawcett,  Henry,  definition  of 
political  economy,  8;  id.,  5;  a 
fallacy,  26  ;  definition  of  wealth, 
42  ;  criticised,  45  ;  absence 
of  wealth  in  savage  nations, 
48;  rent,  248  ;  id.  ^  245  ;  local 
taxes  in  England,  477  ;  on  pro- 
tection, 556 

Fawcett,  W.  L.,  on  debt  and  prices, 
892,  450 


PhliSOKAL  JMJLX. 


xxni 


Fayette,  De  La,  514 

"  Federalist,"  The,  409,  418 

Ferrara,  16 

Field,  Cyrus  W.,  189 

Field,  Marshall,  on  prices,  623 

Fontenay,  M.  de — on  position  (lo- 
cation) and  rent,  242 

Fourier,  75  ;  law  of  variety,  94 

Fox.  C.  J.,  408 

Franklin,  Benjamin,  24,  78,  632, 
647 

Frederick  the  Great  and  beet  sugar, 
503 

Freeman,  Prof.  E.  A.,  408  ;  on 
Turkish  people,  489 

Free  Trade  League,  604  ;  run  by 
importers,  604,  662 

French  and  Hawkins  (harvester), 
264 

France,  Academy  of,  466 

Fulton,  Robert,  24 

G. 

Gallatin,  Secretary,  38,  640 

Gambetta,  M.,  503 

Gardner,  Mr.,  M.P.,  on  Irish  du- 
ties, 492 

Garfield,  President,  38  ;  vote  for, 
423  ;  on  protection,  599 

Gariljaldi,  Giuseppe,  630 

General  Court  of  Mass.,  on  glass 
manufacture,  639 

Genovesi  on  value,  82 

George,  Henry,  definition  of  polit- 
ical economy,  3  ;  of  wealth,  43 ; 
his  land  doctrine,  125-130  ;  on 
title,  186  ;  on  poverty  in  cities, 
219  ;  confiscation  scheme,  243, 
268 

George  H.,  King — writ  of  execu- 
tion for  debt,  144  ;  statutes  con- 
cerning labor,  303 

George  IIL,  King  —  influence  of 
on  constitution  of  England,  133  ; 
statutes  concerning  labor,  303  ; 
coinage  under,  341,  342;  view 
of  prerogative,  408  ;  tax,  466 

Girard,  Stephen,  202 

Gibbon,  454,  550 

Giffin,  272,  273,  392 

Gladstone,  W.  E.,  36,  484;  on  Ire- 
land, 492,  493,  643 

Glaucus,  334 

Glenn,  Dr.,  farm  of,  270 

Godard,  189 


Godin,  M.,  313 

"Golden  Fleece,"  the,  669 

Goldziher,  645,  668 

Goodyear,  189,  325 

Goschen,  Rt.  Hon.  Geo.  J.,  392, 
459,  467;  on  local  taxation,  477, 
478 

Gossen,  Hermann  H.,  his  theory 
of  value,  94 

Gott,  Mr.,  681 

Gough,  Sir  Hugh,  534 

Great  Britain,  census  of,  272 ;  cus- 
toms and  excise,  482 

Grand  Trunk  Railway  Co.,  156 

Grandin,  farm  of,  270 

Grant,  Gen.  U.  S.,  373 

Grant,  Sir  Hope,  534 

Great  Western  Railway  Co.  of  Can- 
ada, 156 

Great  Western  Steamship  Co.,  657. 

Greeley,  Horace,  6,  373,  464,  503 ; 
on  beet  sugar,  504-506 ;  on  re- 
sumption, 529 

Gresham,  Sir  Thomas,  his  law  as 
to  adulterate  coinage  export, 
368 

Grlinlund — on  abstinence,  74  ;  di- 
vision of  earnings,  176,  on  shiv- 
ery and  progress,  212  ;  on  "fleec- 
ings,"  303,  304,  308 

Guizot,  on  representative  govern- 
ment, 408,  409  ;  on  Roman  trilj- 
utes,  454,  503 

H. 

Hallett,  Major,  experiments  in  tliiu 
plantino',  231 

Hale,  Semitor,  38 

Hallam,  on  House  of  Commons,  409 

Hamilton,  Alexander,  38  ;  on  cause 
of  rent,  241  ;  coinage,  337  ;  Bank 
of  United  States,  351  ;  on  gov- 
ernment, 409,  410,  414, 418,  577  ; 
on  glass,  639,  640 ;  fruits  of  tar- 
iff, 641 

Hamilton  Manufacturing  Society, 
640 

Hancock,  Gen.  W.  S.,  423 

Hansard's  Debates,  657 

Hardware,  sanitary,  nine  firms  ou 
prices  of,  621 

Har greaves,  681,  684 

Harris,  Townsend,  553 

Harrold,  F.  W.,  hardware,  I'.ii-- 
mingham,  605 


XXIV 


1  'Eiisoy^  1  /.  iyi)Ex. 


Harmon,  L.,  310 

Hasliell  (Moore  &),  reai-or,  2G4 

Haslin^s,  Warren,  237 

Havre  Line;  of  steamers,  Go? 

Hawkins  (French  &),  liarvester,264 

Haves,  John  L.,  668,  669,  670,  672, 
678 

Hearu— Plutology,  163 

Heat  on,  J.  Henueker,  M.P.,  658 

Herod,  704 

Heeren,  139 

Hegel,  15 

Hegewisch,  139 

Helmuth,  Schwartze  &  Co.'s  Cir- 
cular, 680 

Heyne,  Prof.,  139 

Herodotus  on  land,  138 

Helper,  Hintou  R.,  33 

Henfrey,  H.  W.,  on  English  coins, 
342,  349 

Henry,  Prof.,  on  exhaustion  of 
soils,  253 

Henry  HI..  King  of  England,  334 

Henry  V.,  House  of  Commons  un- 
der, 409 

Henry  VH.,  340;  VHI.,    340,  341 

Hewitt,  Abram  S.,  511,  573 

Hobbes — quoted  by  Adam  Smith, 
43  ;  on  state,  132 

Homer,  61,  278,  333,  334,  645 

Hood,  Thomas,  4 

Horton,  S.  Dana,  15 ;  coinage 
and  standard,  341,  342,  343,  349, 
382 

House,  E.  H.,  553,  554 

House  of  Commons  of  Ireland, 
address  of,  492 

Hough,  Dr.  Franklin  B.,  148 

Hudson,  Hendrik,  189 

Hudson,  James  T.,  268 

Humboldt,  278 

Hume,  on  value,  82  ;  on  money, 
330,  358 

Huskissou,  Rt.Hon.  William,  638, 
655 

Hussey,  Obed.  (harvester),  264 

Hyndman,  on  food  in  England, 
120;  on  earnings,  273 


Illinois,  railway  commissioners  of, 

173,311 
Illinois  Central  R.  R.  Co.,  157 
in2,crsoll,  Robert  G.,  on    avarice, 

305,  305 


Insurance,  New  York  Chamber 
of,  295 

"  International  Review,"  538 

Ireland,  address  of  House  of  Com- 
mons of,  on  Union,  492 

"  Iron  Age,"  448 

Iron-makers,  Western  Association 
of,  581 

Iron  and  Steel  Association  (Ameri- 
can), 558  ;  on  prices  of  American 
and  English  iron  and  steel  wares, 
590 

Irving,  WMlliam,  importing  agent, 
605 

Isocrates,  50 

J. 

Jackson,  Andrew,  38  ;  strong  ex- 
ecutive influence  of,  133  ;  on 
Bank  of  United  States,  351  ;  on 
foreign  trade  and  American 
labor,  381  ;  compromise  tariflF, 
384,  629,  642 

Jacob  and  Esau,  309 

Jacquard,  674 

James  (Apostle),  on  community  of 
goods,  52 

James  I.,  340,  631,  634 

James  II.,  407,  426 

Jefferson,  Thomas,  38  ;  on  navi- 
gation and  manufactures,  598  ; 
on  equilibrium  of  industries, 
598,  629,  640,  641 

Jessup  &  Sons,  AVm. ,  steel,  Shef- 
field, Eng.,  604 

Jevons,  W.  S.,  5,  9, 17  ;  how  eco- 
nomics might  be  made  an  exact 
science,  34  ;  definition  of  politi- 
cal economy,  43  ;  definition  of 
value,  80  ;  value  not  due  to  labor, 
83  ;  or  demand,  92  ;  on  Gos- 
sen's  theory  of  value,  94  ;  on 
utility,  fluctuations  of,  95,  96 ; 
on  v^due  as  affected  by  labor,  98  ; 
to  lower  it,  99  ;  defines  a  market, 
100,  101  ;  on  rent,  243;  defines 
labor,  289  ;  on  labor  combina- 
tions, 302,  303  ;  defines  moneJ^ 
330,  369,  381  ;  petulance  in  dis- 
cussing protection,  556-558,  560, 
571,  572 

Job,  59,  444 

Journal  of  the  Society  of  Arts,  485 

Justinian,  547 


PERSOXAL  INDEX. 


XXV 


K. 

Karamsin,  Tooke  and  Segiin,  ou 

Russia,  528 
Ke  Sheu,   Commissiouer  (Cbiuese 

opium  war),  584 
Kea-King,  540 
Kt'aj-,  J.   Seymour,  on  India,  455, 

484  ;  salt  tox  in  India,  487 
Keen  Lung,  Emperor  of  China,  547 
Keene — broker's  deal  in  wheat,  105 
Kelley,  editor  of  Karamsin,  Tooke 

and  Seijun,  on  Russia,  528 
Kelley,  Hon.  William  D.,  38 
Kendall,  Thompson  I.,  270 
Kent,  William,  650,  651,  652 
Kepler,  24 
Kerr,  Mr.,  641 
King,  Gregory,  on  price,  95,   115, 

372 
Kinnear,  IMr.    Boyd,  on   corn    in 

England,  120 
Knight,  History  of  England,   555 
Knights  of  Labor,  310 
Knox,  Gen.  Henry,  153 
Kolb,  condition  of  nations,  26,  28, 

30,   31,   251,  476,  478,   4«J6,  529, 

537 
Kossuth,  Louis,  630 
Kon-fut-si,  550 


La  Fayette,  514 

Labor  Bureau  of  Massachusetts, 
314,  581 

Lalor,  J.  J.,  569 

Lamb,  Charles,  357 

Lane,  Samuel  (thresher),  264 

La-ot-zi,  550 

Lassalle,  88 

Lauderdale,  Lord,  on  ]n'oportiou 
of  demand,  92 

La  Vasseur,  on  value,  80 

Lauo-hlin,  Prof.  J.  L.,  337,  353, 
366,  381. 

Lawes,  Sir  John,  on  corn  in  Eng- 
land, 120 

Jit'Conlield,  Lord,  land  of,  270 

Le  Devoir,  313 

Le  Play,  331 

Leicester,  Lord,  on  corn  in  Eng- 
land, 120 

Leii)er,  Thomas,  598 

Levi,  Leoni,  272 


Lincoln,  Governor  of  Massachu 
setts,  153 

Lin,  commissioner  (China),  534 

Lincoln,  Abraham,  38,  577 

List,  Frederick,  16;  his  work  in 
Germany,  514 ;  mining  invest- 
ment in  Pennsylvania,  515 

Liverpool,  Lord,  16,  361 

Locke  on  value,  80  ;  on  rent  and 
interest,  241 

Lockwood,  Henry  C,  268 

Londesborough,  Lord,  laud  of, 
270 

"  London  Academy,"  490 

"London  Times, "*596,  598,  658 

Long,  16 

Lonsdale,  Earl  of,  270 

Louis  XIV.,   reign    of,    639,  641, 

Louis  XVI.,  674 
Lubbock,  Sir  John,  46 
Lycurgus,  50,  138 

M. 

Macdonald,  Sir  John  A.,  531,  664 

Macphelah,  333 

MacLeod,  H.  D.,  3  ;  definition  of 
political  economy.  7;  id.,  6,9, 
16  ;  on  value,  source  of,  80  ;  on 
value,  83,  88  ;  on  share  of  ca])- 
ital,  180  ;  on  rate  of  profit,  191, 
192  ;  rent,  241  ;  on  rent  in  new 
and  old  comnuuiities,  241  ;  on 
rent,  243 ;  defines  labor,  289, 
333  ;  coin  circulates  on  credit, 
344;  currency,  393,  448,  451. 

McCvdloch,  J.  R.,  5,  6;  on  value, 
80  ;  on  decline  of  cultivation  of 
breadstuffs  after  repeal  of  pro- 
tection, 120  ;  on  profit,  168  ;  ag- 
ricultural product  of  England, 
177  ;  rent  and  fertility,  238,  239  ; 
on  labor,  282  ;  defines  labor, 
289  ;  wage  fund,  293  ;  <m  labor 
combinations,  302,  373  ;  on 
crises,  374,  376,  377,  394 ;  on  to- 
bacco tax,  481  ;  on  China,  538  ; 
on  dependence  on  foreigners, 
570  :  on  decline  of  silk  manufac- 
ture, 637 

McCulloch,   Secretary,  Hugh,  392 

McCormick,  Cyrus  IL,  (reaper) 
264 

Madison,  James,  38,  629,  041,  642, 
055 


XXVI 


rEESONAL  INDEX. 


Madras  civil  service,  member  of 
on  labor  in  India,  487 

Magna  Cliarta,  59 

Mailock,  W.  H.,  on  earnings  of 
British  people,  176  ;  on  land- 
holding  in  England,  872 ;  in- 
comes, 278,  274 

Mallorv,  Rollin  R.,  38 

Malte  iirun  on  China,  538 

Malthus,  16,  199,  230  ;  law  of  pop- 
ulation, 292,  295,  307 

Mann,  Institntcs  of,  452 

Margraff  and  sugar,  508 

Marigny,  453 

Mariner,  50 

Marsh,  George  P.,  43 

Marshall,  Chief  Justice,  influence 
of  on  constitution  of  United 
States,  133 

Martin,  R.  Montgomery,  538-540, 
541.  547 

Martineau,  Miss  Harriet,  372,  374, 
389 

Marx,  Karl,  5  ;  definition  of  value, 
80  ;  theory  of  value  criticised, 
88,  91  ;  relation  of  to  Smith  and 
Ricardo,  88 ;  theory  of  value 
not  sustained  by  market  reports, 
101  ;  share  of  wages,  184 ;  on 
■  surplus  value  in  labor,  188  ;  on 
machinery   209,  415 

Mary,  Queen  of  England,  340 ; 
House  of  Commons,  under,  409 

Mason,  David  H.,  628;  on  salt, 
696 

Massachusetts  Labor  Bureau,  314, 
581 

May,  John,  670 

Maximilian,  450 

Mazzini,  577,  630 

Medhurst,  Dr.,  on  China,  540, 
547 

Medill,  Joseph,  598 

Meggins,  on  drain  of  silver,  345, 
373 

Messageries  Maritimes,  658 

Metropolitan  Museum  of  New 
York,  334 

Michigan  Central  Railroad  Com- 
pany, 156 

Mill,  John  Stuart,  definition  of 
political  economy,  2  ;  metaphys- 
ical method,  9.  10,  13  ;  theory 
of  international  values,  15,  16, 
17,  18,  23 ;  definition  of  po- 
litical economy,    43  ;    on  value. 


83  ;  theory  of  value  not  sus- 
tained by  market  news  ever,  101, 
180  ;  on  .socialism,  185,  186  ;  on 
decline  of  profits,  194 ;  error, 
195,  199,  200  ;  rent  and  fertility, 
288  ;  monopoly  and  rent,  241 , 
247  ;  theory  of  rent,  248  ;  trans- 
portation affects  rents,  how,  247  ; 
on  labor,  282,  289  ;  on  wage 
fund,  290,  292,  380,  459,  460; 
on  protection  and  revenue,  469, 
470  ;  on  protection,  556,  571,  587, 
628,  634,  696 

Million,  the,  320 

Milton,  on  India,  69 

Minerva,  334 

Mint  at  Bombay,  331  ;  at  Washing- 
ton, 338 

i\Iiscellaneous  statistics  of  Great 
Britain,  32 

Mitchell,  S.  Aug.,  552 

Moffat,  Robert  Scott,  558,  566 

Mongredien,  on  corn  laws  and 
price,  112 

Moody,  laud  and  labor,  157  ;  on  cir- 
culating capital,  198  ;  on  bonanza 
farming,  219,  264 ;  on  inven- 
tions, 264,  265 ;  tone  of  book, 
268  ;  on  great  land-holdings  in 
United  States,  270 

Moore  and  Haskell  (reaper),  264 

More.y — on  Roman  law,  130 

Morrill,  tariff,  470 

Morrison.  Dr.,  540 

Morse,  Prof.,  189,  325 

Mulhall,  36,  178,  273 

Mun— on  foreign  trade,  65 

Museum,  Asiatic,  334  ;  Metropoli- 
tan of  New  York,  334 

N. 

Napoleon  I. — On  Say,  effect  of 
wars  on  capital,  211,  861,  436, 
503,  504,  510,  577,  630,  674 

Nebuchadnezzar,  334 

Nero,  667 

Newbold,  Charles,  first  cast-inni 
plough,  264 

New  England  Crown  Glass  Co., 
64f, 

New  England  Glass  Co.,  641 

New  Jersey  Railroad  and  Trans- 
portation Co.,  154 

"  New  Princeton  Review,"  553 

New  York  Central  Railroad  Co., 
155 


PERSOXAL  INDEX. 


X  X  \  1 1 


"  I^ew  York  Tribune"  on  funds 
of  Free  Trade  League,  604 

Newton,  Sir  Isaac,  215,  571 

Nicholas,  Czar,  527 

Niebuhr,  139 

Nimmo,  James,  jr..  Statistician 
Department  of  Agriculture,  106  ; 
railway  freiirhts.  221 

"Nineteenth  Century,"  484,  487. 

North,  EdAyard  P.,  657 

North,  Lord,  408 

"  North  American  Review."  657 

Northumberland,  Duke  of,  270 

Northern  Pacific  Piaihvaj'  Co.,  157 

Nott  and  Gliddon,  33 

Nourse,  Joel  (plow),  264 

O. 

Oberhampf,  674 

O'Hara,  Gen.  James,  577,  578.  639, 

640 
Ohio  Agricultural  Report  on  wheat 

products,  254 
Old  Testament,  453 
Oriental  and  Levant  Trading  Co., 

490 
Ossian— enduring  quality  of  high 

art,  73 
Overend.  Gurney  &  Co.,  in  crisis 

of  1865,  389 


Paris  3Ionetary  Conference,  336 

Parliament  Committee  on  Decline 
of  Silk  Manufacture,  636,  637 

Parliament  Committee  on  Contract 
Packets,  657 

Parliamentary  debates,  555  ;  Han- 
sard, 657 

Pascalis,  Dr.  Felix,  632 

Patent  oflice,  204 

Patroclus,  334 

Patterson,  R.  IT.,  ciisis  of  1865  in 
England,  389 

Patterson,  William  T..  secretary 
of  Dominion  Board  of  Trade, 
665 

Paul  (St.),  on  community  of  goods, 

Paul,   inventor   of  roller   spinner, 

681 
Peacedale    woolen     mainifactory, 

313 
Peel,  Sir  Robert,  16,  638 


Pell,  Read  and,  on  American  Agri- 
culture, 250 

Pennsylvania  ATool  Growers'  As- 
sociation, 680 

Peuusylvania  Railroad  Co.,  156 

Pericles,  547 

Perry,  A.  L.,  56  ;  rejects  "wealth," 
43  ;  defines  value,  i:0  ;  on  labor, 
282,  557;  his  free-trade  methods, 
571,-603,  584,  587,  589,  591,  592, 
594,  595,  599,  600, 

Perry,  Commodore,  553 

Peter  the  Great,  527 

Phelps,  Dr.,  153 

Phillips,  Wendell,  on  moral  import 
of  good  Avases,  583 

PilLsbury  Floiir  Mills,  313,  314 

Pitt,  William,  408,  410 

Pizarro,  331 

Plato,  Republic,  131 

Pliny,  278,  609 

Plowden's  Review  on  Ireland,  492, 
493 

Plumbing,  nine  firms  dealing  in, 
621 

Plunkett,  Lord,  on  Ireland,  492 

Plutarch,  50,  138 

Political  Economj^  Cyclopaedia  of, 
330 

"  Political  Science  Quarterly,"  465 

Polo,  Marco,  545 

Pope,  xVlexander,  404 

Poor,  Henry  v.,  Railway  Manual, 
145,  157 

Pope,  Alexander,  404 

Porter,  Robert  P.,  on  silk,  632, 
635,  636,  685 

Portland,  Duke  of,  land,  2^0 

Pottinger,  Sir  Ilenrj-,  534 

PowisrEarl  of,  270 

Prendruft,  Gen.,  on  India,  485 

Press,  New  York,  466 

Price,  Bonamy,  9,  17  ;  on  ]\Ial- 
thus'  law  of  population,  230  ; 
on  rent,  243  ;  his  unconscious 
humor,  292  ;  on  crises,  378,  379  ; 
on  protection,  556,  557  ;  on 
]\Iiirs  infidelity  to  free  trade, 
557,  558  ;  on  agricultural  hier- 
archy, 559 

Price,  Mr.,  of  Pittsburgh,  address, 
448 

Q. 

"Quarterly  Review,"  331 


X  X  V  1  u 


PERSONAL  INDEX. 


"Polilical   Science    Quarterly,"' 
4(i5 
(.^uelelet,    A.,   on  crime,  441,  444, 
445 

R. 

Railway  Commissioners'  Report 
of,  of  Illinois,  178,  811 

Rae,  John — produce  of  England, 
177 

Raikes,  Postmaster-General  of 
England,  658 

Read  and  Pell— report  of,  on 
American  Agriculture,  250 

Reavis,  L.  U.,  608 

Redlield,  H.  T.,  on  ratio  of  homi- 
cides to  population,  34 

Reed's  History  of  Sugar,  505 

Repealer's  Manual,  Battersley's, 
493 

Report— of  Reed  and  Pell,  250  ; 
Mass.  Labor  Bureau,  314  ;  Paris 
Monetary  Conference,  336 ; 
Treasury,  388  ;  on  local  taxes  in 
England,  477 ;  of  Parliament 
select  committee  on  scientific 
instruction,  596 ;  of  committee 
of  Congress  on  manufactures, 
605  ;  of  committee  on  packets, 
657  ;  of  committee  on  salt,  694 

Revenue  Reform  Club  of  Brook- 
lyn, 590 

Reviews — Quarterly,  331  ;  Plow- 
den's,  491,  493 ;  Annales  de 
Chimie,  503  ;  Revue  des  Deux 
Mondes,  528  ;  International,  538 

Ricardo,  David,  4  ;  definition  of 
political  economy,  5,  9 ;  his 
method,  16 ;  on  value,  80 ;  no 
absolute  standard  of  value,  83  ; 
relation  to  Karl  Marx's  socialism, 
88,  91  :  on  wages,  170,  180  ;  iron 
law,  185,  199  ;  rent  and  fertility, 
238,  289,  240;  theory  of  rent, 
243  ;  Carey  criticises*  Ricardo, 
247 ;  on  labor's  price,  289,  579, 
645 

Richard  Coeur  de  Lion,  646. 

Ritter — as  cited  by  Roscher,  50,  53 

Roberts,  Ellis  H.,  on  revenue,  453 

Robertson — community  of  goods 
among  Aztecs,  50 

Rochefort,  50 

Roederer,  22 

Roebuck,  Mr.,  408 


R(jgers,  J.  Thorold — as  to  rates  of 
wages,  166  ;  on  protection,  453, 
556,  657 

Roscher,  2  ;  definition  of  polilical 
economy,  4,  22  ;  definition  of 
wealth,  42,  43 ;  on  community 
of  goods,  49,  50,  51,  52,  53;  on 
economic  labor,  64 ;  definition 
of  value,  80  ;  on  farm  profit,  178, 
189  ;  on  rent,  240,  241  ;  on  labor, 
288;  on  money,  330,  569;  on 
protection  as  steadying  prices, 
570 

Rosconi,  Count,  336 

Rothschild,  Baron  A  de,  on  gold 
and  silver,  864 

Rutland,  Duke  of,  laud,  270 


S. 


S'akyamuni,  550 

Saladin  the  Saracen,  646 

Salem,  town  of  (Mass.),  on  glass, 
639 

Salisbury,  Marquis  of,  on  free 
trade,  555,  557 

Salt,  Committee  on,  694 

Sampson  &  Bros.,  importers,  605 

Sands  &  Co.,  A.  B.,  importers, 
604 

Sands,  Mahlon,  secretary  Free 
Trade  League,  604 

Say,  J.  E.,  8,  9,  82,  503,  514 

Say,  Leon,  503 

Schieffelin,  William,  importer, 
605 

Schiller,  48 

Schliemann,  Dr.  645 

Scientific  Instruction,  report  of 
committee  on  American  manu- 
factures, 596 

Scott,  Sir  Walter,  284,  646 

Scrivenor^Histoi'v  Iron  Trade, 
648 

Segun,  Karamsin  and  Tooke  on 
Russia,  528 

Senate  Finance  Committee's  com- 
pilation, 644,  648 

Senior,  on  law  of  value,  94  ;  on 
farm  profits,  178 

Sesostris,  437,  447 

Seward,  W.  H.  38 

Seward,  Jlinister,  550 

Shadwell,  J.  L.,-on  mercantile 
school,  18  ;  on  effect  of  repeal  of 
corn   laws   on  prices,  118,  334  ; 


PER>>OXAL  INDEX. 


xxix 


on  tobacco  fax  in  England,  480  ; 
on  spirits,  483 
Shakspeare,  166,  400,  444 
Shearman,  Thomas  G.,  611,  612 
Shelburne,  Lord,  ministry,  408 
Sheridan,  Richard  Brinsley,  237 
Sidgwick,    Prof.    Henry,    15,    16  ; 
definition  of  political  economy, 
43  ;    on    wealth,    46  ;  definition 
of  value  of  credit,    67  ;  on  the 
two  forms  of  wealth,  92  ;  agree- 
ment with  Jevons  and  Gossen, 
94  ;  on    wealth,    205  ;  on    rent, 
343  ;    on    money,   329  ;  on  pro- 
tection,  557,    561,  562,  563,  566, 
594  ;  on  import  duties,  620,  664 
Siemens,  189 
Sismondi,  330 

Smith,  Dr.  Adam,  2  ;  Definition 
of  political  economy,  5,  7  ;  of 
wealth,  42,  43  ;  absence  of 
in  savage  life,  48  ;  Definition  of 
value  as  due  to  labor,  79,  80  ;  as 
cited  by  Mc  Leod  on  value,  82  ; 
on  value,  82;  criticised, 83,85,  87  ; 
relation  to  Socialism,  88  ;  theory 
of  value  opposed  by  Jevons,  99  ; 
in  conflict  with  current  market 
reports,  101  ;  on  division  of 
labor,  136  ;  his  theory  of  wages, 
166,  170  ;  on  agricultural  I'eut, 
178  ;  on  sharing  between  capital 
and  labor,  179  ;  on  interest,  180  ; 
on  nite  of  profit,  192  ;  on  farm 
profit,  192,  193  ;  on  labor,  199, 
200  ;  on  division  of  labor,  219  ; 
on  retinue  of  servants,  225  ;  on 
wages  in  American  colonies, 
227  ;  on  rent,  238  ;  definition  of 
labor  vague,  282,  288  ;  on  wages, 
295,  298  ;  on  labor  in  China, 
298  ;  in  London,  299,  323  ;  on 
money,  345  ;  relative  value  of 
gold  and  silver,  345,  356,  373  ; 
on  taxes,  457-460,  467,  474  ;  on 
France  and  protection  in,  500, 
503,  544  ;  on  protection,  555, 
556,  570,  572 
Smith,  Gideon  B  (silk),  632 
Smith,  Samuel,  on  India,  66 
Smithsonian  Institution,  253 
Society  for  Establishment  of  Use- 
ful Manufactures,  640 
Soetbeer,  Prof.,  363,  366,  367 
Sok)mon,  704 
SoutJiern  Pacific  Co.,  158 


Spear  &  Jackson,  steel  saws,  Shef- 
field, Eng.,  605 

Spencer,  Herbert,  136 

Spinner,  General,  669 

Springer,  Hon.  William,  of  Illi- 
nois, 25,  682 

Stanhope,  Lord,  555 

Stanley,  Henry  M.,  contract  with 
his  men,  165  ;  natives  on  Congo, 
333,  703 

Statistical  account  of  British  Em- 
pire, 177 

Staunton,  Sir  G.,  538,  539 

Stephen,  Leslie,  17 

Stevens,  Thaddeus,  38 

Stewart,  A.  T.,  181,  195,  215,  226, 
292 

Stewart,  Hon.  William,  38 

Stewart,  definition  of  political  econ- 
omy, 7 

Streator,  tr.  of  Kolb  (see  Kolb) 

Strabo  on  community  of  goods 
among  the  Scythians,  50 

Sullivan,  A.  M.,  274 

Sullivan,  Sir  Ed.,  558 

Sumner,  Hon.  Charles,  38 

Sumner,  Prof.  William  G.,  21 

Supreme  Court  of  the  United 
States,  141 

Swank,  James  M.,  645,  647,  648, 
649,  650 


Tariff,  Senate  Finance  Committee, 
compilation  of,  644,  648 

"  The  Academy,"  490 

The  American  News  Co. ,  604 

"The  Chicago  Tribune,"  593 

"The  Commercial  Bulletin,"  600 

"The  Federalist."  409 

"The  Free  Trade  League,"  604 

"The  London  Times,"  596 

"The  Million,"  320 

The  Mint  at  Bombay,  331 

"The  People's  Pictorial  Taxpay- 
er," 604 

"The  Tribune,"  New  York,  529, 
604 

"The  Textile  Record,"  635 

Thiers,  503,  510,  577,  674 

Thomas,  Philip  E.,  first  railwavin 
the  United  States,  150 

Thomitson  &  Kendall,  farm  of,  270 

Tlmrnton,  Mr.,  15,  1(1  ;  (in  price, 
96  ;  on  labor,  292 


XXX 


PERSONAL  INDEX. 


Tliuovdides,  on  division  of  land, 

"Times,"   London,  on   American 

iron  and  steel,  596 
Toledo     Steel    Works,    Sheffield, 

En  inland,  604 
Tooke,  on  price,  96,  113,  115,  116, 

117,  889 
Tooke — Karamsin,  T.,  and  Segim 

on  Russia,  528 
Toombs,  Senator  Robert,  30,  657 
Torrens,  on  profit,  178  ;  on  wages, 

185 
"Tribune,"  The,  of   New  York, 

529,  604 
Tubal  Cain,  645 
Turgot,  501,  503 

U. 

Union  Pacific  Railroad  Co.,  157 
L  nited  States— department  of  agri- 
culture, 252,  256  ;  money,  330  ; 
treasury  certificates,  335  ;  mint, 
338  ;  debt,  354  ;  treasury  reports 
on  prices,  387  ;  systems  of  taxa- 
tion, 468 ;  customs  compared 
with  Great  Britain,  482  ;  consu- 
lar reports,  499,  506,  523 
University  of  Cambridge,  620 

V. 

Van  Wart  and  McCoy,  New  York, 
agents,  605 

Van  Wart,  Son  ct  Co.,  Birming- 
ham, 605 

Vanderbilt,  C,  189,  217,  2C0,  226, 
305,  397 

Vedas  of  India,  668 

Victoria,  Queen,  influence  of  on 
government,  410 ,  statute  of  13 
Vict,  on  tobacco  tax,  480 

Victor  Emmanuel,  439 

Villard,  Henry,  157 

Vogeler,  Consul-general,  report  on 
sugar,  506 

Von  Beust,  Baron,  577,  630 

Von  Robais,  673 

W. 

Wade,  John,  555 

Wagner,  Boehra  &,  548 

AValker,  Amasa,  6 

Walker,  F.  A.,   on  value,  80  ;  on 

wages  and  profits,  294 ;  money, 

329,  359, 364 
Walker,  Robert  J.,  388,  553  ;  tariff 

of  1846,  388 


Ward,  Lester  F.,  664 

Watt,  24 

Wavland,  Dr.  Francis,  330,  504, 
595 

Webster,  Daniel,  38,  153,  418,  577, 
669 

Washington,  George,  38 ;  as  to 
canals,  140-141,  629 

Warner,  Consul,  528 

"Wealth,"  a  New  York  financial 
journal,  43 

Wells,  David  A.,  438;  on  under- 
valuation, 605  ;  tonnage  taxes, 
654,  666 

Wenck,  on  Roman  tributes,  454 

Western  Association  of  Iron- 
makers,  581 

Western  Pacific  Co.,  158 

Whateley,  Archbishop,  9,  82 

White,  Horace,  380 

Whitney,  Eli,  686 

William  III.,  coinage  under,  342, 
407,  409  ;  on  woolen  manufac- 
ture, 491,  670,  671 

William  and  Mary — coinage,  342  ; 
onAvool,  670 

William  IV.,  act  of.  481 

AYilliam,  Emperor  of  Germauv, 
516,  524,  680 

Williams,  Monier,  331 

Williams,  S.  Wells,  540 

Willoughby,  Lady,  land,  270 

"  Wilmington  Morning  Star,"  698 

Wilson,  Mr.,  658 

Wingate,  Sir  George,  466 

Wood,  Martin,  485 

Wool  Growers'  Association,  680 

Wool  Manufacturers'  As.sociation , 
on  prices  of  wool,  680 

Wright,  Silas,  88 . 

Wright,  Carroll  D.,  39 

Wolowski,  M.  L.,  on  moral  influ- 
ence of  wealth,  49,  78,  528 

Wood,  Jethro,  (plow)  264 

Wrangell,  50 

Wu-ti,  emperor,  276 

Wynn,  Sir  W.  W.,  270 

Y. 

Yarborough,  Earl  of,  270 
Yi  Shon,  Commissioner,  581 
Youn-:-:,  Arthur,  177,  178 
Young,  Dr.  Ed.,  391 

Z. 

Zend-avesta,  668 


Sfe  "  General  Index  "  at  endof  volume. 


PEmCIPLES  OF 


ECONOMIC    PHILOSOPHY, 


CHAPTER  I. 


SCOPE  AND  METHOD. 


1.  Definitions. — Philosophy  is,  in  its  root-ideas,  the  love  or 
pursuit  of  wisdom.  In  modern  usage  it  is  the  body  of  principles 
which  give  logical  coherency  and  harmony  to  science,  as  distin- 
guished from  the  body  of  facts  constituting  the  science  or  branch 
of  knowledge  from  which  the  principles  are  deduced.  An  eco- 
nomic philosophy  would  consist  of  the  logical,  coherent  and  har- 
monious body  of  principles  which  had  been  deduced  from  a  suffi- 
cient observation,  collation  and  comparison  of  economic  facts. 

The  body  of  economic  facts  would  be,  if  systematically  arranged 
and  classified,  the  science.  The  body  of  principles  which  give  logi- 
cal coherency  and  harmony  to  these  facts,  would  be  the  philosophy. 
The  application  of  these  principles  and  facts  to  any  economic  pur- 
pose would  be  the  art  or  practice  of  economy.  Economy  consists 
in  getting  away  from  poverty  and  toward  wealth,  whether  it  is 
attained  by  diminution  of  expenditure  or  increased  production. 
It  may  occur  to  an  individual,  to  society,  or  to  the  state. 

The  term  Political  Economy  has  been  applied  indifferently  to 
the  science,  the  philosophy  and  the  art  of  economy,  whether  as 
practiced  by  individuals,  by  society,  or  by  the  state. 

It  has  the  convenience  which  arises  from  its  capacity  to  take 
on  several  meanings.  As  most  of  these  meanings  will  in  turn 
form  the  topic  of  this  treatise,  it  would  be  in  no  way  improper  to 
be  content  with  the  general  name.  Political  Econom3^  As  that 
name,  by  reason  of  the  many  uses  to  which  it  has  been  put,  has 


2  ECONOMIC  PHILOSOPHY. 

ceased  to  be  a  precise  designation  of  doctrine,  it  is  thought 
proper  to  say  that  among  the  various  works  which  are  offered  to 
the  public  on  Political  Economy,  the  present  aims  particularly  to 
present  the  outlines  of  the  economic  philoso]Dhy  of  existing 
society,  industry  and  government. 

In  the  presentation  of  this  philosophy  in  its  outlines,  so  many 
facts  are  necessary,  that  to  many  readers  it  may  seem  more  sci- 
entific than  philosophical — more  an  array  of  facts  than  a  study  of 
principles. 

If,  however,  this  book  successfully  explains  society  to  itself, 
vindicating  its  economic  methods  at  the  bar  of  its  conscience,  then 
it  is  conceived  its  scientific  quality  is  subordinate  to  its  philo- 
sophic— its  facts  are  less  important  than  its  sociodocy.  If  it  helps 
man  to  know  himself,  in  his  three  relations,  as  a  unit  of  society, 
as  a  worker  in  business,  and  as  a  citizen  of  the  state,  its  moral  aim 
rises  far  above  its  scientific;  yet  this  difference  of  aim  does  not 
alter  the  fact  that  the  field  in  which  our  discussions  lie  is  identi- 
cal with  that  which  has  so  long  and  by  so  many  been  designated 
"Political  Economy  "  that  it  would  be  an  unavailing  affectation 
to  attempt  to  change  the  name. 

Political  Economy  treats  of  the  duties  of  the  Government  to  the 
people  as  respects  their  social  well-being,  and  of  the  natural  laws, 
principles  and  truths  which  apply  to  society  as  an  organization 
that  subsists  by  material  means,  growing  if  they  are  supplied  and 
dying  if  tiiey  ai'e  withheld.* 

*.4mto;'fe  ("Politics  and  Economics,"  Bohn's  Class.  Lib.,  p.  1),  defined  politics  as 
the  study  of  the  highest  possible  and  most  excellent  end  and  aim  of  the  perfect  city 
or  state. 

He  said  (Id.  289) :  "  It  is  the  province  of  political  science  to  constitute  a  city  from 
the  very  first,  and  when  constituted  to  turn  it  to  a  proper  use."  But  a  city  "  is  such  a 
collection  of  houses,  land  and  wealth  as  brings  about  an  independent  and  happy  life.'' 
(Id.)  "  As  these  are  the  essence  for  which  men  combine  into  a  city  or  state,  evident  y 
economics  are  prior  to  politics  in  the  order  of  nature ." 

Adam  Smith  defined  political  economy  only  in  his  title,  viz.:  "  An  inquiry  into  the 
nature  and  causes  of  tlie  wealth  of  nations." 

Roscher{so\.  1,  p.  87,  "  Polit.  Econ.  by  Lalor  "),  says.-  "  By  the  science  of  national  orpo 
litical  economy  we  understand  the  science  which  has  to  do  with  the  laws  of  the  develop 
ment  of  the  economy  of  a  nation,  or  with  its  economic  national  life.  Like  all  the  polit- 
ical sciences,  or  sciences  of  national  life,  it  is  concerned  on  the  one  hand  with  the 
consideration  of  the  individual  man,  and  on  the  other  it  extends  its  investigations  to 
the  whole  of  human  kind." 

John  ISiuai't  Mill  says.-  "Writers  on  political  economy  profess  to  teach,  or  to 
investigate,  the  nature  of  wealth,  and  the  laws  of  its  production  and  distribution; 
including,  directly  or  remotely,  the  operation  of  all  the  causes  by  which  the  condition 
of  mankind  or  of  any  society  of  human  beings,  in  respect  to  this  universal  object  of 
human  desire,  is  made  prosperous  or  the  reverse." 


UNITt  OP  LA  ir.  3 

The  broadest  law  of  being,  of  which  every  plant,  animal  and 
mind  are  alike  illustrations,  is  that  growth  arises  from  an  ability 
m  the  individual  to  assimilate  nutrition  in  excess  of  its  expendi- 
ture. This  is  equivalent  to  making  a  profit  out  of  its  environ- 
ment. A  person  walking  through  a  forest,  which  is  a  city  of 
vegetation,  where  tree-life  is  forced  against  itself  most  compactly, 
observes  that  all  but  the  outer  and  top  limbs  die  for  want  of  light. 
They  can  not  make  a  profit  out  of  their  environment  sufficient  to 
supply  their  waste.     The  grass  in  the  field,  and  the  birds  of  the 

Henry  C.  Carey  says :  "  Social  science,  treating  of  man  in  his  efforts  for  the  main- 
tenance and  improvement  of  hia  condition,  may  be  defined  as  being  the  science  of  the 
laws  which  govern  man  in  liis  efforts  to  secure  for  himself  the  highest  individuality, 
and  the  greatest  power  of  association  with  his  fellow  men.  .  .  .  Man,  the  molecule 
of  society,  is  the  subject  of  social  science.  .  .  .  Of  all  the  departments  of  knowl- 
edge social  science  is  the  most  concrete  and  special,  the  most  dependent  On  the  earlier 
and  more  abstract  departments  of  science,  the  one  in  which  the  facts  are  the  most  diffi- 
cult of  collection  and  analysis,  and  therefore  the  last  to  obtain  development.  Of  all, 
too,  it  is  the  only  one  that  affects  the  interests  of  men,  their  feelings,  passions,  preju- 
dices, and  therefore  the  one  in  which  it  is  most  difficult  to  find  men  collecting  facts  with 
the  sole  view  to  deduce  from  them  the  knowledge  they  are  calculated  to  afford."— Soc. 
Sci.  Cond.,  by  Mc/\ean,pp.  47,  37,  33. 

Fawcett  (Henry)  says :  "  Political  economy  is  concerned  with  those  principles  which 
regulate  the  production,  the  distribution,  and  the  excliauge  of  wealth." — Manualof  Pol. 
Econ.,p.  4. 

5a«/!a<  ("Harmonies  of  Political  Economy,"  by  Frederick  Bastiat,  by  Stirling,  p. 
67),  says :  "  The  subject  of  political  economy  is  man.  But  it  does  not  embrace  the 
whole  range  of  liumau  affairs.  The  science  of  morals  has  appropriated  all  that  comes 
within  the  attractive  regions  of  sympathy  —  the  religious  sentiment,  paternal  and 
maternal  tenderness,  flJial  piety,  love,  friendship,  patriotism,  charity,  politeness.  To 
political  economy  is  left  only  the  cold  domain  of  personal  interest.  This  is  unjustly 
forgotten  when  economic  science  is  reproached  with  wanting  the  charm  and  miction 
of  morals.  How  can  it  be  otherwise  ?  Dispute  its  right  to  existence  as  a  science,  but 
don't  force  it  to  counterleit  what  it  is  not  and  cannot  be.  If  human  transactions  which 
have  wealth  for  their  object  are  vast  enough,  complicated  enough,  to  afford  materials 
for  a  special  science,  leave  to  it  its  own  attract  one,  such  as  they  are,  and  don't  force  it 
to  speak  of  men's  interests  in  the  language  of  sentiment.  .  .  .  Take  a  lyre  and 
chant  such  themes!  As  well  might  Lamartine  sing  his  odes  with  the  aid  of  the  Loga- 
rithm tables!  " 

Henry  George  ("  Progress  and  Poverty,"  LoveH'o  edition,  p.  12),  says :  "  This  asso- 
ciation of  poverty  with  progress  is  the  great  enigma  of  our  tiuies.  It  is  the  central  fact 
from  which  spring  industrial,  social  and  political  difficulties  that  perplex  the  world,  and 
with  which  statesmanship,  and  philanthropy,  and  education,  grapple  iu  vain.  .  .  . 
It  has  not  yet  received  a  solution.  It  must  be  within  the  province  of  political  economy 
to  give  such  an  answer." 

Henry  Dunning  McL(od  says  "it  is  the  science  of  exchanges  or  of  values,"  thus 
omitting  from  it  all  relation  to  politics,  nations  or  government.— Pri^fiy^/cf  of  Econ. 
Phil.,  vol.  1,  ;;,  103. 

Coi/o/i  ("  Public  Economy,"  p.  20),  says  :  "Political  economy  is  the  api)lication  of 
knowledge  derived  from  experience  to  a  given  position,  to  given  interests,  and  to  given 
institutions  of  an  independent  state  or  nation,  for  the  increase  of  public  and  private 
wealth." 

iSif(/t/("Converiatioin  in  Pol.  Econ."  ),  says  it  "  is  primarily  occupied  with  the  la.vs 


4  ECONOMIC  nilLOSOPnY. 

air,  the  artist  studying  at  his  easel,  and  the  banker  in  his  directors' 

room,  the  sewing  girl 

Sewing  at  once  with  a  double  thread 
A  shroud  as  well  as  a  shirt ; 

and  even  the  charity  or  aid  society  that  seeks  to  carry  relief  to 
the  poor,*  all  live  by  this  same  law — of  making  income  exceed 
expenditure.  No  coral  insect  can  live  without  it  and  the  Roman 
Empire  could  not  get  above  it. 

In  affirming  this  unity  of  law  betw^een  Economic  Nature  and 
Physical  Nature,  we  do  not  affirm  whether  the  life  which  thus 
adapts  itself  to  its  environment  is  the  cause  or  the  effect  of  the  or- 
ganism in  which  it  acts.  The  materialist  says  that  life  is  an  effect 
of  its  organism.  The  supernaturalist  says  that  the  soul  is  of  an  ori- 
gin above  and  anterior  to  physics,  and  is  the  immediate  cause  of  the 
laws  which,  in  the  living  organism,  contrast  with  the  laws  which 
govern  mere  inanimate  matter.  Upon  this  issue  the  economist  in  no 
way  pronounces,  when  he  sets  out  with  the  statement  that  in  eco- 
nomics as  in  physics  there  are  living  organisms,  viz  :  the  individ- 
^lal— society— the  State— the  world  of  States  ;  that  all  these  grow 
and  decay  in  their  economic  aspect,  and  that  the  law  of  the 
growth  of  each  is  the  same  as  in  physics,  viz :  that  it  is  dependent 
on  the  power  of  the  individual  to  absorb  more  than  it  expends— 
to  make  income  exceed  waste. 

Political  economy  is  the  study  of  the  natural  laws  which  gov- 
ern the  supply  or  exhaustion  of  the  means  whereby  the  organism 
called  society  grows,  and  of  the  reasons  of  its  decline  and  dissolu- 
tion, t 


natural  and  social,  which  govern  In  the  production  and  distribution  of  wealth  in  mate- 
rial things,  with  a  constant  outlook  to  the  general  welfare  of  society,  so  far  as  that 
welfare  depends  upon  the  necessaries,  comforts  and  luxuries  of  physical  life." 

Ricardo  fays:  '-To  determine  the  laws  which  regulate  this  distribution  (of  the 
whole  produce  of  the  earth,  all  that  is  derived  from  its  surface  by  the  united  applica- 
tion of  labor,  machinery  and  capital,  between  the  three  classes  of  the  community, 
namely,  the  proprietor  of  the  land,  the  owner  of  the  stock  or  capital  necessary  for  its 
cultivation,  and  tlic  laborers  by  whose  industry  it  is  cultivated),  is  the  chief  problem  in 
political  economy."— P/'«/ace  to  Principles.     Works,  p.  5. 

*  Recently  in  New  York  city,  an  Episcopal  clergyman  named  Crowley  was  sent  to 
the  penitentiary  as  a  swindler  for  purporting  to  run  an  orphan  asylum  without  having 
the  means  to  feed  his  orphans,  being  unsuccessf  til  in  begging  them. 

+  Roscher  says  :  "  The  public  economy  of  a  people  has  its  origin  simultaneously  with 
the  people.  It  is  neither  the  invention  of  man  nor  the  revelation  of  God.  It  is  the 
natural  product  of  the  faculties  and  propensities  which  make  man  man.  It  grows  with 
the  nation,  with  the  nation  it  blooms  and  ripens,  and  finally  it  declines  with  the  \iw- 
Itler'—PolU.  Econ.,  Lalor,  84. 


CONFLICTS  OF  ECONOMISTS.  5 

2.  Is  Political  Ecouoiiiy  a  Science. — Society  is  made  up 
in  part  of  principles  of  human  nature  which  are  lasting,  and  of 
manifestations,  which  change  every  hour.  It  combines  much 
that  is  transitory  with  somewhat  that  is  permanent.  To  nearly' 
every  economist  his  own  system  lias  the  exactitude  of  demonstra- 
ble science  and  the  conclusiveness  of  a  final  word.  Yet  it  is  but 
candor  to  admit,  that  as  his  work  goes  out  to  other  economists, 
it  is  like  a  prisoner  thrown  into  a  deu  of  lions.  They  dismem- 
ber it,  and  its  fragments  appear  in  the  next  edition  of  their  own 
works,  contradicted  and  refuted  hy  piecemeal,  as  having  con- 
tained just  enough  nutrition  to  tempt  them  to  apply  to  it  the 
gastric  juice  of  dissolving  criticism.  So  Adam  Smitli  is  modified, 
by  Kicardo,  Ricardo  by  McCulloch,  and.  all  by  Mill,  Carey, 
McLeod  and  Jevous.  In  this  discord  the  true  science  of  politi- 
cal economy  seems  a  dissolving  vision.  Each  will  say  there  is  a 
science,  but  when  search  is  made  we  find  the  science  of  each 
consists  largely  of  that  which  to  others  is  only  his  errors.  The 
usual  notion  of  a  science  is  of  a  body  of  truth,  beginning  with 
certain  exact  definitions  which  all  men  who  give  it  their  study 
will  accept,  proceeding  thence  to  a  system  of  classified  facts, 
which  cover  a  well-defined  sphei'e  of  ]3henomena,  and  leading 
up  generally  to  principles  or  generalizations,  which  are  accepted 
as  applying  to  al^  these  facts.  In  this  sense  we  cannot  declare 
political  economy  a  science  save  by  first  expelling  from  the 
temple  of  science  all  Avho  dispute  our  definitions,  our  classifica- 
tions of  facts,  or  our  principles.  Yet  they  are  sure  to  be  modified 
even  by  our  friends  and  disciples. 

If  we  include  as  economists  all  men  who  attract  attention  and 
followers  by  their  speculations  concerning  political  economy, 
as  politeness  at  the  sacrifice  of  precision  requires  us  to  do,  politi- 
cal economy  becomes  an  incongruous  babel  of  conflicting  oracles. 
Not  a  solitary  term  in  use  can  be  harmoniously  defined.  One  says 
wealth  is  a  physical  substance,*  one  that  it  is  a  mental  condition,  t 
another  that  it  is  a  ratio  between  two  quantities,!  another  that  it  is 
a  difference  in  power  between  two  attractions,  another  that  it  is  un- 
d!3finable.§  One  defines  labor  as  human  time,  ||  anotlier  as  sacri- 
fice, IF  another  as  productive  force,  **  one  so  as  to  include  the  labor  of 
a  man, ft  but  not  of  a  hoi'se  or  engine,  another  so  as  to  include 
beer  or  cider  working  in  a  barrel,  or  water  falling  on  a  mill- 

*Fawcett,  Manual,  p,  0.       +  Viz.,  of  power,  capacity,  and  ability.    Carey,  Elder. 
%  McLeod.     §  Perry,      ||  Karl  Maix.      T  Adam  Smith.      **  McCulloch.      It  Smith. 


6  ECONOMIC  PIIILOSOrnY. 

wheel.*  To  one  credit  is  capital,  and  even  coin  is  a  species  of 
credit.f  To  one  money  is  coined  gold  or  silver, |  to  another  it 
extends  to  bank  notes,  §  to  another  to  cliecks.il  To  one  trade  and 
commerce  are  one;  to  another  they  are  opposites.  To  one  value 
and  utility  are  one ;  to  another  they  are  opposites.  One  says  all 
production  grows  out  of  trade ;  anotlier  that  all  trade  is  a  tax  on 
production,  and  is  itself  unproductive.  Certain  economists,  like 
Smith  and  Mill,  enter  on  their  work  without  defining  many 
terms,  assuming  either  that  their  meaning  is  too  well  known  to 
admit  of  being  made  clearer,  or  too  variable  to  admit  of  behig 
fixed  by  definition.  They  use  the  terms  in  several  distinct 
senses  on  every  page,  and  yet  i^est  their  accuracy,  in  tangled  and  in- 
tricate processes  of  reasoning,  on  the  success  their  readers  may 
happen  to  have  in  attaching  to  these  terms,  in  each  of  their  varied 
uses,  the  same  meaning  which  the  writer  attached  to  it  in  that  use. 

Some  have  taken  refuge  in  a  refusal  to  recognize  any  but 
some  small  knot  of  their  own  way  of  thinking  as  economists. 
But  this  is  both  narrow  and  uninstructive.  It  settles  nothing. 
One  says  there  is  a  science  and  it  will  shoi'tly  come.  But 
he  means  "  when  others  come  to  agree  with  me.  I  now  knoiv.''' 
Another,  "It  is  ojily  a  shifting  combat  in  which  the  oppos- 
ing forces  are  equal,  but  decline  to  acknowledge  their  equal- 
ity." But  this  position,  while  it  is  favorable  to  investigation,  is 
fatal  to  conviction,  and  at  war  with  the  singleness  of  truth. 
Whether  political  economy  can  justly  be  called  a  science,  there- 
fore, depends  on  whether  the  word  science  shall  first  be  defined 
as  a  body  of  exact  and  accepted  truth,  or  as  a  collection  of  studies, 
convictions  and  discussions  concerning  matters  of  which  one  man 
is  permitted  to  see  but  a  part,  and  another  man  another  part,  and 
which  in  all  their  relations  summon  together  complications 
of  which  no  man  can  see  the  whole.  If  the  former  view  is 
adopted,  political  .economy  is  not  now  a  science  and  does  not 
seem  likely  soon  to  be  one.  If  the  latter  view  is  held,  then  ])olit- 
ical  economy  is  the  highest,  most  important,  and  most  dilficult 
to  reduce  to  fixity,  oi'  certainty,  of  all  the  sciences. 

The  latter  view  has  the  sanction  of  August  Comte,  whose  very 
profound  classification  of  the  sciences  has  found  general  favor 
among  scientific  men.  He  regards  the  sciences  as  standing  in 
a  complete  logical  oi'der,  beginning  with  mathematics,  which 
involves  the  fewest  elements  and  the  most  certainty,  and  proceed- 

*McCulloch.        tMcLeod.  J  Amnsa  Walker.         §  l\iry.  1  McLeod, 


ITS  AIM  IS  PRACTICAL.  7 

iug  from  thence  through  astronomy,  physics,  chemistry  and 
physiology  to  sociology,  which  is  the  last,  highest,  and  most 
complex  of  the  sciences,  involving  the  most  elements  and  the  least 
certitude.  The  logical  feature  in  this  order  of  the  sciences  con- 
sists in  the  fact  that  each  successive  science  is  made  up  of  all  the 
factors  and  elements  invoh'ed  in  the  preceding  science,  to  which 
it  adds  one  new  element  characteristic  to  itself,  and  each  loses  or 
parts  with  some  of  the  certainty  that  belongs  to  the  preceding 
sciences.  Mathematics  involves  only  the  three  elements  of  ex- 
pansion, duration  and  number,  or  space,  time,  and  quantity,  and 
being  absolutely  simple  is  reducible  to  certainty,  except  in  its 
very  highest  oi^erations.  Astronomy  adds  to  these  thi-ee  ele- 
ments that  of  motion.  Physics  supplies  all  the  qualities  of 
matter.     Biology  adds  life. 

Sociology  combines  man  in  societj^.  What  Comte  here  calls 
sociology",  finds  its  introduction  and  first  principles  in  political 
economy. 

3.  Political  Economy  also  an  Art.* — The  practical  aim  of 
political  economy  is  to  fit  its  students  to  judge  or  predict  with 

*  The  earlier  writers  treat  politicul  econory  more  as  an  art.  Stewart's  "Inquiry 
into  the  Principles  of  Political  Economy,"  publit^hed  17'6~,  says:  "The  s  atesmaa  is 
not  master  to  esttblish  what  form  of  economy  he  pleases.  .  .  .  The  great 
art,  therefore,of  political  economy,  is  for  it  to  adapt  the  different  operations  of  it  to  the 
spirit,  manners,  habits  and  customs  of  the  people,  and  afterwards  to  model  these  cir- 
cumstances so  as  to  be  able  to  iirroduce  a  set  of  new  and  more  useful  institutions. 

"  The  principal  object  of  this  science  is  to  secure  a  certain  fund  of  subsistence  for  all 
the  inhabitants;  to  obviate  every  circumstance  which  may  render  it  precarious;  to 
provide  everything  necessary  for  supplying  the  wants  of  the  society,  and  to  employ  tlie 
inhabitants  fsupposii'g  them  to  be  freemen)  in  such  a  manner]  as  naturally  to  create 
reciprocal  relations  and  dependencies  between  them,  so  as  to  make  their  several  inter- 
ests lead  them  to  supply  one  another  with  their  reciprocal  wants.  .  .  .  Political 
economy  in  each  country  must  necessarily  be  different.  .  .  .  It  is  the  business  of  a 
statesman  to  judge  of  the  expediency  of  different  schemes  of  economy,  and  by  degrees 
to  mod^'l  the  minds  of  his  subjects  so  as  to  allure  thcni  from  the  inducement  of  jirivate 
interest  to  coucur  in  the  execution  of  his  plan." 

This  at  the  present  day  would  be  called  economic  statesmanship  rather  than  political 
economy. 

Nine  years  later  Adam  Smith  still  defined  j)olitical  economy  as  an  art.  In  the  intro- 
duction to  Book  IV.  he  says  :  "  Political  economy  proposes  two  di-tinct  objects  ;  first 
to  provide  a  plentiful  revenue  or  subsistence  for  the  people,  or  more  i)ropcrly  to  enable 
them  to  provide  such  a  subsistence  or  remedy  for  themselves."  (The  later  Manchester 
school  would  have  said  "  to  leave  them  to  provide  sucii  a  subsistence  for  tlnunsi^lves  or 
go  without.")  "  .\nd  secondly,  to  supply  the  state  or  common  weal  v.itha  revenue  suf- 
ficient for  the  public  service.    It  proposes  to  enrich  both  the  i)eople  and  the  sovereign." 

Dndcr  the  full  sway  of  the  laissez  faire  school  serious  efforts  were  made  to  omit 
altogether  the  prefix  "  political  "  as  savoring  loo  much  of  government  interference,  and 
call  the  science  "  Plutolo;ry— the  Science  of  Wealth,"  "  Chrematistics,"  "  The  Art  of 
Traffic,"  "  Catallactjcs,"  etc. 


8  ECONOMIC  PIIILOSOniY. 

gi'eater  accuracy  the  consequences  which  will  ensue  to  the  mate- 
rial welfare  of  the  people  from  certain  courses  of  governmental 
or  social  action.  The  art,  of  which  political  economy  aims  to 
present  the  scientific  theory,  is  economic  statesmanship.  What 
the  sum  of  knowledge  concerning  light  is  to  the  optician  and 
photographer,  that  is  the  sum  of  knowledge  concerning  political 
economy  or  social  science  to  the  statesman  and  legislator.  As 
the  optician  needs  also  to  know  the  nature  of  glass,  so  the  states- 
man needs  also  to  know  the  nature  of  the  people,  and  diplomacy, 
law,  and  many  other  things.  But  political  economy  should  sup- 
ply him  with  the  true  theories  on  which  all  legislation  affecting 
economic  interests  should  be  framed.  And  right  here  we  are  met 
by  the  practical  difficulty  which  makes  the  progress  of  political 
economy  slower  than  would  be  expected  from  the  great  impor. 
tance  of  the  art  to  which  it  is  an  adjunct.  In  no  other  field  of 
scientific  eifort  have  the  rewards  of  the  successful  practice  of  the 
art,  to  which  the  science  supplies  the  theory,  been  so  great  as  to 
preclude  a  master  of  the  art  from  becoming  a  teacher  of  the 
theoiy.  None  other  than  physicians  and  surgeons  of  tried  prac- 
tical skill  would  be  thought  fit  to  teach  medical  science.  Only 
good  practical  lawyers  and  judges  can  teach  law.  Certainly 
no  man  would  undertake  to  teach  watch-making,  or  the  man- 
agement of  a  locomotive,  who  had  never  made  a  watch  nor  run 
an  engine.  Practical  statesmen,  however,  have  seldom  been  also 
educators,  partly  because  college  Avork  devolves  on  scholarly 
men,  to  whom  political  strifes  are  distasteful,  and  partly  since  the 
honors  and  stress  of  a  statesman's  career  leave  him  no  leisure  for 
less  public  duties.  One  could  not  reasonably  ask  a  Pitt  to 
retire  from  the  cabinet,  or  a  Hamilton  from  the  treasury,  to 
become  an  instructor  of  youth;  and  as  to  writers  looking  for 
profits  to  the  sale  of  their  w^orks,  it  is  more  often  those  whose 
books  promise  a  visionary  millennium,  than  those  which  really 
instruct,  that  command  a  ready  sale. 

Napoleon  I.  expressed  the  antagonism  between  practical  states- 
manship aitd  the  theoretical  economists  of  his  time  by  his  course  to- 
wardJ.  B.  Say,  and  by  his  famous  and  forcible  saying  "if  an  em- 
pire were  made  of  adamant,  the  economists  would  grind  it  to  pow- 
der."    Say,  in  turn,  held  views  which  verged  toward  anarchy. 

In  England  the  more  advanced  economists  acknowledge  that 
political  economy  has  fallen  into  odium  because  men  not  ac- 
quainted practically  with  either  statesmanship,  politics  or  indus- 
try, have  sought  to  build  up,  on  a  priori  reasoning,  or  by  means  of 


CA  USES  OF  ERROR.  9 

such  experience  as  is  accessible  to  a  man  not  in  public  life,  a 
speculative  and  metaphysical  body  of  theories  concerning  the 
effects  of  legislation  upoii  business,  as  they  appear  to  men  who 
have  never  been  engaged  in  either  legislation  or  business.  It  is 
therefore  the  only  attempt  ever  made  to  construct  a  science  out 
of  the  criticisms  of  a  body  of  men  who  have  not  practiced  the  art 
whose  practice  they  assume  to  criticise.* 

4.  The  Deduftive— a  priori—  or  Metaphysical  Method. 
— The  method  of  the  a  priori.,  deductive,  or  metaphysical  school 
of  writers  on  economics  consists  in  treating  it  as  a  logic  of 
human  tendencies,  a  plexus  or  network  of  social  probabilities 
dedueible  from  what  are  assumed  to  be  the  well-known  principles 
of  human  nature  acting  on  large  masses  of  men  collectively. 
Mr.  John  Stuart  Mill,  David  Ricardo,  J.  B.  Say,  and  Archbishop 
Whately,  are  leading  masters  of  this  school.  The  style  of  these 
writers  is  usually  the  product  of  then'  assumption  that  political 

*Prof.  Bonamy  Price  of  Oxford  says  ("  Practical  Political  Economy,"  p.  7) :  "  It  is 
theauthority  of  economical  writers  which  is  declining.  This  diminished  weight  is  the 
result  of  their  mode  of  treating  the  problems  of  the  living  world  with  wliich  Political 
Economy  deals.  Men  take  a  shorter  and  a  far  clearer  path  through  their  own  observa- 
tion than  through  the  tangled  jungle  of  scientific  refinements." 

Mr.  C.  S.  Devas,  an  apostle  of  Catholic  Ethics  and  of  Sismondi,  in  a  work  full  of 
learning  and  acuteness  ("  Groundwork  of  Economics  ")  says  :  •'  It  is  time  that  some- 
thing was  done  in  England  either  to  restore  the  declining  credit  of  what  is  known  as 
political  economy,  or  to  replace  that  enfeebled  body  of  doctrine  by  a  worthier  suc- 
cessor." Our  grandfathers  exulted  in  political  economy  as  a  grand  and  beneficent  sci- 
ence, not  the  least  among  the  glories  of  their  age;  our  fathers  respected  it;  and  little 
more  than  twenty  years  ago  it  successfully  withstood  all  the  sharpness  of  Mr.  Raskin's 
reasoning  and  raillery.  But  times  have  changed.  There  are  men  of  intelligence  who 
are  beginning  to  suspect  that  much  of  this  science  is  but  a  colleciion,  partly  of  useless 
discussions  and  idle  declamation,  partly  of  truisms,  partly  of  untruths;  while  the 
anarchy  among  recent  economists  on  the  very  foundations  and  first  principles  of  their 
science,  as  any  one  may  see  in  Mr.  Billon's  recent  work  on  the  "  Dismal  Science,"  is  a 
matter  not  of  suspicion,  but  of  certainty. 

Prof.  Jevons  says  ("  The  Theory  of  Political  Economy,"  Preface  1 ,  vii)  :  "  When  at 
length  a  true  system  of  economics  comes  to  be  established,  it  will  be  seen  that  that 
able  but  wrong-headed  man,  David  Ricardo,  shunted  the  car  of  economic  science  on 
to  a  wrong  line,  a  line,  however,  on  which  it  was  further  urged  toward  confusion  by 
his  equally  able  and  wrong-headed  admirer,  John  Stuart  Mill.  ...  It  will  be  a 
work  of  labor  to  pick  up  the  fragments  of  a  shattered  science  and  to  start  anew,  but 
it  is  a  work  from  which  they  must  not  shrink  who  wish  to  see  any  advance  of  economic 
science." 

Henry  Dunning  McLeod,  discussing  the  Ricardo-Mill  theory,  that  labor  (and  not 
demand)  causes  value,  says  :  "  Surely  we  have  had  enough  of  this  Bedlamite  rubbish, 
and  it  may  be  asked, why  do  we  load  our  pages  with  it?  Simply  for  this  reason,  that  this 
idiotic  staff  is  the  official  political  economy  in  England  at  the  present  day!  This  is 
what  the  candidates  for  the  civil  service  of  India  are  told  to  believe  in  as  the  perfection 
of  hurt  an  wisdom,  and  which  is  still  taught  and  recommended  in  our  universitiee. 
Proh  Fudorr    ("  Principles  Econ.  Phil."  I.,  053.) 


10  ECONOMIC  PHILOSOPHY. 

economy  is  a  branch  of  dialectics.  It  is  marked  on  every  page 
by  the  introductory  phrase,  "Let  us  suppose,"  "If  it  be 
assumed,"  "  If  we  can  imagine,"  "Let  us  now  introduce,"  "It 
would  then  follow,"  "In  some  cases,"  "But  suppose  a  lot  of 
persons,"  "Suppose  an  event  to  occur,"  "They  would  in  general 
then  require,"  "From  these  considerations  (hypotheses)  it  will 
appear,"  etc.  We  may  see  a  truth  in  Mr.  Buckle's  statement  that 
"all  history  is  a  history  of  tendencies."  Though  we  might  pre- 
fer to  say  that  history  gives  the  events,  from  which  tendencies 
are  inferred  by  philosophy.  But  assuming  that  tendencies  are  the 
chief  events  of  history,  it  does  not  follow  that  the  history  even 
of  tendencies  can  be  written  in  sentences  which  begin  with  "Let 
us  suppose." 

Mr.  Mill's  work  on  this  account  omits,  as  either  too  laborious 
or  unnecessary,  any  review  or  analysis  historically  of  any  event, 
or  of  the  practical  working  of  any  economic  theory,  except  as 
we  may  be  willing  to  accept  the  fine  workings  of  his  own  reason- 
ing powers  as  being  identical  with  the  actual  course  of  events. 
His  nearest  approach  to  descriptive  statement  consists  in  occasional 
quotations,  chiefly  from  French  and  German  writers  of  facts  re- 
lating to  the  cottier,  metayer,  and  peasant  proprietaiy  systems  of 
land-holding,  all  introduced  to  illustrate  his  own  impulsive  ad 
captandum  notions  of  how  land  ought  to  be  held,  rather  than  to 
present  in  logical  sequence  the  modes  and  effects  of  existing  sys- 
tems. From  the  standpoint  of  an  historical  investigator  his  book 
is  as  void  of  facts,  in  their  economic  sequence  as  cause  and  effect, 
as  Victor  Hugo's  "Toilers  of  the  Sea,"  or  Charles  Dickens's 
"  Tale  of  Two  Cities."  As  an  exercise  in  pure  dialectics  or  the 
art  of  reasoning,  it  is,  to  a  certain  order  of  minds,  as  fascinating 
as  Plato's  "Dialogues."  But  we  may  come  out  of  it  without 
knowing  whether  the  farmei^s  of  the  United  Kingdom  did  or 
did  not,  in  consequence  of  the  repeal  of  the  corn  laws,  with- 
draw from  cultivating  grain  on  as  much  land  as  would,  if  put 
in  grain  tillage,  have  produced  tlie  quantity  of  grahi  imported; 
or  whether  the  free  importation  of  grain  did  or  did  not  make 
bread  cheaper  or  the  prices  of  breadstuffs  less  fluctuating. 

Not  for  the  purpose  here  of  controverting  Mr.  Mill,  but  simply 
of  presenting  the  objections  to  the  metaphysical  or  deductive 
metliod,  we  turn  to  his  theory  of  international  values.*  He  tells 
us  there  that  "the  values  of  commodities  produced  at  the  same 


*  " Political  Ecouomy,"  vol.  2,  chap,  xviii.,  p.  137. 


MILLS  METHOD  MISLEADS.  i  I 

place  .  .  .  depend  .  .  .  upon  tlieir  cost  of  production." 
In  the  spaces  marked  by  points,  Mr.  Mill  had  inserted  two 
unmeasurable  quantities  to  be  deducted  from  his  main  proposi- 
tion. These  were:  (1)  "Jn  places  sufficiently  adjacent  for  capital 
to  move  freely  between  them."  (2)  "Temporary  fluctuations 
apart."  Who  knows  what  is  a  free  movement  of  capital  as  dis- 
tinguished from  a  constrained  movement  of  capital  ?  Who 
knows  what  places  ai-e  sufficiently  adjacent  for  a  free  movement 
of  capital  ?  If  values  of  commodities  depend  on  their  cost  of 
production,  then  the  fluctuations  in  value  must  also  depend  on 
their  cost  of  production.  For  of  what  worth  would  an  explana- 
tion of  values  be  which  would  not  explain  fluctuations  in  value  ? 
But  if  fluctuations  in  value  depend  on  cost  of  production,  then 
cost  of  pi'oduction  (of  a  single  commodity)  must  itself  be  a  fluc- 
tuating quantity.  But  this  is  absurd,  for  when  a  thing  has  been 
once  produced  the  cost  of  production  of  that  individual  thing  is 
fixed,  and  cannot  (;luinge.  The  only  element  which  can  fluctu- 
ate is  the  cost  of  pi'oducing  other  things  like  it.*  If  Mr.  Mill 
means  by  "cost  of  production  "  the  cost  of  producing  the  indi- 
vidual thing  to  which  the  value  attaches,  then  the  value  of  every 
object  would  be  fixed  on  the  completion  of  it  as  a  commodity, 
and  there  could  be  no  fluctuations  in  value  either  temporary  or 
permanent.  If  he  means  by  cost  of  production  the  cost  of  pro- 
ducing other  things  essentially  like  the  thing  to  Avhich  tlie  value 
attaches,  then  values  can  vary  with  every  new  cost  of  produc- 
tion, and  there  is  no  ground  for  a  distinction  between  j)exnnanent 
and  temporary  fluctuations. 

Eliminating  these 'elements  of  fog,  let  us  see  if  we  i*eally  grasp 
a  tangible  idea  when  we  say  that  values  of  any  kind  or  in  any 
place,  are  fixed  hj  their  cost  of  production.  Who  can  measure 
one  single  absolute  cost  of  production  in  its  entirety  ?  The  cost 
of  production  of  ray  pen,  when  estimated  absolutely  as  a  cost  to 
society,  involves  a  cost  of  producing  the  gold  from  the  mine,  and 
the  cost  of  producing  the  man  who  dug  the  gold,  the  implements 
with  which  he  dug  it,  and  the  process  by  which  the  gold  was  sep- 
arated, assayed,  melted,  and  Avorked  up.  The  cost  of  the  handle 
involves  the  cost  of  cutting  the  tree  from  which  it  was  taken, 
and  of  inventiiig  and  perfecting  the  ax  with  which  it  was  cut, 
and  the  iron  and  steel  manufacture  which  rendered  it  possible. 
Cost  to  an  individual  is  measurable,  because  as  to  him  the  means 

♦  This  is  styled  by  Mr.  Carey  "  the  cost  of  reproduction." 


]2  ECONOMIC  riJILOSOPUY. 

with  whicli  he  works  have  a  measurable  money  cost.  But  cost 
to  society,  in  kibor,  is  immeasurable,  because  the  attempt  to  meas- 
ure it  involves  a  measui'ement  of  all  the  antecedent  labor  which 
culminated  in  it  whetlier  mediately  or  immediately.  Tlie  cost  to 
an  individual  has  a  beginning-  when  he  pays  for  certain  raw 
materials.  But  society  lives  perpetually,  works  continually,  and 
has  no  antecedent  worker  to  furnish  it  with  any  raw  materials. 
Each  attempt  to  compute  a  cost  of  production  to  society  goes  back 
to  the  time  wheta  society  began  the  labors  leading  up  to  it — 

"When  Adam  delved  and  Eve  pprn." 

Hence  in  referring  us  to  cost,  to  society,  of  the  production  of  the 
thing  valued,  as  the  source  of  the  value  of  the  commodity,  Mr. 
Mill  refers  us  to  an  immeasurable  quantity*. 

He  then  proceeds  to  "suppose  that  ten  yards  of  broadcloth 
cost  in  England  as  much  labor  as  fifteen  yards  of  linen,  and  in 
Germany  as  inuch  as  twenty." 

What  does  he  mean  here  by  labor  ?  The  mere  time  of  a  human 
being  without  regard  to  age,  sex,  skill,  or  fitness  ?  Or  does  he 
mean  the  appropriate  application  of  ])hysical  force  to  textile  fibers 
to  produce  cloths  ?  If  he  means  the  former,  then  ten  hours'  work 
of  a  Hindoo  coolie,  without  other  mechanism  than  a  hole  in  the 
ground  to  put  his  lo-v;  in,  and  a  tree  overhead  to  hang  his  yarn 
on,  would  be  expected  to  measure  against  an  Englishman  work- 
ing at  his  loom.  If  he  means  the  latter,  then  a  machine  in  Eng- 
land, without  any  man  in  it,  but  producing  many  yards  an  hour, 
might  be  measured  against  a  man  without  a  machine  working 
days  to  produce  a  yard.  He  then  says,  "When  each  country 
produced  both  commodities  for  itself,  ten  yards  of  cloth  exchanged 
for  fifteen  yards  of  linen  in  England  and  for  twenty  in  Germany. 
They  will  now  exchange  for  the  same  number  of  yards  of  linen 
in  both.  For  what  number  ?  If  for  fifteen  yards,  England  will 
be  just  as  she  was,  and  'Germany  will  gaui  all.  If  for  twenty 
yards,  Germany  will  be  as  before  and  England  will  derive  the 
whole  of  the  benefit." 

He  then  proceeds  with  an  intricate  process  of  metaphysical 
disquisition  of  exactly  the  same  order,  and  of  no  more  value 
than  those  which  the  schoolmen  of  the  middle  ages  gave  to  the 
question,  "What  would  happen  when  an  irresistible  body  in 
motion  comes  into  collision  with  an  impenetrable  substance  at 

rest." 
From  the  view  of  political  economy  taken  by  the  historical 


BAHBEN  RESULTS.  13 

school  of  economists,  in  which  Adam  Smith,  Roscher,  Henry  C. 
Carey,  and  Henry  Dunning-  MacLeod  are  prominent,  the  exer- 
cise in  mental  gymnastics  found  in  Mr.  Mill's  chapter  on  inter- 
national values  does  not  lie  within  the  domain  of  economic 
science — 

1.  Because  it  is  a  supposititious  case,  and  economic  science 
must  rest  upon  facts. 

2.  Because  it  is  a  cloudy,  foggy,  and  indefinable  case,  expressly 
made  to  defy  human  powers  of  analysis,  and  which  depends  for 
its  claim  to  respect  not  upon  the  fact  that  it  communicates  knowl- 
edge, but  that  it  resists  in  a  moderate  degree  the  effort  to  prove 
that  its  author  slipped  in  his  logic. 

3.  Because  it  becomes  an  impossible  case  if  its  terms  are  made 
so  tangible  by  construing  them  in  a  definite  way,  as  to  give 
them  a  definite  meaning.  It  is  not  i^ossible  that  in  two  civilized 
industrial  nations,  having  facilities  for  production  essentially 
alike,  an  inequality  of  the  kind  suj)posed  in  the  rate  of  exchanging 
broadcloth  against  linen  could  exist,  unless  England  and  Gei-many 
were  both  cut  off  from  all  trade  in  broadcloth  and  linen  and  their 
equivalent  fabrics,  not  only  from  each  other,  but  from  all  other 
countries. 

When  Mr.  Mill  has  waded  through  the  morass  of  what  he  calls 
"the  windings  and  entanglements  of  complex  international 
transactions,"  he  comes  out  at  last  with  what  he  calls  a  "law  of 
the  equation  of  international  demand."  He  states  it  thus:  "The 
produce  of  a  country  exchanges  for  the  produce  of  other  countries 
at  such  values  as  are  required  in  order  that  the  whole  of  her  exports 
may  exactly  pay  for  the  whole  of  her  imports."  What  have  we  got 
here  save  the  truism  that  a  countiy,  like  an  individual,  can  only  buy 
what  it  pays  for,  or  more  simply,  in  all  exchange  there  is  an  ex- 
change. Of  course,  to  make  this  true,  it  is  necessary  to  regard 
the  exportation  of  gold  and  silver  in  such  quantities  as  to  drain 
a  country  of  its  coin  supply,  and  even  an  expoi'tation  of  debts 
and  promises  to  pay,  as  a  payment. 

But  what  we  arrive  at  is  the  truism  with  which  the  chapter  be- 
gan, viz.,  that  in  all  international  exchange  there  is  an  ex- 
change. If  something  was  got  without  giving  any  thing  in  re- 
turn it  would  be  a  free  gift  and  }iot  an  exchange.  Hence,  noth- 
ing is  evolved  at  the  end  of  tlie  chapter  except  what  the  terms 
used  in  the  very  title  of  the  chapter  are  pi'egnant  witli. 

If,  however,  the  principle  is  sought  to  be  applied  between  any 
two  nations  without  including  all  others,  it  is  converted  from  a 


14  ECONOMIC  PHILOSOPHY. 

truism  into  a  falsehood.  If,  for  instance,  its  application  be, "  The 
United  States  must  buy  its  manufactured  goods  in  England  if  it 
would  succeed  in  selling  its  breadstuff's  there,  it  becomes  a  false- 
hood," as  the  two  facts,  what  we  shall  buy  of  any  one  nation,  and 
what  we  shall  sell  to  it,  stand  in  no  relation  of  interdependence 
whatever.  We  may  and  do  sell  to  some  nations  three  times  as 
much  as  we  buy  of  them,  and  buy  of  others  five  times  as  much  as 
we  sell  to  them.  The  so-called  law  of  the  equation  of  international 
demand  might  as  well  be  applied  to  an  individual.  The  total  of 
every  man's  outgo  in  the  long  run  must  equal  the  total  of  his 
income. 

5.  Decline  of  the  Metapliysical  and  rise  of  the  Histor- 
ical Method. — There  are  certain  conveniences  and  even  charms 
in  treating  political  economy,  as  Mill  and  Eicardo  have  done,  as 
a  study  of  the  logic  of  social  tendencies  merely.  It  fits  in  with 
the  fact  that  all  economic  quantities  are  in  a  continual  state  of 
transition  aiul  fluidity — of  flux  and  reflux.  The  forces  with 
which  it  deals,  based  as  they  are  on  human  interest  and  desire, 
emulation  and  competition,  affection  and  emotion,  vary  every 
moment  in  direction  and  intensity.  The  values  we  compai^e  vary 
while  we  are  comparing  them,  and  even  the  standards  for  com' 
l)aring  and  measuring  them  sometimes  outstrij)  the  values  in 
their  variations.  The  instant  an  economic  quantity  is  seized  in 
one  point  of  view  it  itisists  on  putting  on  another  function,  and 
appearing  in  another  character.  Terms  resolutely  resist  firm  and 
stable  definitions,  because  the  things  they  represent  are  incap- 
able of  resting  in  the  performance  of  a  single  function. 
'  Take  the  term  labor.  If  a  man  carries  mortar  from  the  street 
to  the  roof  of  a  building  in  a  hod,  is  that  labor  ?  Cei^tainly  not, 
if  the  man  is  a  British  lord  practicing  to  show  his  muscle.  It  is 
amusement.  Certainly  not  also  if  the  man  is  a  slave  in  Cuba, 
working  by  the  compulsion  of  enforced  ownership.  In  such  case 
the  man  is  capital,  in  the  economic  sense,  as  truly  as  if  he  were 
a  steam  engine  or  a  horse.  Does  his  labor  consist  in  applying 
i)hysical  foi'ce  to  raise  the  mortar,  or  in  expending  human  energj^  ? 
If  the  former  be  true,  then  if  a  horse  or  engine  be  substituted, 
that  is  labor  ;  and,  if  so,  we  find  capital  laboring  :  and  interest  be- 
comes wages. 

Every  other  economic  term,  wealth,  value,  utility,  profit,  rent, 
interest,  capital,  money,  land,  production,  trade  distribution,  ex- 
change, consumption,  taxation,  savings,  banks,  credits,  currency, 
and  political  economy  itself  eludes  fixation  in  any  one  meaning, 


END   OF  LAI88EZ  FAIBE.  15 

because  the  things  it  stands  for  perform  many  offices.  It  takes 
on  of  necessity  a  cliange  of  definition  for  each  office  it  performs. 
Mr.  S.  Dana  Horton*  shows  that  the  word  "standard"  takes  on 
nine  distinct  meanings,  each  of  them  exact  as  to  its  own  function. 

Mr.  Mill  evades  defining  wealth,  as  the  law  evades  defining 
fraud,  by  saying  ' '  though  nobody  can  tell  what  it  is,  everybody 
knows  what  it  is." 

Thiij  very  fluidity,  apparent  everywhere  in  economic  quantities 
and  terms,  begets  an  inclination  to  avoid  definitions,  as  being 
mei'ely  fallacious  attempts  to  attribute  a  fixit}^  to  the  flowing,  and 
to  steer  clear  of  historical  causes  and  effects  in  their  sequence  as 
being  too  complex  and  iiiti'actable  to  illustrate  principles.! 

Prof.  Sidgwick  regards  the  metaphysical  school  of  economists, 
commonly  known  as  the  English  or  Manchester  school,  ashavhig 
reached  the  climax  of  its  power  at  tlie  period  of  the  repeal  of  the 
corn  laws  (1846-50),  as  having  begun  to  wane  in  18G0,  and  as  finally 
losing  its  authoritative  hold  on  the  thinking  men  of  England  in 
1871 .  The  leading  principles  of  this  school  are  that  free  competition, 
laissez  faire,  or  to  be  "  let  alone  "  by  the  government  is  all  that 
industry  asks  or  needs,  that  the  government  is  to  be  run  as  a  fiscal 
ao-ency,  having  no  other  concern  than  to  pi'ovide  itself  with  reve- 
nue and  keep  the  peace  between  workers  of  all  kinds,  and  that 
the  actual  world  of  industry  is  either  at  all  times  the  best  world 
possible,  or  if  not  it  will  become  so  under  the  stimulus  of  a  little 
more  non-interference  on  the  part  of  government  than  it  has 
hitherto  enjoyed.  The  generation  from  1828  to  1846  was  largely 
occupied  in  giving  increased  popularity  to  this  idea,  whose  domi- 
nant principle  was  laissez  faire,  and  whose  political  and  popular 
cure-all  was  called  "Free  Trade." 

Mr.  Sidgwick  dates  the  decline  of  tlie school  from  the  pei-iod,  in 
1871,  when  Mr.  Mill,  reviewing  Mr.  Tliornton's  book  on  Lab<^r, 
and  its  attack  on  the  "Wages  Fund  theory,"  acknowledged 
that  the  theory  had  been  shown  to  be  really  no  theory  at  all,  l)ut 
only  a  circuitous  statement  which  ended  where  it  began.  Wages 
depend  on  the  proportion  which  capital  bears  to  labor,  so  long  as 


*  See  extract  in  chapter  on  Money. 

t  The  philosoplier  Ilegel  is  paid  to  have  been  engaged  In  pointing  ont  to  hJH  class  the 
"principle''  of  mathematical  harmony  which  required  that  on  logical  principles  there 
should  be  a  vacant  orbit  space  between  the  orbits  of  Mars  and  Jupiter,  when  one  of  his 
ptiI)ilH  informed  liim  that  asteroids  had  jiist  been  discovered  in  that  space.  "Very 
likely,"  replied  Ilegel;  "  the  principles  of  pure  reason  reiuire  that  tlie  space  should  be 
vacant,  but  the  accidents  of  Nature  seldom  come  u]*  to  tlic  slaiidaid  of  pure  reasou." 


10  EOONOMTC  PHILOSOPHY. 

capital  is  defined  to  be  so  much  money  as  employei's  do  actually 
distribute  in  the  form  of  wages  only,  and  so  long  as  labor  is  defined 
to  be  the  number  of  persons  whom  the  wages  thus  distributed 
hire.  This  truism  is  of  exactly  the  same  nature  as  that  just 
referred  to  in  Mr.  Mill's  theory  of  international  values.  Mr.  Sidg- 
wick  pictures  the  English  school  of  economics  as  receiving  a  rude 
shock  when  Mr.  Mill  candidly  acknowledged  that  for  fifty  years 
his  logic  had  been  imposed  upon  by  its  own  forceful  fluency.  It 
was  as  if  he  had  taught  that  in  vegetation  every  leaf  owes  its  size 
and  shape  to  the  ratio  which  the  general  fund  of  leafiness  bears 
to  the  number  of  stems  on  which  the  leaves  grow. 

6.  Carey's  Corrective  Influence. — Far  more  powerful 
causes,  however,  than  Mr.  Long's  i*efutation  of  the  wages  fund 
theory  (1867),  or  Mr.  Thornton's  work  on  labor,  was  the  growth 
in  America  of  a  school,  largely  under  the  influence  of  Henry  C. 
Carey's  nine  economic  works  and  fifty-seven  pamphlets,  dating 
from  1835  to  1870,  aided  by  the  works  of  Stephen  Col  well,  Calvin 
Colton,  Prof.  Bowen,  Horace  Greeley  and  others.  The  writings  of 
Dr.  Carey  found  their  way  into  nearly  every  Eui'opean  language, 
and  were  eagerly  thumbed  in  the  libraries  of  every  European 
university.  Thej-  struck  a  vein  of  thought  in  harmony  with 
French,  German  and  Russian  economics.  They  wei'e  echoed  in 
the  works  of  Frederick  List  and  the  lectures  of  Diihring,  in  Ger- 
many, by  Ferrara  in  Italy,  and  in  the  essays  of  Bastiat.  Chairs 
for  the  special  teaching  of  American  constitutional  law  and 
American  history  were  founded  in  German  universities,  and 
naturally  caused  much  attention  to  be  given  to  the  views  of  such 
American  economists  as  seemed  to  shed  new  light  on  the  science. 

Dr.  Carey  was  by  far  the  most  vigorous  and  sustained,  learned 
and  equipped,  versatile  and  philosophic  assailant  of  the  laissez 
faire  tb eory .  He  opposed  the  English  school  at  every  point — Mal- 
thus'  theory  of  population,  Ricardo's  theorj'of  rent.  Mill's  theory 
of  international  trade,  Lord  Liverpool's  and  Sir  Robert  Peel's 
notions  on  money,  and  in  the  latter  seven  of  his  works  the  theory 
of  free  foreign  trade.  In  1835  Mr.  Carey  publisbed  "an  essay 
on  the  rate  of  wages,"  assailing  the  Ricardo  theory  that  as  wages 
rise  profits  must  fall,  and  arguing  that  as  profits  rise  wages  rise. 
His  eiglit  succeeding  works,  presenting  a  complete  philosophy  of 
societj^  have  been  the  armory  from  whence  were  originally  sup- 
plied many  of  the  weapons  with  which  German  and  French 
economists  fought  for  time  in  which  to  build  up  an  historical 
school. 


EFFECT  OF  AMERICAN  WAR.  17 

The  result  of  the  American  contest  of  1861-65  tended  far  more 
powerfully  than  any  admission  by  Mr.  Mill  to  give  influence  and 
power  to  Auierican  thought.  The  government  had  practiced 
laissez  faire  toward  slavery,  letting  it  alone  until  it  was  found 
that  it  would  not  let  the  government  alone  ;  and  hence  it  or  the 
government  itself  must  fall.  The  century,  whose  chief  business 
it  had  been  to  teach  that  government  must  not  interfere  with 
industry,  found  its  most  stupendous  effort  to  be  the  conduct  of  the 
revolution  for  insuring  the  payment  of  wages  to  servants.  Russia 
passed  through  a  like  revolution.  England  dropped  the  laissez 
faire  theory  to  fix  judicial  rents  for  Irish  tenants  after  the  prac- 
tice of  laissez  faire  had  destroyed  their  power  to  pay  cus- 
tomary rents.  Protection  to  industry  and  various  forms  of 
qualified  state  socialism  were  in  the  air.  English  opinion  was 
powerless  to  resist  them.  Jevons,  McLeod,  Leslie  Stephen,  and 
even  Bonamy  Price  discovered  that  doctrines  w^hich  fifty  years 
earlier  seemed  nearly  self-evident  Avere  waning.  The  epoch  of 
assumption  was  past.  The  epoch  of  proof  had  come,  even  in 
economics.  Exactly  why,  nobody  fully  knows,  any  more  than 
we  know  why  the  fashion  of  believing  in  witchcraft  ceased  when 
it  did.  But  it  ceased.  In  1885  a  convention  of  most  of  the 
teachers  of  political  economy  in  the  United  States  was  held  at 
Saratoga  Springs.  It  agreed  without  debate  that  the  doctrine  of 
laissez  faire  was  an  error. 

7.  The  Historical  Method  i.s  not  a  History  of  Eco- 
nomic Opinion  merely. — Political  economy  is  not  a  mere  his- 
tory of  the  opinions  or  summaiy  of  the  controversies  in  wliich 
the  several  schools  of  economists  have  labored  to  evolve  or  place 
in  a  clearer  light  their  views. 

It  would  exist,  as  a  practical  art  and  scientific  theory,  among 
nations  and  legislators,  if  no  books  were  ever  written  upon  it. 
And  indeed,  no  books  of  economic  criticism  could  exist  were  there 
not  the  action  of  legislators  to  be  criticised.  Hence  the  basis  of 
all  economic  discussion  is  practical  statesmanship,  and  the  lat- 
ter must  always  be  regarded  as  furnishing  the  material  for  the 
former.  In  its  turn,  again,  the  basis  of  practical  statesmanship 
is  the  desire  of  the  dominant  forces  and  classes  in  society,  whether 
their  dominance  is  that  of  numbere,  wealth  or  other  causes,  to  pro- 
mote their  own  interests,  modified  by  the  degree  in  which  the 
gi'owth  of  the  altruistic  sentiment  prompts  them  to  i)romote  the 
interests  of  the  minority  or  servient  class,  but  this  generally,  how- 
ever, as  a  means  of  ultimately  promoting  their  own.     In  tur}i  the 


18  ECONOMIC  PHILOSOPHY. 

forces  wliich  underlie  leg-islation  will  generally  be  found  to  be 
the  desire  of  the  successful  or  powerful  classes  to  maintain  their 
success  or  promote  their  power.  Political  economy  is  in  fact  a 
study  of  the  action  of  the  influential  and  dominating  masses  of 
men  making  itself  known  through  legislation,  in  its  bearing  on 
the  promotion  of  the  growth  of  wealth,  power  and  freedom,  as 
ethics  and  jurisprudence  are  the  study  of  the  like  action  of  the 
dominating  mass  or  ruling  class,  as  it  bears  on  questions  of 
moral  right  or  jural  right. 
I  What  the  dominating  mass  of  a  state  hold  to  be  right,  is 
'  right,  for  the  time  being,  in  that  state.  At  least  there  is  no  practi- 
cal appeal.  What  the  mass  hold  to  be  law  is  in  like  manner  law. 
And  what  the  mass  hold  to  be  economy  is,  for  the  same  reason, 
economy.  But  what  the  critics  say  would  be  a  higher  moral 
right  remains  a  mere  private  opinion  until  the  dominating  mass 
sanction  it.  So  of  law,  and  so  of  economy.  Hence  in  any  true 
history  of  political  economy  the  history  of  legislation  would 
need  to  con^e  before  the  history  of  the  criticism,  and  the  history 
of  the  changes  in  human  interests  which  brought  about  the  legis- 
lation would  need  to  pi-ecede  the  history  of  the  legislation.  But, 
in  fact,  all  attempts  to  state  the  history  of  political  economy 
heretofore  have  been  attempts  to  narrate  the  course  of  the  criti- 
cism without  narrating  either  the  course  of  the  legislation  on 
which  it  bore  or  the  changes  in  human  interests  Avhich  gave  rise 
to  it. 

Histories  of  political  economy  are  therefore  pervaded  by  two 
fallacies,  viz.,  the  substitution  of  a  jiart  for  the  whole  ;  or  of  the 
criticisms  of  the  economists  for  the  history  of  the  economies,  and 
the  substitution  for  what  the  economists  have  actually  written  of 
that  which  the  historian  assumes  to  be  the  purpoi't  and  effect  of 
their  writings.  It  is  always  unsafe  to  accept  as  true  the  descrip- 
tion of  any  set  of  opinions  in  the  language  of  its  adversaries. 
This  is  especially  true  of  economic  discussion.  One  caii  not  be 
sure  of  rightly  apprehending  the  meaning  of  any  author  until  he 
reads  his  views  in  his  own  words. 

Thus  in  describing  the  mercantile  sj^stem  Mr.  Shadwell  *  says  : 
"It  was  supposed  that  money  alone  constituted  wealth  ;  and  as 
they  never  thought  of  disputing  that  wealth  consisted  of  gold  and 
silver,  they  held  themselves  bound  to  prevent  as  far  as  possible 
the  exportation  and  to  encourage  the  importation  of  those  metals." 
Mr.  Mill  states  this  point  as  strongly  as  Mr.  Shadwell. 

*  "  Political  Economy,"  by  J.  L,  Sli:uhvell,p.  10. 


HISTORIES  OF  POLITICAL  ECONOMY.  19 

On  the  contrary  Mr.  C.  S.  Devas,  also  reviewing  the  history 
of  the  economists,  says  :  ' '  Looking  to  the  appearances  of  the 
world  with  which  they  were  familial',  and  seeing  how  commer- 
cial and  political  greatness  belonged  as  a  fact  to  those  countries 
wherein  the  money  in  circulation  was  abundant,  the  economists 
whom  we  call  the  mercantile  school,  imagined  that  the  econom- 
ical well-being  of  a  state  is  in  proportion  to  the  amount  of  the 
precious  metals  circulating  within  it,  and  that  in  consequence  to 
preserve  and  increase  this  amount  to  the  utmost,  is  the  funda- 
mental rule  of  economical  policy.  But  (with  some  rare  excep- 
tions) they  by  no  means  held  the  error  often  attributed  to  them 
that  wealth  consists  in  money  alone  ;  nor  even  can  they  be 
charged  with  malving  light  of  agriculture,  and  wishing  it  neg- 
lected in  comparison  with  manufactures  and  commerce." 

These  flat  contradictions  between  two  sincere  economists  describ- 
uig  the  same  fact,  warn  us  how  difficult  a  task  it  is  to  correctly 
state  the  history  of  economic  discussion. 

Instead  of  being  a  matter  to  be  lightly  skimmed  over  as  a  pre- 
lude to  the  better  comprehension  of  the  existing  economic  condi- 
tion of  society,  it  requires  the  largest  knowledge  of  the  present 
economic  conditions  of  man  to  enable  us  to  form  any  proximately 
accurate  view  of  his  past  economic  condition.  Of  the  two  the 
present  is  the  more  comprehensible,  because  it  can  be  observed, 
and  the  past  eludes  us  because  it  contains  so  many  unknow^n  factors. 

8.  Limitatioii.s  on  tlie  Historical  Method. — To  us  the 
ownership  by  an  ancestor,  as  in  Rome,  of  all  his  descendants  and 
of  their  property,  seems  the  product  merely  of  a  despotic  spirit,  an 
evident  wrong  which  came  gi^adually  to  be  abolished.  But  to  a 
Roman  the  incoherence  of  our  present  family  system,  whereby 
some  members  of  a  family  might  perish  of  hunger  while  others 
had  wealth,  would  seem  unnatural  and  depraved.  We  think 
the  Roman  unjust  by  forgetting  that  in  return  for  allegiance 
the  humble  received  support  and  security  from  the  strong.  And 
we  fail  to  set  off  the  degree  in  which  the  present  condition  of 
society  exposes  individuals  to  want  in  the  event  of  the  failure  of 
their  industrials  efforts,  while  persons  nearly  related  in  blood, 
po.ssessed  of  large  means  and  capable  of  giving  profitable  direction 
to  their  efforts,  are  neither  required  nor  allowed  by  law  to  do  so. 
The  key  to  the  difference  lies  in  the  fact  that  in  Rome  society  was 
chiefly  organized  by  means  of  authority  or  force,  while  modern 
society  is  organized  by  means  of  money,  on  the  basis  of  having 
nothing  but  what  we  can  pay  for. 


20  ECONOMIC  PHILOSOPHY. 

A  like  difficulty  arises  in  the  effort  to  compare  our  life  with  the 
life  of  the  middle  ages,  in  which  the  church  ruled,  or  witli  any 
unlike  form  of  social  economy.  The  past  being-  by  far  the  more 
obscure  of  the  two,  and  the  more  difficult  of  apprehension, 
is  incapable  of  throwing  the  degree  of  light  on  the  present,  that 
one  might  easily  be  brought  to  assume.  People  living  in  an 
industrial  age  can  very  imperfectly  apprehend  why  any  body 
should  ever  have  done  the  amount  of  fighting  necessary  to  make 
a  military  age,  or  should  have  esteemed  athletic  sports  so  highly 
as  to  liave  measured  epochs  of  time  by  olympiads,  or  should  have 
made  reverence  for  the  dead,  rather  than  the  comfort  of  the  living, 
the  root-idea  of  their  arcliitecture,   as  in  Egypt. 

We  are  not  greatly  helped  in  the  effort  to  understand  our  own 
period  by  the  examples  of  those  who  Avould  have  found  it  as  im- 
possible to  do  our  work  as  we  would  to-day  find  it  to  do  theirs. 
The  remote,  whether  in  time  or  space,  can  only  in  a  limited  way 
instruct  the  neai\  The  general,  whether  in  war,  philosophy  or 
economy,  can  only  remain  general  by  receiving  constant  aid  from 
the  special.  No  rule  requires  to  be  more  frequently  applied  in  deal- 
ing with  new  exigencies  in  business  or  in  finance  than  that  ' '  cir- 
cumstances alter  cases, "  that  new  wine  can  not  be  put  into  old 
bottles,  or  as  Hans  Breitmaii  pleasantly  puts  it, 

"  The  mill  cau  not  grind  with  tlie  water  that  is  past." 

Lord  Beaconsfield  on  a  memoi'able  occasion  parried  the  thrust 
that  his  iDolicy  at  a  former  period  differed  from  his  pi'esent  by 
replying,  "many  things  have  happened  since  then."  The  changes 
in  social  conditions  forbid  that  the  economics  of  the  i^resent  or  the 
future  can  travel  on  all-fours  with  that  of  the  past ;  yet  still  the 
unity  of  man  makes  the  past  the  only  lamp  by  which  the  future 
may  be  foreknown.  But  the  law  of  the  economic  value  of  past 
events,  or  of  events  made  distant  by  the  unlikeness  to  oui'selves 
of  those  among  whom  they  occui',  is  like  the  law  of  attraction 
in  physics — it  is  directly  as  the  magnitude  of  the  event  and  in- 
versely as  the  square  of  its  distance  from  us. 

It  may  be  said  generally  that  the  more  competent  individuals 
become  to  provide  for  themselves  the  less  is  the  obligation  of 
others  to  provide  for  them,  and  hence  moral  obligations  contract 
as  economic  competency  is  diffused.  In  the  middle  ages  each 
social  class  owed  the  other  much.  The  lord  owed  his  tenants  pro- 
tection and  support.  The  tenaiit  owed  his  lord  obedience  as  well 
as  rent.  Perhaps  obedience  was  his  rent.  Now  landlords  and 
tenants  owe  no  such  duties.     Then  the  chui-ch  owed  tlie  trav- 


NAMES  OF  DISPRAISE.  21 

eler  a  couch  and  a  meal.  Now  it  owes  liiin  only  a  free  seat  if  he 
wishes  to  hear  a  sermon.  Then  very  little  of  what  society 
enjoyed  came  by  purchase.  Most  of  it  came  by  tlie  performance 
of  some  moral  obligation.  Now  but  little  of  what  society  enjoys 
comes  without  being-  paid  for.  The  former  state  was  the  more 
despotic  but  also  the  more  aif ectionate  ;  the  latter  is  more  free  but 
also  more  mercenary.  The  former  had  more  duties  ;  the  latter 
more  rights. 

This  progress  has  been  carried  so  far  that  one  economist  *  writes 
on  "  What  the  social  classes  owe  to  each  other,"  with  the  result 
as  the  conclusion'  that  tliey  owe  nothing,  and  that  human  happi- 
ness is  achieved  in  the  degree  that  they  claim  notliing  at  the 
hands  of  others.  This  is  extending  the  laissez  faire  doctrine  in 
a  new  form,  viz. ,  ' '  Not  merely  should  the  state  let  the  social  classes 
alone,  but  the  social  classes  should  let  each  other  alone."  Human 
nature  rebels  against  this  utter  excision  of  moral  obligations  from 
social  economy.  It  also  rebels  against  the  opposite  theory  that 
the  state  should  be  every  body's  guardian  in  all  things.  Some- 
where between  these  two  extremes  the  state  draws  a  compromise- 
Where  it  should  be  drawn  is  a  question  which  some  will  always 
continue  to  ai'gue  from  the  moral,  others  from  the  economic 
standpoint. 

Society  as  an  organism  has  health  at  sometimes  and  disease  at 
othei'S,  and  health  in  some  parts  and  disease  in  others  ;  with  this 
peculiarity  that  "  in  the  diseases  of  the  body  politic  the  physicians 
and  nurses  are  themselves  parts  of  the  diseased  organism." 

In  consequence  of  this  diseased  condition,  tije  instant  social 
questions  are  discussed  from  the  moral  standpoint,  each  faction 
finds  no  terms  of  moral  eulogy  sufficiently  glowing  for  its  own 
principles,  and  no  terms  of  dispraise  severe  enough  for  tlio.se  of  its 
adversary.  All  facts,  events  and  doctrines  thus  come  to  have 
their  two  sets  of  names — those  by  which  they  ai'e  known  to  their 
friends  and  those  by  which  they  are  known  to  their  enemies. 

As  the  traveler  in  India  found  that  the  gods  of  any  one  province 
would  be  enrolled  among  the  devils  of  the  next  province  he  vis- 
ited, so  the  student  of  economics  will  discover  that  names  of 
moral  praise  or  dispraise  serve  only  to  indicate  the  quality  of  the 
spectacles  through  which  the  writer  observes.  It  may  be  said 
generally  that  tlie  only  objection  to  the  discussion  of  economical 
questions  from  the  ethical  standpoint  is  that  the  disputants  burn 

*  Prof  Sumner;    "  What  the  Social  Classes  owe  to  each  other." 


22  .  ECONOMIC  nilLOSOPllY. 

with  more  indignation  than  instruction,  and  shed  more  heat  than 
light. 

A  very  general  drift  of  modern  thought  in  favor  of  determin- 
ing social  questions  by  a  wide  survey  of  facts  is  shown  by  the 
increased  care  and  means  used  each  year  to  collect  statistics.  In 
the  United  States,  the  federal  government  and  the  states  are 
yearly  increasing  the  extent  of  their  inquiries.  Bureaus  of  stat- 
istics as  to  labor,  productioii,  the  fertility  of  plants  and  animals, 
commerce,  transportation,  education,  etc.,  are  in  order.  Cities  and 
boards  of  trade,  congressional  committees  and  the  press,  concur 
in  feeding  the  appetite  for  wider  and  sounder  generalizations  and 
truer  judgments  concerning  social  jihenomena.  They  confirm 
the  saying  of  Roederer,  "  Politics  is  a  field  which  has  been  trav- 
ersed thus  far  only  in  a  balloon  :  it  is  time  to  put  foot  on  solid 
ground." 

9.  Relation  of  Economics  to  Ethics.— Questions  of  what 
we  ought  to  do  belong  to  ethics.  Questions  of  what  it  is  generally 
believed  and  held  that  Ave  ought  to  do  belong  to  morals.  Ques- 
tions of  what  it  will  profit  men  and  nations  in  the  immediate 
future  and  in  a  material  and  secular  sense  to  do,  belong  to 
economics.  And  questions  of  what  it  will  profit  a  man  to  do  in  the 
absolute  totality  of  his  existence,  and  for  eternity,  belong  to 
religion.  There  is  such  a  filiation  between  all  these  forms  of  the 
one  idea  that  it  is  not  strange  that  some  have  treated  economics  as 
a  branch  of  ethics.  They  hold  that  the  shortest  road  to  profit  is 
to  do  as  we  ought,  or  as  it  is  generally  believed  and  held  that  we 
ought,  or  as  we  are  taught  that  for  our  eternal  interests  we  ought. 
In  the  middle  ages,  as  Roscher  discovers,  political  economy  was  at 
least  in  one  instance  taught  as  a  department  of  dogmatic  theol- 
ogy.* Doubtless  there  is  still  a  very  large  following  for  those 
who  discuss  questions  of  social  economy  from  the  ethical  stand- 
point, i.e.,  who  assume  that  it  is  much  easier  to  know  and  do  what 
is  right,  than  to  find  out  what  is  profitable  to  society  in  the  utili- 
tarian sense.  The  danger  of  this  position  becomes  apparent  only 
when  economic  and  ethical  quacks  arise,  very  sturdily  insisting  that 
something  is  morally  right  which  perhaps  has  never  been  tried,  if 
tried  would  be  very  disastrous,  and  is  only  attractive  to  its  pro- 
posers because  their  fancy  runs  away  with  their  judgment. 


*  Roscher,  Vol  i.,  p.  102,  by  Lalor:  "  Thus  for  instance  G.  Bid  (ob.  1495),  the  "last  of 
the  schoolmen,"  gives  us  his  doctrine  of  political  economy  in  a  work  on  dogmatic 
theology,  in  the  chapter  on  penance,  his  starting  point  being  the  inquiry,  how  the 
economic  damage  caused  by  the  sinner  may  be  repaired." 


THE   TRUE  METHOD.  23 

On  the  other  hand  economic  investigations  often  serve  to  dis- 
place erroneous  moral  notions,  very  sincerely  held,  by  showing 
that  they  involve  great  injuiy  and  are  in  fact  immoi'al.  The 
utilitarians  hold  that  the  ultimate  standard  of  right  is  "  will  it  in- 
crease the  totality  of  human  pleasure  and  diminish  the  totality  of 
pain."  The  intuitionists  answer  this  by  saying  that  this  is  a  com- 
putation which  nobody  can  make  ;  that  it  i^esolves  all  morality 
into  expediency,  which  it  is  not,  and  that  the  sure  mode  of 
increasing  the  totality  of  happiness  is  to  follow  our  convictions 
of  right  as  being  a  clearer  as  well  as  less  selfish  guide  than  our 
seiise  of  j)resent  or  future  interest.  Both  considerations  must 
blend  and  harmonize  in  any  wise  system  of  teaching. 

10. — The  Scientific  Method. — The  scientific  method  of  in- 
vestigation in  political  economy,  as  in  all  the  other  sciences,  is  that 
of  observation,  experiment  and  comparison  of  the  widest  possible 
array  of  facts,  and  when  these  results  have  been  generalized  or  class- 
ified, these  generalizations  or  deductions  become  economic  laws. 
If,  for  instance,  it  be  claimed  to  be  an  economic  law  that  laud 
should  be  owned  by  tribes,  and  that  no  private  ownership  of  land 
should  be  allowed,  the  scientific  economist  will  observe  and  collect 
all  the  known  instances  where  private  ownership  of  land  has  pre- 
vailed; he  will  then  observe  and  collect  all  the  known  instances 
in  which  tribal  ownership  of  land  has  prevailed  to  the  exclusion 
of  private  ownership.  He  will  then  compai'e  the  relative  pro- 
ductiveness of  the  two  systems.  If  he  finds  that  tribal  ownei'ship 
stands  associated  with  savage  life  and  low  rates  of  production,  as 
among  the  American  Indians,  the  peasantry  but  not  the  wealthier 
classes  of  ancient  Mexicans  and  Peruvians,  the  wild  tribes  of 
Siberia,  Mongolia,  Tartary,  and  the  Congo  River,  indeed  with 
slave  life  and  savage  life  everywhere,  while  civilization  in  Egypt, 
Greece,  Rome,  modern  Europe,  and  America  stands  associated 
with  private  ownership,  and  the  more  pi'oductive  and  intense  the 
industry  the  greater  the  scope  given  to  private  title  to  land, 
credits,  contracts,  and  franchises,  and  that  not  in  a  single  in- 
stance has  any  people  become  actively  productive  except  through 
private  ownership,  he  concludes  that  the  attack  on  j)rivate  owner- 
ship of  land  is  an  error. 

The  scientific  method  does  not  object  to  hypothesis,  or  what 
Mr.  Mill  styles  "  a  pr/o?v' conclusions,  based  on  the  lawsof  human 
nature.''  It  only  objects  to  the  substitution  of  these  results  of 
guessing,  before  "testing  them  by  experience  or  comparing  them 
with  concrete  phenomena"  into  the  place  of  perfected  economical 


24  ECONOMIC  PJIILOSOPIIY. 

reasoning.  The  sole  scientific  function  of  hypothesis  is  to  suggest 
some  new  hue  in  which  investigation  by  observation,  comparison 
and  experiment  may  proceed.  Tlie  exercise  of  the  scientific  imag- 
ination by  an  observer  of  shrewdness  and  experience  may  be  of 
tlie  liighest  value.  Franklin  imagined  that  lightning  was  elec- 
tricity before  he  tested  it  by  his  kite.  Watt  thought  steam  would 
move  an  engine,  and  Fulton  had  faith  that  an  engine  would  pro- 
pel a  boat  better  than  a  sail.  Columbus  conceived  that  there  was 
a  new  world  in  advance  of  proof,  and  Kepler  that  the  line  drawn 
from  the  sun  to  the  earth,  though  it  difl^ers  in  length  every  day, 
describes  always  equal  areas  in  equal  times.  But  most  excellent 
guesswoi'k  often  proves  erroneous.  The  guess  is  idle  save  as  a 
suggestion  toward  one  or  the  other  of  three  modes  of  scientific 
inquiry,  viz.,  by  observation,  comparison  and  experiment. 

11.  Tlie  Philosophy  of  Statistics. — We  cannot,  with  Cossa, 
say,  "  Let  no  man  trust  himself  to  fool  with  statistics  until  he  is 
well  grounded  in  theory."  For  this  is  equivalent  to  saying,  "Let 
no  man  find  out  facts  until  he  first  knows  the  reasons  for  them." 
Reason  or  philosophy  is  to  facts  what  theory  is  to  statistics.  A 
sound  and  trained  reason  is  only  po,ssessed  by  one  who  has  made 
a  wide  and  careful  survey  of  the  facts  which  justify  the  reason. 
So  we  would  rather  say,  let  no  man  fool  with  economic  theories 
until  he  is  well  grounded  in  economic  facts.  Statistics  are  his- 
torical facts  i^resented,  in  blocks  and  masses,  so  as  to  show  quan- 
tity, also  in  grades  to  show  quality,  with  dates  atid  periods  to 
show  momentum  or  foi'ce  of  movement,  and  in  sequence  with 
events  to  show  causes. 

In  thus  commending  statistics  "we  must  warn  the  reader  that 
those  who  have  voyaged  iiiost,  upon  their  shoreless  sea,  are  best 
aware  of  their  dangers.  Statistics  of  themselves  are  blind.  They 
have  neither  judgment,  conscience,  perception,  nor  intelligence. 
Unless  the  person  who  uses  them  possesses  these  qualities  they 
may  be  made  to  say  any  thing.  Hence,  the  adage  has  gi*own  up 
since  the  advent  of  the  Baconian,  positive  or  statistical  school, 
''Nothing  can  be  so  deceptive  as  figures — except  facts."  Excel- 
lent figures  may  be  used  in  behalf  of  a  bad  theory,  and  deplorable 
errors  may  be  advanced  to  sustain  a  good  one.  A  correct  theory 
will  not,  therefore,  make  our  statistics  true.  When  the  figures  are 
disproven  it  is  not  to  be  iiecessarily  inferred  that  the  proposition 
in  whose  behalf  they  were  adduced  is  weakened. 

Thus,  in  a  document  designed  to  indicate  the  magnitude  of 
■"The  Drink  Bill  "of  the  American  people,  the  annual  value  of 


FIGURES  THAT  MISLEAD.  25 

spirituous  liquors  consumed  is  correctly  stated  at  $900,000,000.  In 
very  proper  contrast  with  this  enormous  waste,  the  cost  of  ])ub- 
lic  instruction  is  set  down  at  $85,000,000,  and  the  cost  of  missions 
at  $5,000,000.  So  far  well  !  But  the  statistician  in  comparing 
these  figures  with  the  cost  to  the  people  of  their  annual  consump- 
tion of  meat,  inadvertently  assumes  that  if  the  United  States  census 
gives  any  of  the  figures  of  meat  consumption  it  must  give  tliem 
all.  In  fact,  however,  it  only  gives  the  value  of  the  meats  packed 
in  the  packing  houses,  these  being  all  which  can  be  classed  under 
"manufactures,"  and  it  is  as  a  form  of  manufactures  only  that 
meat  statistics  are  taken.  All  the  meat  sujDplies  furnished  by  the 
76,241  butchers  of  the  United  States,  and  all  meats  butchered  on 
farms  by  those  who  raise  it,  and  all  poultry,  game  and  small 
meats  of  eveiy  kind  are  omitted  from  the  census.  Hence,  the  un- 
wary statistician  in  search  of  the  figures  of  meat  consumption  to 
compare  with  spirituous  liquors,  states  them  at  $303,000,000,  be- 
ing the  correct  amount  named  in  the  census,  but  only  for  the 
meats  packed  in  packing  houses.  This  would  make  the  meat 
consumption  for  51,500,000  people  about  $5  per  capita  per  year, 
or,  say  ten  cents  per  head  per  week.  In  fact,  in  manufacturing 
and  urban  populations,  the  cost  of  the  meat  bill  is  more  nearly 
$1  per  head  per  week.  The  consumption  of  bread,  groceries, 
and  vegetables  combined  is  about  half  or  two-thirds  as  much 
more.  Assuming  the  cost  of  consumption  among  farmers  to 
equal  that  in  cities,  the  two  classes  of  food,  animal  and  vege- 
table, would  cost  about  $3,300,000,000,  or  about  four  times  the  ex- 
penditure for  spirituous  liquors,  which  is  about  the  proportion 
which  a  person  of  good  judgment  would  assume  if  not  misled  by 
the  figures. 

An  imposing  pi'etense  of  statistical  proof  is  also  sometimes 
made  \>j  collecting  a  formidable  array  of  statistics  of  a  feature 
of  the  case  which  is  not  in  dispute,  and  leaping  over  the  real 
point  in  dispute  without  any  statistics  whatever  that  bear 
upon  it. 

Thus  Mr.  Springer,  of  Illinois,  in  an  article  in  the  North 
American  Review,  purports  to  state  in  statistics,  by  how  much 
the  cost  of  various  articles  of  American  production  is  increased 
to  the  consumer,  by  the  duty  on  importations.  He  concedes  that 
they  are  not  increased  in  cost  by  the  whole  amount  of  the  duty, 
but  adopts  a  purely  deductive,  a  priori,  hypothetical  and  unsus- 
tained  fraction  of  a  third,  half,  or  two-thirds  of  the  duty,  and 
says  it  is  reasonable  to  assume  that  they  must  be  increased  by 


26  ECONOMIC  rillLOSOPHY. 

this  amount  at  least.  The  point  to  which  his  statistics  were 
needed  was  tliat  of  the  degree  in  which  in  any  one  case 
the  duty  causes  an  increased  price.  This  was  the  knob  of  tlie 
question,  and  this  he  covered  wholly  by  a  guess.  Having  guessed 
at  his  standard,  tlie  calcvilations  based  upon  it  were  as  devoid  of 
any  element  of  statistical  proof  as  if  he  had  first  guessed  at 
a  quarter  of  the  amount  sought  and  then  multiplied  it  by 
four. 

Again,  economists  sometimes  assume  that  statistics  show  as  to 
one  class  what  they  only  show  as  to  a  class  having  very  unlike 
interests.  Tlius  Mr.  Fawcett  says  :  "There  is  no  surer  test  of  the 
prosperity  of  the  laboring  class  than  the  low  price  of  bread,  and 
there  are  few  statistical  facts  better  substantiated  than  that  the 
marriages  among  the  laboring  class  increase  with  the  fall  in  the 
jjrice  of  bread." 

But  Mr.  Fawcett  does  not  say  whether  the  laboring  class  to 
which  he  refers  is  that  which  produces  or  that  which  consumes 
the  bread.  In  1849,  when  the  effort  to  make  bread  cheap  in 
England  by  giving  it  free  importation  from  abroad,  regardless  of 
the  interests  of  the  bi*ead  producers,  culminated,  the  ejectments  in 
Ireland  among  the  bread  producers  rose  to  eight-fold  their  pre- 
vious number,  and  the  arrests  for  crime  increased  in  like  pro- 
portion, population  diminishing  in  five  years  by  three-eighths. 
Whatever  force  Mr.  Fawcett's  alleged  statistics,  if  such  there 
be,  may  have,  it  could  only  relate  to  a  portion  of  the  laboi-ing 
class,  viz.  to  those  tliat  labored  in  factories,  and  not  on 
farms. 

There  are  also  errors  in  the  collected  statistics  which  could  only 
be  I'emoved  by  costly  investigation,  and,  no  such  investigation 
having  been  made,  no  removal  of  the  error  is  possible.  This 
arises  especially  where  statistics  of  the  same  fact  are  taken  by  the 
officials  of  two  governments,  as  where  both  keep  an  account  of 
the  shipment  or  receipt  of  a  product  which  to  the  one  is  an  import 
and  to  the  other  is  an  export. 

Thus*  in  a  recent  year  French  customs  officers  returned  the 
export  of  silk  from  France  to  Belgium  at  36,862  kilogrammes, 
while  tlie  Belgian  officers  returned  the  import  of  silks  from 
France  for  the  same  year  at  25,947  kilogrammes.  In  the  same 
year  the  export  of  coals  from  Belgium  to  France  figures  in  Bel- 
gian exports  as  21,121,520  cwts.,  whereas  the  same  fact  figures 

♦  "  The  Condition  of  Nations,"  by  Kolb,  Brewer  and  Streeter,  p.  895. 


CONFLICTS  IN  STATISTICS.  27 

in  Frencli  imports  as  19,655,869  cwts.  In  1853  the  export  of 
wool  from  Belgium  to  France  amounts  in  the  Belgian  returns  of 
exports  to  371,260  kilogranmies,  while  the  French  customs  returns 
of  arrivals  of  wool  ill  France  from  Belgium  show  that  3,301,500 
kilogrammes  were  received.  In  one  year  the  value  of  wool  imported 
into  Great  Britain  from  F)-ance  is  stated  in  the  French  books  to  be 
11,750,000,  francs  or  £470,000,  while  in  the  English  books  it  appears 
as  of  the  value  of  £1,280,280.  In  one  year  French  returns  show 
an  export  to  England  of  cotton  to  £345,760,  while  English  retui*ns 
show  an  import  of  cotton  from  France  of  only  £180,000.  The 
next  year  France  sends  to  Great  Britain,  according  to  French 
retui'us,  952,035  kilogrammes  of  silk  goods,  while  Great  Britain 
receives  from  France,  according  to  English  returns,  only  233,739 
kilogrammes.  So  by  British  returns  Great  Britain  sends  into 
France  245,925  kilogrammes  of  silk,  while  according  to  French 
accounts  France  receives  from  England  more  than  twice  as  many, 
viz. ,  597,354.  The  English  x-eturn  their  export  of  wool  to  France 
in  one  year  at  3,207,741  kilogrammes,  while  the  French  return 
their  import  of  wool  from  England  at  3,940,496  kilogrammes.  In 
corn  87,716  hectoliters  on  one  side  appear  as  312,768  hectolitei-s 
on  the  other.  Coals  start  from  England  as  7,292,411,  and  arrive 
in  France  as  5,631,829  cwts.  Comparing  English  customs  retui'ns 
with  Belgian,  1,015,173  kilogrammes  of  colt'ee  dispatched  in  one 
year  from  Great  Britain  to  Belgium,  are  made  to  arrive  in  Bel- 
gium as  572,613  kilogrammes.  Again  from  England  to  Belgium 
4,036,049  kilogx'ammes  of  wool  are  exported,  and  only  1,643,766 
kilogrammes  of  wool  are  entered  in  Belgium  in  the  same  year  as 
received  from  England.  1,676,701  kilogrammes  of  hops  are  sent 
from  Belgium  to  England,  and  only  861,466  appear  in  English 
returns  as  received  from  Belgium.  Belgium  sends  glass  goods  to 
the  British  Isles,  in  quantity  3,776,544  kilogrammes,  while  En- 
gland acknowledges  the  receipt  of  glass  goods  from  Belgium  in 
5,645,826  kilogrammes.  It  is  probable  in  the  cases  cited  that  the 
returns  on  both  sides  are  accurate  in  the  mode  in  which  they  are 
taken,  but  that  the  quantities  which  are  covered  by  the  same 
terms  are  really  different  quantities.  For  instance,  in  dealing  with 
wool,  the  customs  officers  on  one  side  may  have  but  one  designa- 
tion for  wool,  or  hair,  shoddy  and  fleeces,  while  the  other  may 
have  two  or  three,  viz.,  wool  and  mixed,  or  wool,  shoddy,  hair  and 
mixed,  in  which  case  what  one  sends  as  wool  will  not  be  received 
by  the  other  as  wool.     This  will  make  the  returns  dili'er  in  the 


28  ECONOMIC  FJULOSOPJIT. 

statistics,  while  each  will  be  truthful  according  to  its  own  system 
and  law,  but  comparisons  made  on  such  data  must  be  made  with 
care,  t.  e.,  figures  when  compared  mvxst  be  known  to  have  beeu 
arrived  at  by  the  same  process  of  collection.  Again  it  may  be 
that  the  French  system  of  receiving  goods  at  the  Belgian  frontier 
does  not  distinguish  between  English  goods  coming  through 
Belgium  into  France  and  Belgian  goods,  while  the  Belgian  may 
call  one  a  transit  of  English  goods  through  Belgium  and  not  an 
export  of  Belgian  goods.  It  is  certain  that  if  the  two  countries 
classified  goods  in  the  same  way,  and  both  made  correct  returns, 
there  could  be  no  discrepancy. 

When  one  sees  very  startling  facts  presented  as  statistics,  there- 
foi'e,  it  is  proper  to  call  for  the  mode,  or  system,  or  authority  by 
which  the  statistics  were  collected.  If  they  were  collected  in 
different  countries,  or  at  far  distant  periods  of  time  in  the  same 
country,  and  the  conti'ast  they  present  with  wliat  the  common 
judgment  would  iiifer  is  very  great,  it  is  reasonable  to  withhold 
assent  until  it  is  known  that  the  general  process  by  which  the 
contrasting  data  were  collected  is  the  same. 

We  are  told*  that  in  France,  previous  to  the  existence  of  rail- 
ways, there  was  one  passenger  killed  to  every  335,000  carried,  and 
out  of  every  30,000  carried  one  was  wounded  ;  whereas  out  of 
1,781,403,678  passengers  who  traveled  on  the  railways  in  France 
between  September,  1835,  and  December,  1875,  only  one  to  every 
5,178,890  was  killed  and  only  one  to  every  580,450  was  wounded. 
This  makes  railway  traveling  seventeen  times  safer  than  travel- 
ing in  a  diligence  or  "  stage"  behind  horses.  On  French  statis- 
tics it  has  been  estimated  that  if  a  person  could  lose  his  life  only 
in  railway  traveling,  the  chances  would  be  that  he  would  only 
die  at  the  age  of  960  years.  On  Belgian  railways  the  proportion 
killed  of  those  who  travel  on  railways  is  only  one  in  20,000,000, 
or  one-fourth  that  of  France.  In  the  United  States,  on  the  other 
hand,  in  1875  there  was  one  wounded  by  railway  travel  in  every 
172,000  carried,  aiid  one  killed  in  every  810,000  persons  carried. 
Statistics  also  show  that  in  England  the  dangers  of  railway  travel 
exceed  those  on  the  continent  and  even  those  in  the  United  States, 
being  in  1876,  1,245  killed  out  of  538,287,295  carried,  or  one  in 
about  430,000,  which  is  a  rate  essentially  equivalent  to  the  old 
stage  coach  rate  in  France.    Now  either  the  railroad  travel  is 


*"  Condition  of  Nations,"  Kolb,  Brewer  and  Streeter,  899. 


SAFETY  ly  TEA  VEL.  29 

much  safer  in   France  and  Belgium   tlian   in  England  and   the 
United  States,  or  accidents  are  less  fully  i-eported.* 

It  happens  that  in  France  and  Belgium,  railways  are  under 
government  control,  while  in  England  and  America  they  are 
under  private  control.  If  now  it  should  also  be  true  that,  under  state 
control,  the  railway  operators  who  have  accidents  are  dismissed, 
while  under  private  control  they  are  not,  this  fact  might  cause 
more  accidents  to  be  concealed  or  not  reported,  and  might  also 
cause  fewer  to  be  committed.  On  the  other  hand,  in  France, 
under  the  old  diligence  system,  the  rate  of  accident  was  about  as 
great  as  the  rate  now  is  in  England  under  the  railway  system. 

As  the  public  mind  has  a  fixed  impression,  or  common-sense 
judgment,  that  railway  travel  is  as  dangerous  as  stage  coach 
travel,  it  would  need  fuller  statistics  to  make  it  plain  whether  the 
pretended  inci-ease  of  safety  of  railway  travel  over  stage  travel  in 
France  does  not  result  from  a  less  trustworthy  mode  of  reporting 
the  deaths  under  the  system  of  state  control  than  under  that  of 
private  control.  If  not,  then  a  strong  case  is  made  out  for  state 
control  over  private  control,  as  respects  safety  in  travel,  as  well 
as  for  railways  over  coaches  drawn  by  horses. 

Among  the  most  doubtful  statistics  in  general  use  are 
those  entertained  in  Europe  and  America  concerning  the  popula- 
tion of  China.  Very  eminent  publicists  discredit  them.  In  ex- 
planation of  certain  discrepancies  in  these  statistics  it  is  said 
that  when  the  Chinese  government  called  for  returns  of  popula- 
tion with  tlie  view  to  distributing  taxes,  the  population  returned 
was  small,  but  when  returns  were  called  for  as  the  basis  of  dis- 
tributing imperial  aid  or  charity  among  the  provinces  the  popula- 
tion rose  to  "myriads  of  millions." 

So  in  parts  of  the  United  States  the  desire  of  counties  to  escape 
taxation  has  led  to  assessments  of  values  of  both  land  and  per- 
sonal property  at  from   one-sixth  to  one-twentieth  of  their  true 


*In  1881  the  average  number  of  miles  a  passenger  could  travel  by  rail  without  being 
killed  was  :* 

MILES. 

In  the  United  Kingdom 194,892,255 

In  New  York ir2,9tir),,%2 

In  Massachusetts 503,568,188 

WITHOUT    BEING    INJUKED. 

In  the  United  Kingdom 6,992  602 

In  New  York 13,94o!7.54 

In  Massachusetts 28,955,030 

•  Dorsey  on  Engli.-ih  and  American  railroads,  18. 


oO  ECONOMIC  nilLOSOPIIY. 

value.  In  one  case  the  Supreme  Court  of  Illinois,  acting  under  a 
statute  which  required  all  land  to  be  assessed  at  its  full  and  fair 
value,  corrected  an  assessment  of  railroad  property  conceded  to  be 
at  only  one-third  its  value,  as  being-  too  high,  on  pi-oof  that  the  aver- 
age assessment  of  other  lands  in  the  county  icas  at  only  one-fifth 
of  their  value.  And  in  the  city  of  Chicago  in  the  ten  years  from 
1871  to  1881  assessments  of  aggregate  values  of  real  and  per- 
sonal property  declined  for  the  whole  city  by  two-thirds,  \vhereas 
the  actual  values  nearly  doubled. 

So  in  the  empire  of  France  prior  to  the  war  of  Napoleon  III. 
against  Germany  ending  in  Sedan,  the  published  statistics  of  the 
French  army  called  for  1,400,000,  whereas  only  between  400,000 
and  500,000  men  were  in  the  service. 

Again,  in  the  debates  on  the  slavery  issue,  preceding  the  war 
of  the  rebellion,  Mr.  Toombs  and  other  Southern  senators  cited 
the  small  returns  of  pauperism  in  the  Southern  States  against  the 
large  returns  in  Massachusetts  as  evidence  of  the  greater  wealth 
of  the  Southern  States.  To  this  it  was  replied  that  returns  of 
pauperism  measured  only  the  extent  of  the  state  provision  for 
the  relief  of  the  poor,  and  not  the  extent  of  the  poverty.  A 
state  might  escape  all  statistical  appearance  of  pauperism  by 
making  no  provision  whatever  for  its  poor. 

12.  The  Results  of  Statistics. — The  difference  in  certainty 
between  the  a  priori  and  the  historical  method  will  appear  by  con- 
trasting the  perfect  blank  to  which  the  mind  of  any  a  priori 
reasoner  would  be  reduced  if  asked  to  say  how  many  bachelors  in 
France  would  marry  single  women  in  any  given  five  years  ;  or 
how  many  would  marry  widows  ;  how  many  widowers  would 
marry  spinsters,  and  how  many  widowers  would  marry 
w'idows.  But  let  any  child  of  fifteen  years  of  age  be  told  what 
the  actual  proportion  was  in  the  three  following  periods,  of  five 
years  each,  and  he  could  instantly  answer  the  inquiiy  for  any 
future  period  within  a  narrow  margin.     The  proportions  were:* 

Years  1836-40.  1841-4.1.  1846-50. 

Bachelors  with  spinsters 8,339  8,386  8,3.55 

Bachelors  with  widows ..    351  354  371 

Widowers  with  spinsters  982  937  934 

Widowerswith  widows 320  323  340 

Any  x^erson  glancing  at  this  table  could  safely  predict  that  in 
the  five  years  from  J  880  to  1886  in  France  the  marriages  of  single 

*  "  Condition  of  Isatioiis,"  j).  27. 


MARRIAGES  AND  HEALTH.  31 

men  to  single  women  would  be  between  8,300  and  8,400,  that  the 
marriages  of  bachelors  with  widows  would  not  vaiy  50  from  350, 
that  the  marriages  of  widowers  with  spinsters  would  be  within  50 
of  950,  and  that  the  marriages  of  widowers  with  widows  would  be 
between  315  and  350. 

Still  more  difficult  would  it  be  on  any  a  priori  basis  to  deter- 
mine how  many  men  under  thirty  years  of  age  or  under  forty- 
five  will  marry  women  of  over  60  years  of  age  in  Belgium.  The 
case  comes  entirely  within  our  reach,  when- we  learn  that  in  the 
six  following  periods  of  five  years  each,  women  of  over  60  married 
men  of  the  ages  here  given  :* 

Periods  of  5  years.                                                     Men  of  30  years  Between  30  and 

•'                                                                    and  under.  45  years. 

1841tol845 Twice  Six 

1846  to  1850 Once  Six 

1851  to  1855 Once  Six 

1856to]8C0 Once  Six 

1861  to  1865 Once  Six 

13.  Utility  of  Statistics. — The  national  utility  of  such  sta- 
tistics may  be  illustrated  by  the  fact  that  the  belief  once  widely 
prevailed  that  people  subjected  continuously  to  an  enervating 
climate  became  "  acclimated,"  so  that  it  affected  them  less  than 
those  newly  brought  under  its  influences.  If  this  were  true  it 
would  be  the  policy  of  the  British  government  to  continue  troops 
permanently  at  whatever  post  they  were  sent  to.  If  the  reverse 
were  true  it  ought  to  cliange  them  fi*equently.  Statistics  were 
collected  of  past  experience,  and  it  was  found  that  the  mortality 
was  twice  as  great  among  those  continuousl}^  subjected  to  the 
strain  of  a  bad  climate  as  in  those  exposed  ofP  and  on,  or,  in  effect, 
that  the  longer  the  human  frame  was  exposed  to  injurious  con- 
ditions the  less  was  its  power  of  resistance.  Hence  the  govern- 
ment ordered  that  no  troops  should  be  stationed  in  distant  colo- 
nies more  than  three  years.  The  result  was  that  the  average 
annual  mortality  of  British  troops  serving  abroad,  which  had  been 
previously  48.58  in  1,000,  was,  subsequently  to  the  order,  24.2, 
a  reduction  of  one-half. 

In  certain  cases  statistics  relating  to  health  point  the  way  to  in- 
vestigations concerning  the  causes  of  diseases  as  related  to  either 
climate,  diet,  water,  or  hygiene  of  particular  districts  with  irre- 
sistible force.  Thus  in  France,  out  of  100,000  recruits  in  one  de- 
partment of  the  Pas  de  Calais,  only  118  had  to  be  exempted  from 


*"  Condition  of  Nations,"  p.  Zi. 


32  ECONOMIC  PHILOSOPHY. 

service  for  scrofula.  In  another  department  immediately  contig- 
uous (du  Nord)  2,809  out  of  100,000  were  exempted  for  the  same 
cause.  One  department  contained  not  one  case  requiring  dismis- 
sal for  glandular  disease,  another  contained  8,832  in  100,000.  In 
one  only  36  in  100,000  were  incapacitated  through  loss  of 
teeth,  in  another  6,700. 

14.  Regularity  of  Plieuonieua  Shown  by  Statistics. — 
Accidents  in  coal  mines  are  so  regular  that  in  England  the  pro- 
duction of  89,419  tons  of  coal  costs  a  life,  in  Germany  the  produc- 
tion of  70,461.  Among  the  miners  of  Frieburg  1  man  and  12 
Avomen  in  10,000  reach  the  age  of  90  years.  Among  the  general 
laborers  10  men  and  26  women  out  of  10,000  reach  the  same  age. 
Relief  from  all  work  by  retirement  from  business  tends  to  shorten 
life  and  brings  it  below  that  of  the  peasant.  Statistics  also  show 
many  foi'ms  of  peculiar  natural  compensation,  as  that  years  of 
gi'eat  epidemics  will  be  followed  by  j^ears  of  so  much  less  than 
the  usual  number  of  deaths,  and  with  such  an  increase  of  births 
as  to  nearly  restore  the  population  to  what  it  would  have  been 
without  the  epidemic. 

One  of  the  most  important  facts  disclosed  by  statistics  is  the  con- 
stancy of  the  ratio  which  crime,  and  other  forms  of  action  which 
are  believed  to  rest  on  perfect  freedom  of  the  individual,  will  bear 
to  society  and  to  certain  of  its  conditions,  especiallj'  illiteracy 
and  destitution.  In  Great  Britain'^  the  record  of  coronei's'  in- 
quests for  the  three  years  1865,  1866,  and  1867,  .shows  a  constancy 
in  crime  like  or  exceeding  that  which  pertains  to  the  revenue  or 
to  any  department  of  production. 


Murders         ..--.- 

Killed -        ■ 

Justifiable  homicides   -        -        -        - 

Suicides    ------- 

Accidentally  killed      -        -        -        - 

Deaths,  cause  unknown 

Found  dead 

Natural  deaths         ----- 

Total -        -2.5,011     24,920    24,648 


*  "  Miscellatieous  Statistics  of  Great  Britain,"  vol.  i. 


1865. 

1866. 

1867. 

227 

272 

255 

282 

223 

179 

6 

5 

6 

1,397 

1,360 

1,356 

11,397 

11,262 

11,172 

222 

225 

208 

2,657 

2,697 

2,702 

8,823 

8,882 

8,870 

PO  VERTY  AND  CRIME.  33 

Of  this  total : 

Males        -        -        -        -        -        -        -  17,566       17,496      17,304 

Females        -        - 7,445        7,430        7,344 

15.  Statistics  Taken  With  a  Bias. —Statistics  have  been 
extensively  taken  in  most  countries  to  show  the  proportion  which 
crime  bears  to  illiterac}^,  to  particular  forms  of  religious  faith, 
or  to  intemperance,  while  in  very  few  cases  are  we  able  to  learn 
the  degree  in  which  crime  results  fi'om  poverty.  It  is  important 
that  those  who  have  charge  of  collecting  statistics  for  govern- 
ments should  be  without  bias  or  theory  as  to  what  the  statistics 
ought  to  prove.  While  in  ordinary  years  in  Ireland  the  arrests 
for  crime  ai'eonly  from  4,000  to  5,000,  in  1849,  the  culmination  of 
the  famine,  they  rose  to  41,989,  from  which  they  fell  to  11,788  in 
1854,  simultaneously  with  a  fall  in  the  number  of  ejectments  of 
small  householders  from  74,171  in  1850  to  8, 989  hi  1854,  to  4,972  in 
1862,  311  in  1869,  and  444  in  1870.  Again  in  Cis-Leithania  (Aus- 
tria) in  1871  out  of  22,620  persons  convicted  of  crimes,  18,820  were 
utterly  destitute,  2,637  were  on  the  verge  of  destitution,  and  only 
163  were  well-to-do. 

It  results  in  errors  of  inference  also,  in  the  treatment  of  sta- 
tistics, both  in  politics  and  economics,  to  display  abnormal  indus- 
try in  collectijig  the  facts  which  are  supposed  to  be  the  effects  of 
a  particular  cause,  and  to  make  no  statistical  or  other  research 
which  might  develop  other  causes  not  recognized,  or  show  a 
greater  relative  power  in  them  than  in  the  one  cause  assumed. 

For  instance.  Helper's  "  Impending  Crisis  "  displayed  with  great 
fullness  the  superiority  of  the  pi'oductive  industries  of  the  Northern 
States  over  those  of  the  Southei'n,  leaving  it  to  be  inferred  that 
this  superiority  was  wholly  due  to  tbe  relative  conditions  of  the 
laborer  of  the  two  sections  as  being  the  one  free  and  the  other 
enslaved.  It  made  no  account  of  the  difference,  in  quality  and 
I)roductive  value,  between  a  population  wholly  European,  inheri- 
tors of  thirty  centuries  of  civilization,  and  a  population,  forty 
per  cent,  of  which  was  African,  inheritors  of  but  three  centuries 
of  civilizing  influence.  Here  the  statistics  might  all  be  true,  but 
the  inference  might  require  to  be  modified  by  other  statistics 
showing  the  relative  productive  value  of  newly  civilized  races  com- 
pared w  ith  those  among  whom  liabits  of  jiroduction  had  been  longer 
inherited.  Nott  and  Gliddon,  in  their  work  on  "  Types  of  Man- 
kind," had  presented  historical  data  tending  to  show  the  prime- 
val and   perpetual  inequality  of  the  two  races,  white  and  black, 


34  ECONOMIC  PHILOSOPHY. 

leaving  it  to  be  inferred  that  this  inequality  necessarily  justi- 
fied slavery.  Tlie  historical  data  might  be  correct,  and  the  infer- 
ence exaggerated. 

So  Mr.  H.  F.  Redfield  published  a  careful  collection  of  statis- 
tics showing  that  in  the  twenty  years  after  the  war  of  1861-5,  up- 
wards of  forty  thousand  homicides  were  committed  in  the  South- 
ern States,  that  a  very  large  proportion  of  them  went  vmpun- 
ished,  and  that  the  ratio  of  homicides  to  populati(m  was  several 
times  greater  than  in  the  Northern  States.  The  inference  appeared 
to  be  that  the  Federal  Government,  whose  police  powers  were  so 
imperfectly  developed  that  it  was  powerless  to  prevent  the  assas- 
sination of  two  of  its  presidents,  should  exercise  police  jurisdic- 
tion either  throughout  the  South  or  throughout  the  Union.  It 
was  thus  assumed  that  the  ratio  of  murders  would  be  equalized 
by  bringing  the  two  sections  under  one  administration  of  law. 
This  again  overlooked  the  fact  that  one  of  these  sections  was  al- 
most wholly  of  one  race,  while  the  other  was  divided  nearly 
equally  as  respects  numbers  between  two  races,  between  which 
marriage  was  repugnant,  and  social  equality  and  sympathy  prac- 
tically impossible.  No  observant  person  can  have  any  reasona- 
ble doubt  that  an  introduction  into  any  one  northern  state,  of  an 
alien  race  to  the  extent  of  forty  per  cent,  of  the  whole,  too  un- 
like the  existing  to  intermarry  or  associate,  would  be  strenuously 
opposed  on  all  sides,  and  if  permitted  would  greatly  increase  the 
rate  of  homicide. 

The  necessity  of  collecting  duties  on  imports  leads  also  to  the 
collection  of  very  full  statistics  of  imports  and  exjjorts  in 
most    countries,*  while    so    far  as   the  internal  trade    remains 

*  IF.  Stanley  Jtvons  ("  Theory  of  Political  Economy,"  p.  23),  say8 :  "  I  do  not  hesi- 
tate to  say,  too,  that  economics  might  be  gradually  erected  into  an  exact  science  if  only 
commercial  statistics  were  far  more  complete  and  accurate  than  they  are  at  present,  po 
that  the  formulaj  could  be  endowed  with  exact  meaning  by  tlie  aid  of  numerical  data- 
These  data  would  consist  chiefly  in  accurate  accounts  of  the  quantities  of  goods  pos- 
sessed and  consumed  by  the  community,  and  the  prices  at  which  they  are  exchanged. 
There  is  no  reason  whatever  why  we  should  not  have  those  statistics,  except  the  cost 
and  trouble  of  collecting  them,  and  the  unwillingness  of  persons  to  afford  information. 
The  quantities  themselves  to  be  measured  and  registered  are  most  concrete  and  i^recise. 
Tn  a  few  cases  we  already  have  information  approximating  to  completeness,  as  when  a 
commodity  like  tea,  sugar,  coffee,  or  tobacco  is  wholly  imported.  But  when  articles 
are  untaxed  and  parlly  produced  within  the  country,  we  have  yet  the  vaguest  notions 
of  the  quantities  consumed.  Some  slight  success  is  now  at  last  attending  the  efforts  to 
gather  agricultural  statistics  ;  and  the  great  need  felt  by  meu  engaged  in  the  cotton 
and  other  trades  to  obtain  accurate  accounts  of  stocks,  imports,  and  consumption  will 
probably  lead  to  the  publication  of  far  more  complete  information  than  we  have  hith- 
erto enjoyed.  The  deductive  science  of  economics  must  be  verified  and  rendered  use- 
ful by  the  purely  empirical  science  of  statistics.  Theory  must  be  invested  with  the 
reality  and  life  of  fact." 


FOREIGN  TRADE.  35 

untaxed,  no  government  supervision  exists  over  it,  and  no 
statistics  of  it  are  preserved.  This  brings  into  the  fore- 
ground the  imports  and  exports  of  a  country,  as  if  these  were 
the  substance  of  a  nation's  welfare,  whereas,  in  a  country  of  large 
extent  and  diversified  productions,  the  import  and  exjjort  trade 
combined  may  not  be  a  hundredth  part  of  its  internal  trade  in 
volume  or  importance.  There  have  been  long  periods  of  years 
when  the  tonnage  and  values  transported  through  the  Erie  canal 
alone  exceeded  the  entire  imports  and  exports  at  all  the  ports  of 
the  United  States.-  Moreover,  if  a  manufacturing  section  like 
New  England  happens  to  be  an  independent  nation  by  itself,  all 
the  commodities  it  sends  out  figure  as  "  exports,"  and  all  the  food 
and  raw  materials  it  buys  appear  as  imports.  In  this  case  the  ex- 
port of  shoes  from  New  England*  would  be  twenty-fold  that 
from  Great  Britain,!  yet  her  industrial  activity  might  be  less  than 
it  now  is,  though  by  reason  of  New  England  being  part  of  the 
Union,  and  a  large  part  of  her  shoe  trade  being  with  other  parts 
of  the  United  States,  from  whence  also  she  buys  much  of  her  raw 
materials  and  food,  this  entire  trade,  which  is  just  as  valuable  as 
it  could  be  if  New  England  were  an  independent  nation,  cuts  no 
figure  in  any  schedule  of  imports  or  exports. 

Certain  kinds  of  statistics  are  thus  brought  into  prominence 
because  the  necessity  of  collecting  a  particular  tax  causes  them 
to  be  fully  and  accurately  collected,  and  not  because  they  are  the 
best  by  which  to  test  a  nation's  progress.  Writers  who  have  a 
bias  in  favor  of  regarding  this  class  of  statistics  as  identical  Avitli 
national  prosperity,  will  cite  the  larger  foreign  trade  and  banking 
of  England,  whose  small  area  and  insular  position  cause  her  to 
depend  largely  on  foreign  trade  and  banking,  as  proof  of  her  su- 
periority over  countries  like  Russia  and  America,  whose  real 
greatness  would  not  be  seriously  diminished,  and  might  in  many 
departments  of  industry  be  increased,  if  their  foreign  trade  were 
wholly  extinguished.  5: 

*100,000,000  pairs.    t4,200,000  pairs. 

iFor  instance,  Sir  Tlios.  Brai^sey  saya  ("  Work  and  Wages,"  p.  1G8) :  "  The  supe- 
riority of  England  over  every  competitor  in  the  industrial  field,!?  eufflciently  proved 
by  the  proportion  of  our  exports  per  head  of  the  populiition.  In  England  the  rate  is 
£0,  38.,  2d.,  while  in  France  It  is  only  £2,  lSs.,3d.,  and  in  Italy,  £1,  4s.,  8d." 

These  facts  merely  indicate  insular  po.sitiou.  If  London  were  insulated  from  Great 
Britain  into  a  separate  nation,  BO  that  all  its  trade  with  Enghuid  would  count  as  "im- 
ports and  exports,''  it  would  be  found  far  greater  than  that  of  the  whole  of  Great 
Britain.  On  the  other  hand,  unite  in  one  empire  Great  Britain  and  the  colonies  with 
which  the  British  people  trade,  so  that  their  present  trade  with  them  will  be  left  out  of 
"imports  and  exports,"  and  the  foreign  trade  of  the  whole  empire  would  shrink 
Btatistically,  though  the  actual  trade  might  increase. 


36  ECONOMIC  PIIIL080PIIT. 

16.  The  American  Impulse  Toward  Economic  Prog- 
ress.— Circumstances  have  made  the  United  States  of  America, 
during  the  past  half  century,  the  field  of  most  easy  and  rapid 
progress  in  the  development  of  economic  science.  It  has  been 
the  country  of  by  far  the  most  rapid  growth  in  wealth.  Where 
wealth  grows  most  rapidly  the  laws  governing  its  growth  will  be 
most  successfully  studied.*  This  follows  as  naturally  as  that  the 
military  art  should  develop  most  rapidly  during  war;  that  fine  art 
should  achieve  its  best  works  where  most  painting  and  sculpture 
are  evolved  ;  that  most  agricultui-al  imj)lements  should  be  in- 
vented where  agriculture  is  most  extensively  conducted,  or  that 
soils  should  grow  in  fertility  most  rapidly  where  the  soil  is  most 
intensively  tilled. 

The  United  States,  by  presenting  thirty  or  forty  systems  of  bank- 
ing under  state  control,  followed  by  one  under  national  control, 
have  afforded  the  best  school  in  which  to  study  the  monetary 
side  of  political  economy.  By  its  varied  experience  in  manufac- 
tures, its  I'apid  development  of  railways,  its  diffusion  of  free  edu- 
cation under  state  control  and  aid,  all  being  more  or  less  under 
nearly  forty  independent  systems  working  side  by  side,  it  has 
afforded  the  most  apt  school  in  which  one  having  economic  in- 
sight could  observe. 

Every  economic  measure  has  endured  in  the  proper  committee 
of  state  or  national  legislation  the  assaults  of  critics  engaged  in 
the  particular  kind  of  business  which  the  measure  would  most 
affect,  and  whose  pursuits  rendered  them  most  competent  to  fur- 
nish original  information  bearing  most  directly  on  the  point. 
These  have  more  value  than  the  data  which  have  yet  found  their 
way  into  books.  If  a  canal  were  to  be  built,  both  those  living  on 
its  route  and  those  who  could  derive  no  immediate  benefit  would 
be  heard.  If  a  duty  were  to  be  laid  or  removed,  both  importers 
and  manufacturers  of  the  particular  article  on  which  the  duty 

*Mulhall,  a  leading  Englieh  statistician,  says  of  us  :  "  Every  day  tliat  the  sun  rises 
upon  tlie  American  people  it  sees  an  addition  of  two  and  a  half  millions  of  dollars  to 
the  accumulated  wealth  of  the  Republic,  which  .is  equal  to  oue-third  of  the  daily  ac- 
cumulations of  mankind. 

They  are  as  follows  : 

United  States...   $825,000,000  per  annum. 

Prance 375,000,000    " 

Great  Britain 325,000,000    " 

Germany 200,000,000    " 

Other  countries 725,000,000    " 

See  also  Gladstone's  remarks  in  "  Our  Kin  Beyond  the  Sea.'' 


THE  STUDY   OF    INTERESTS.  «7 

was  proposed  to  be  laid  would  attend.  In  this  manner  the  bear- 
ing- of  leorislation  on  rival  industries  would  be  studied  in  the  lio-ht 
of  the  practical  knowledge  possessed  by  the  men  who  conducted,  or 
desired  to  conduct  the  industries,  or  who  purcliased  or  desii-ed  to 
purchase  tlieir  product. 

It  was  the  necessity,  on  the  part  of  rulers,  to  accommodate  the 
action  of  government  in  laying  taxes  to  the  industrial  wants  and 
circumstances  of  the  taxpayers,  that  originated  the  British  House 
of  Commons,  and  with  it  that  bi-cameral,  or  two-chambered 
representative  legislature,  which  is  so  closely  copied  in  our 
House  of  Representatives,  not  only  in  the  federal  government, 
but  in  each  of  the  state  governments.  The  British  legislature,  in 
its  inception,  was  a  council  of  notables  summoned  to  advise  the 
king.  The  Commons  were  an  influential  lobby  of  taxpayers 
of  note  who  convened  to  petition  the  king  and  lords  as  to  the 
mode  in  which  they  should  be  taxed.  The  fornuila  of  en- 
actment recited  that  the  laws  were  jjassed  by  the  king  in 
person,  with  the  advice  of  his  lords,  spiritual  and  temporal,  upon 
the  hunible  petition  of  the  Commons.  Hence,  free  popular 
government  in  modern  times  grew  out  of  the  principle  of 
respect  for  a  lobby  consisting  of  business  men,  producers  and 
consumers,  who  sought  to  explain  to  the  law-makers  the  pi^actical 
effects  of  proposed  measures  of  legislation.  It  still  remains  true 
that  it  is  when  the  business  interests  immediately  affected  by 
legislation  of  any  kind  appear  before  the  committee  of  ways  and 
means  of  the  house  of  representatives  to  explain  to  legislators 
intelligently  and  from  experience  what  are  the  economic  effects 
of  legislation,  past,  present  or  prospective,  on  their  personal  in- 
tei'ests,  that  the  head  waters  of  practical  political  economy  are 
reached.  If  legislators  can  not  find  out  what  the  effect  of  pro- 
posed legislation  will  l)e  by  inquiring  of  those  whose  interests  it 
will  affect,  they  can  not  find  out  at  all.  Whether  these  interests 
when  known  are  of  a  kind  which  should  be  regarded  rather  than 
others  with  which  they  may  conflict,  is  a  question  whicli  addresses 
itself  to  legislative  discretion.  But  of  the  fact  that  the  most  im- 
portant source  of  enlightenment  for  a  legislator  is  the  testimony  of 
the  man  upon  whom  his  legislation  is  to  act,  there  can  be  no 
doubt.  It  may  be  interested.  But  the  adjusted  aggregate  of  all 
private  interests  constitutes  the  public  interest.  It  may  be  sel- 
fish. But  the  aggregate  sellisluiess  of  a  whole  people  brought  to 
bear  to  secure  their  collective  welfare,  is  patriotism. 

The  word  "  lobby  "  is  an  opprobrious  word,  while  the  sacred 

*  CJuizot  on  Ki'lj.  (ii.v.vPD.  'lOiMVT.  482-507,  5i;i,  r,17. 

458097 


38  ECONOMIC  PHILOSOPHY. 

right  of  the  people  to  petition  for  a  redress  of  grievances  is  the 
most  popular  and  indestructible  boon  which  the  constitution 
aflFords.  Yet  there  is  no  other  name  for  tlie  delegation  of  citizens 
which  comes  to  the  capital  to  make  a  petition  concerning  legisla- 
tion effective  than  "  the  lobby."  It  is  one  of  the  contradictions 
between  the  purity  of  the  ideal  and  the  corruption  of  the  real  in 
politics,  that  the  right  of  petition  should  continue  to  be  the  sub- 
ject of  profound  reverence,  while  the  men  who  exercise  the  i-ight 
should  be  assumed  to  be  almost  of  necessity  engaged  in  influen- 
cing legislation  corruptl3^  In  fact,  no  influence  is  more  useful  or 
necessary  to  a  legislatui-e  which  is  called  u])on  to  i)ass  laws  of  a 
kind  that  bear  upon  economic  values,  as  nearly  all  laws  in  some 
manner  must,  than  that  of  the  persons  whose  economic  interests 
are  thus  affected.  And,  on  the  contrary,  no  doctrine  is  more 
pernicious  in  practice  than  the  despotic  notion  that  a  legislature 
sliould  approach  its  work  with  an  ideal  reverence  for  some  cast- 
iron  rule  or  so-called  "principle,"  which  is  derived  from  some 
theorist  of  high  repute,  whether  Aristotle,  Adam  Smith,  or  any 
other,  and  is  so  sacred  that  it  is  not  to  be  subjected  to  critical  anal- 
ysis at  the  hands  of  all  who  feel  that  they  will  be  injured  by  it. 

Statesmen  like  Hamilton,  Madison,  Jefferson,  Washington 
himself,  De  Witt  Clinton,  Gallatin,  Callioun,  Jackson,  Clay,  Web- 
ster, Choate,  Rollin  R  Mallory,  Silas  Wright,  Benton,  Cass, 
Douglass,  Lincoln,  Hale,  Seward,  Chase,  Thaddeus  Stevens, 
Etheridge,  Stewart,  Sumner,  Garfield  aud  Kelley  ai'e,  and  should 
be,  closely  studied  by  American  students  for  their  economic  opin- 
ions. The  chapters  bearing  on  economic  topics  in  the  writings  of 
Hamilton,  Horace  Greeley  and  James  G.  Blaine,  and  in  the 
speeches  of  the  great  debaters  in  Congress,  form  an  inexhaustible 
mine  of  economic  instruction.  What  practical  men  say,  while 
under  criticism,  and  in  the  presence  of  the  enemy,  and  liable  to 
correction,  brmgs  us  nearer  to  the  economic  life  of  the  people  than 
didactic  works  are  apt  to  do. 

17.  The  United  States  as  an  Econoniic  Instructor. — 
In  America  the  author  whose  teachings  are  most  original,  influ- 
ential, valuable  and  authoritative  on  all  economic  and  social 
topics  is  the  government  itself,  in  all  its  enginerj' — national, 
state  (including  its  machinery  of  elections),  nuiniciiial  and  local. 
The  census  of  the  United  States,  compiled  every  ten  years  since 
1790,  the  censuses  of  most  of  the  states  compiled  in  the  interven- 
ing fifth  year,  or  every  five  years,  the  debates  in  Congress,  as 
published  in  the  Congressional  Globe,  the  messages  of  the  Presi- 


CESS  us    TEACHINGS.  39 

dents  and  the  reports  of  the  heads  of  departments,  especially  that 
of  the  treasury,  agricultural  bureau,  and  foreign  consuls,  the 
messages  also  of  the  govei'nors,  and  reports  of  the  state  officers, 
and  the  debates  in  the  legislatures  of  the  respective  states,  the  city 
councils  of  cities  and  the  town  meetings  of  towns,  are  the  point 
of  contact  between  the  popular  mind  and  practical  political  econ- 
omy. England  followed  the  United  States  in  1801,  in  taking  a 
census.  Besides  these,  the  special  investigations  made  and  reports 
published  by  committees  of  Congress  upon  questions  relating  to 
revenue,  coinage,  banks,  shipping,  railroads,  mining,  canals,  or 
other  internal  impi'ovements,  and  the  statistical  reports  of  asso- 
ciations representing  producers,  supersede  in  interest  and  often 
exceed  in  economic  applicability  to  our  situation,  and  even  in  sci- 
entific value  the  purely  economic  discussions  of  persons  who 
are  removed  from  us  by  distance,  time  or  lack  of  familiarity  and 
sympathy.  Facts  and  figures,  however  official  or  truthful,  nnist 
be  set  in  appropriate  relation  to  all  other  facts  and  implications, 
or  their  use  may  still  in  elTect,  deceive.    . 

Facts  of  every  kind  can  be  handled  deceitfully,  and  made  the 
means  of  misleading  the  unwary.  This  is  especially  true  of  the 
facts  and  omissions  of  the  census. 

Of  some  products  the  annual  crop  is  given — of  others  the  total 
stock  on  hand  ;  many  very  extended  and  valuable  products  are 
omitted  altogether.  Mr.  Carroll  D.  Wright  has  elfectively  called 
attention  to  the  fact  that  in  taking  returns  of  capital  invested  in 
manufactures  or  other  industry  no  returns  are  made  of  boi'rowed 
capital,  and  that  in  this  manner  the  ratio  of  wages  to  capital  and 
of  profits  to  capital  have  both  been  overestimated.  This,  how- 
ever, points  only  to  a  more  perfect  system  of  taking  the  census. 
The  amount  of  exaggeration  and  misrepresentation  which  the 
census  prevents  is  incalculably  greater  than  that  which  it  permits 
to  exist. 

Second  only  to  the  government  of  the  United  States  in  influ- 
ence as  a  teacher  of  economic  science  is  the  American  newspapei' 
press.  It  has  not  wholly  emerged  from  that  youthful  period  in 
which  discussion  is  carried  on  in  a  disputatious  rather  than  in  a 
scientific  spirit.  As  a  whole,  however,  its  method  is  nearly  as  fair 
and  not  less  intelligent  than  that  of  the  writers  of  books.  It  is 
gradually  learning  that  government,  after  all,  calls  for  skill  and 
study  as  well  as  mere  honesty  and  i)atriotism.  With  all  its 
shortcomings  it  may  be  truly  said  that  while  financial  and  eco- 
nomic questions,  especially  the  tariff  question,  have  seldom  in  the 


•lU  ECONOMIC  PllILOSOPIIY. 

American  press  been  treated  as  ably  as  in  Congress,  the}'  have 
continually  been  discussed  by  both  Congress  and  the  American 
press  with  a  degree  of  wisdom  and  fairness  far  greater  than  any 
which  have  marked  the  English  economists  generally  since  Adam 
Smith.  It  has  been  unfortunate  for  economic  science  that  it  has 
been  deemed  a  point  of  political  good-breeding  in  England  since 
1846  to  bow  when  the  term  "free  trade"  is  mentioned  as  if  it 
were  the  host,  to  lift  one's  hat  as  if  it  were  the  queen,  and  to  shed 
tears  of  patriotism  as  if  it  were  the  flag.  In  fact  it  is  only  a 
mixed  experiment,  freighted  with  evils  not  easy  to  calculate.  Its 
partial  trial  cost  indeed  the  expatriation  of  millions  of  farmei'S, 
the  fortunes  of  some,  and  even  the  lives  of  not  a  few  of  those 
of  the  poorer  class.  But  so  long  as  the  j^rowess  of  the  British 
army  extends  British  markets  adequately  to  keep  British  spindles 
going,  the  ruin  of  the  farmers  can  be  atoned  for  by  the  prosperity 
of  the  manufacturers.  To  perceive  this  has  constituted  the  dis- 
tinctive function  of  the  Manchester  school. 


CHAPTER  II. 


WEALTH. 


*  18.  Wealth  and  Poverty— Social. —Wealth,   in  ordinary 
speech,  is  apphecl  to  a  large  accumulation  of  property  in  one  per- 
son, or  as  brought  into  one  point  of  view,  as  when  we  speak  of 
the  wealth  of  some  one  person,  city  or  state.     In  political  economy 
the  term  wealth  expresses  the  abstract  idea  or  quality  wherein 
these  large  masses  of  wealth  are  identical,  in  substance,  with  the 
smallest  quantity,  though  it  be  the  sum  paid  to  a  laborer  for  a 
day's  work,   or  by  him  to  a  restaurant  proprietor  for  a  meal. 
Wealth,  therefore,  in  the  economic  sense,  rejects  the  element  of 
quantity  which  is  associated  with  the  term  in  colloquial  usage, 
and  retains  only  the  quality  wherein  a  small  sum  of  wealth  is 
identical  with  a  large  one.    Wealth,  in  the  colloquial  sense,  stands 
to  wealth  in  the  economic  sense,  as  the  term  "  ocean  "  does  to  the 
term  "  water,"  ocean  conveying  the  idea  of  a  vast  quantity,  while 
"  water "  is  as  fully  met  by  a  glassful   as  by  a  sea.     So  a  boot- 
black's fee  is  as  truly  wealth,  economically,  as  the  largest  estate. 
Economic  wealth  would  be  the  power  to  satisfy  one's  desires, 
provided  desire  were  not  in  itself  an  inimitably  expansive  quan- 
tity, and  therefore  incapable  of  satisfaction  in  any  absolute  sense. 
Wealth  is,  therefore,  a  power  to  command  the  services  of  our  fel- 
low men.     When  these  services  are  commanded  by  force  only,  as 
in  slavery,  and   under  barbaric  despotisms,   foi'ce  becomes  the 
chief  source  of  wealth.    Wealth  then  takes  on  the  form  of  slave- 
owning,  or  seigniorage,  or  lordship,  over  many  retainers,  servants, 
henchmen,   or  soldiers.     In  commercial  periods  the  exei'cise  of 
force  is  relegated  to  the  government  and  its  army  and  police. 
Wealth  then  becomes  the  power  to  command  the  voluntary  ser- 
vices of  men  by  paying  for  them.     In  the  degree  that  a  man  pos- 
sesses much  of  this  power  he  is  wealthy.     Possessing  little  of  it 
renders  one  poor.     But  even  the  poor  obtain  all  the  material  com- 
fort they  enjoy   through  such   share  of  wealth    as    is    theirs. 
Wealth,   therefore,  does  not  consist  in  commodities,   services, 


42  ECONOMIC  PHILOSOPHY. 

money,  lands,  or  pleasures,  but  in  the  power  to  control  tliein  at 
will  by  compensation.* 

Wealth  may  again  be  defined  as  the  removal  of  poverty. 
Ijideed  if  the  logical,  historical  order  were  observed,  poverty,  as 
the  antithesis  aiid  antecedent  of  wealth,  would  be  entitled  to  the 
prior  definition.  Poverty  is  the  condition  of  unsupplied  want — 
of  hunger,  thirst,  nakedness,  destitution  and  inability  to  com- 
mand the  services  of  one's  fellow  men.  It  pertains  to  all  human 
beings  at  birth,  except  in  so  far  as  law,  originating  in  parental 
affection,  may  have  invested  them  with  a  title  to  the  affectionate 
care  of  their  parents,  or  to  certain  rights  to  inherit  property  from 
their  ancestors  or  relatives.  It  is  the  characteristic  of  all  nomad- 
ism, like  that  of  the  Australian  natives,  and  of  all  savageism.  It 
diminishes  with  barbarism — the  drift  toward  civilization  being 
always  proportionate  to  the  growth  of  the  wealth  of  the  aggregate 
society.  Civilization  is  the  intellectual  aspect,  or  name,  for  the 
same  increase  in  the  complexity  of  individual  rights  and  powers, 
and  the  same  development  of  personal  liberty,  relatively  to  com- 
munal, tribal  or  state  power,  of  which  the  growth  of  capital,  or 
wealth  is  tlie  economic  aspect,  or  name. 

*  Adam  Smith  ("  Wealth  of  Nations  "  by  McCulloch,  p.  13),  says  :  "  Every  man  is 
rich  or  poor  according  to  the  degree  in  which  he  can  [or  can  not]  afford  to  enjoy  the 
necessaries,  conveniences  and  amusements  of  human  life.  But  afttr  the  division  of 
labor  has  once  thoroughly  taken  place,  it  is  but  a  very  small  part  of  these  with  which  a 
man's  own  labor  can  supply  him  ;  the  far  greater  part  of  them  he  must  derive  from  the 
labor  of  other  people.  And  he  must  be  rich  or  poor  according  to  the  quantity  of  that 
labor  which  he  can  command,  or  which  he  can  afford  to  purchase. 

H.  C.  Carey  says  wealth  consists  in  the  power  to  command  the  ever  gratuitous  ser- 
vices of  nature.— <Si9C.  Sci.,by  McKemup.  100. 

J5as('i«<  ("  Harmonies  of  Economics,"  tr.  by  Stirling,  p.  181),  says :  "The  vulgar 
employ  the  word  wealth  in  two  senses.  They  say  '  the  abundance  of  water  is  wealth 
to  such  a  country.'  In  this  case  they  are  thinking  only  of  utility.  But  when  one 
wishes  to  reckon  up  his  own  wealth,  he  makes  what  is  called  an  inventory,  in  which 
only  commercial  value  is  taken  into  account. 

"  With  deference  to  the  savants  I  believe  the  vulgar  are  right  for  once.  Wealth  is 
either  actual  or  relative.  In  the  first  point  of  view  we  judge  of  it  by  our  satisfactions. 
Mankind  become  richer  in  proportion  as  they  acquire  a  greater  amount  of  ease  or 
material  prosperity,  whatever  be  the  commodity  by  which  it  is  procured.  But  do  yon 
wish  to  know  what  proportional  share  each  man  has  in  the  general  prosperity  ?  In 
other  words,  his  relative  wealth.  This  is  simply  a  relation,  which  value  alone  reveals> 
because  value  is  itself  a  relation." 

Roscher  seems  to  use  the  term  "  goods"  for  "  wealth,"  and  says  :  "  Goods  are  any 
thing  which  can  be  used,  whether  directly  or  indirectly,  for  the  satisfaction  of  any  true 
or  legitimate  human  want,  and  whose  utility  for  this  purpose  is  recognized."  (•'  Pol. 
Econ.  by  Lalor,"  vol.  i,  p.  53  ;  chap.  1,  sec.  1.)  He  therefore  defines  economy  as  the 
systemized  activity  of  man  to  satisfy  his  need  of  external  goods. 

Henry  Faivcett  ("Manual,"  p.  G),  says  :  "  Wealth  may  be  defined  to  consist  of  every 
commodity  which  tias  exchange  value." 


CAREY'S  DEFINITION.  4:J 

Mr.  Cai'ey's  defiuition  of  wealth  as  "the  power  to  command  the 
always  gratuitous  services  of  the  great  forces  of  nature  "  is  excel- 
lent when  understood  in  Mr.  Carey's  sense,  and  may  be  broader 
and  more  philosophical  tlian  that  we  have  adopted  ;  but  it  involves 
much  study  to  comprehend,  and  its  full  meaning  grows  upon  the 
iniud  only  gradually,  as  it  does  in  the  class  of  truths  called  mys- 
tical. The  word  nature  came  into  the  English  language  with  a 
religious  meaning,  as  distinguishing  what  a  man  is  at  birth  in 
contrast  with  what  he  becomes  by  grace  or  divine  (supra- 
mundane)  influence.  From  this  it  passed  to  mean  the  constitu- 
tion wliich  all  things  have  under  law,  as  distinguished  from 
changes  they  may  take  on  supernaturally.  In  both  these  old 
senses  man  is  a  part  of  nature,  and  in  the  first  of  them  nature  is 
the  whole  of  man. 

Gradually  nature,  which  at  first  had  meant  what  man  was  at  bii-th, 
(from  natiis,  born)  came  to  be  used  by  some  as  meaning  tlie  world 
exterior  to  man,'^  to  wliich  the  root  meaning  of  the  word  nature, 
viz. ,  birth,  has  no  application.  Whatever  there  be  in  man,  which 
obtains  command  of  the  forces  of  exterior  nature,  must  of  course 

John  Sluarl  Mill  AeRnGS  weaKh  na  "'all  useful  or  agreeable  thiiiga  which  possess 
exchangeable  value,  or  in  other  words,  all  useful  and  agreeable  things  except  those 
which  can  be  obtained,  in  the  quantity  desired,  without  labor  or  sacrifice." 

Jevons  ("  Primer,"  p.  13),  says  wealth  is  "  what  is  transferable,  limited  in  supply,  and 
useful."  P«/Ty  rejects  the  term  wealth.  George  {"  Progveee  and  Poverty,"  pp.  34- 
37),  says  it  is  natural  products  modified  by  human  exertion,  so  as  to  gratify  desire. 

Henry  Sidgwick  ("  Pol.  Econ."  p.  71),  says:  "The  wealth  of  any  individual  is  con- 
sidered to  include  all  useful  thin!;s— whether  material  things,  as  food,  clothe.'?,  houses, 
etc.,  which,  being  at  once  valuable  and  transferable,  admit  of  being  sold  at  a  certain 
price." 

Adam  Smith  again  ("  Wealth  of  Nations"  by  McCulloch,  p  14),  says  ;  "  Wealth,  as 
Mr.  Hobbes  says,  is  power.  .  .  .  The  power  which  that  possession  immediately 
and  directly  conveys  to  him  is  the  power  of  purchasing  a  certain  command  over  all  the 
labor,  or  over  all  the  produce  of  labor  which  is  then  in  the  market.  The  exchangeable 
value  of  every  thing  must  always  be  precisely  equal  to  the  extent  of  this  power  which  it 
conveys  to  its  owner." 

Roscher  (vol.  i,  chap.  1,  sec.  9),  says  :  "  The  possession  of  large,  and  also  of  poten- 
tially lasting  resources;  ol)jectively  such  resources  themselves  we  call  wealih.  But  it 
mast  be  large  in  a  twofold  sense,  large  as  compared  with  the  rational  wants  of  its  pos- 
sessor, and  large  also  as  compared  wiih  the  resources  of  other  peopls.  If  all  men  were 
possessed  of  a  great  deal,  but  all  of  an  exactly  equal  amount,  each  would  be  compelled 
to  be  his  own  chimney-sweep,  scavenger  ami  bootblack  ;  and  how  could  any  one  then 
be  properly  called  wealthy?  " 

ANew  York  financial  journal  entitled  Wealih  adopts  tlie  following  well  considered 
and  apt  definition  :  "  Wealth  is  that  positive  and  substantial  share  in  the  good  of  for- 
tune which  distinguishes  an  individual  from  his  neighbors  by  putting  him  in  possession 
of  all  that  is  commonly  desired  and  sought  after  by  man." 

*  It  is  so  used  in  the  title  of  Mr.  George  P.  Marsh's  book,  "  Man  and  Nature,"  a  treat- 
ise on  physical  geography  as  inlluenced  by  human  action. 


44  ■  ECONOMIC  PIULOSOPIIY. 

])c  i)ai't  of  iriau's  nature.  It  is  not,  therefore,  a  contest  between 
man  and  nature,  but  between  nature  in  man  and  nature  exterior 
to  man.  The  forces  which  wealth  aids  man  to  control  are,  per- 
haps, "the  great  forces  of  natui^e."  But  the  forces,  in  man,  which 
do  the  conti'olling,  must  be  still  greater  forces  in  man's  natui-e,  or 
they  would  not  control.  Hence,  minds  educated  in  certain  schools 
of  thought,  I'epel  as  ill-conceived  and  incongruous,  the  attemj^t,  in 
a  definition  designed  to  be  exact,  to  treat  "man"  as  being  one 
distinct  entity  and  nature  another. 

Another  class  of  minds  asks,  "Why  do  we  need  any  aid  to  com- 
mand services  which  are  rendered  gratis  ?  "  They  do  not  merely 
ask  this  question,  but  they  find  themselves  unable  to  answer  it. 
This  inability  renders  it  necessary  to  translate  Carey's  language 
into  the  dialect  in  which  other  minds  think.  "When  it  is  so  trans- 
lated it  seems  to  mean  that  wealth  is  the  power  to  obtain  by  exchange 
or  i^ayment  such  services  on  the  part  of  other  men  as  will  bring 
within  the  reach  of  one's  own  enjoyment  those  properties  of  mat- 
ter which,  though  at  some  time  or  place  imparted  to  matter  gra- 
tuitously, yet  can  not  be  enjoyed  by  me  without  the  services  of 
my  fellows.  Confessedly  coal,  iron,  wood,  Avheat,  wool,  potatoes, 
flour,  and  the  life  that  is  in  plaiits,  animals,  and  our  fellow  men, 
come  to  society  at  large  as  the  gratuitous  gifts  of  nature.  The 
fragrance  and  flavor  of  tea,  wine,  venison  or  game  is  the  gratui- 
tous gift  of  nature.  Even  the  sharp  flavor  of  the  pepper  with 
which  we  season  the  venison  is  tlie  gratuitous  gift  of  nature. 
This  is  all  that  we  enjoy.  We  do  not  enjoy  the  labor  the  China- 
man performed  in  carrying  the  tea  over  the  mountains  on  his 
back  ;  nor  any  other  of  the  labor  necessary  to  place  the  tea  or 
pepper  or  game  on  our  table.  Yet  we  pay  for  the  labor  and  get 
the  enjoyable  pi'operties  gratis.  Hence  in  the  closest  analysis  we 
get  what  we  enjoy  gratis,  from  nature,  by  paying  our  fellow  men 
to  bring  it  to  us.  Hence,  also,  what  we  pay  for  seems  to  form  no 
part  of  what  we  enjoy,  but  it  is  the  means  of  getting  it. 

Man  makes  no  pro})erty  of  matter  or  force  which  his  fellow 
man  can  enjoy,  whether  it  be  the  light  of  the  stars,  the  hardness 
of  ivory,  the  beauty  of  gold,  the  glint  of  the  diamond  or  the' 
warmth  of  fur.  But  men's  toil  makes  the  telescope,  the  paper 
knife,  the  coin,  the  solitaire,  and  the  sacque.  Hence  while  the 
properties  we  enjoy  come  gratis  to  society  as  a  whole,  they  come 
to  him  who  enjoys  them,  as  wealth,  only  through  his  own  labor  or 
the  labor  of  his  fellows,  and  by  exchange.  Nature  having  affixed 
impassable  limits  to  each  man's  power  to  consume,  and  not  hav- 


FAWCETT  ON  WEALTH.  45 

iiig  presented  to  any  man  all  he  needs  to  consume,  the  surplus  of 
one  mans  product  must  be  forwarded  to  supply  the  deficiency  of 
another. 

Wealth,  therefore,  is  that  power  in  me,  however  and  whenever 
obtained,  which  gives  me  command  through  the  services  of  my 
fellow  men,  which  it  enables  me  to  pay  for,  of  all  those  gifts  or 
services,  which  nature  brings  gi'atuitously  to  some  member  of 
society,  at  some  time  or  place,  but  which  only  through  his  toil  or 
that  of  others,  is  brought  to  me. 

Mr.  Carey,  however,  correctly  defined  wealth  as  a  power  in 
man,  as  compared  with  Mr.  Fawcett,  who  defines  it*  as  a  com- 
modity, and  therefore  a  ijhysical  object.  If  a  commodity  were 
intrinsically  wealth,  it  would  i^emain  wealth  in  the  same  degree 
in  whosesoever  hands  it  might  be.  To  say  that  it  is  such  a  conr 
modity  as  has  exchange  value  is  tautological,  as  it  is  the  fact  that 
it  has  exchange  value  which  makes  it  a  commodity.  To  be  a 
commodity  it  must  commode  or  accommodate  or  meet  the  wants 
of  somebody.  The  question  whether  a  thing  is  a  conmiodity, 
therefore,  depends  on  whether  it  is  wanted.  But  when  we  define 
commodity  as  a  thing  that  is  wanted,  it  is  plain  that  the  point 
that  determines  its  being  a  commodity  is  not  any  quality  of  the 
thing  itself,  but  the  state  of  desire  in  the  mind  of  the  person  who 
wants  it.  Want  therefoi'e  stands  as  the  antithesis  of  wealth,  and 
wealth  is  the  power  to  remove  or  satisfy  wants.  One  might  de- 
fine want  as  "  the  thing  we  desire,"  and  the  word  is  so  used  when 
we  say  of  a  book  "  it  supplies  a  long-felt  want."  Now  if  we  also 
define  wealth  as  "the  thing  we  desire,"  which  is  the  outcome  of 
Mr.  Fawcetfc's  definition,  it  will  happen  that  wealth  and  want, 
while  opposite  in  meaning,  will  be  defined  in  the  same  terms. 
Both  will  mean  the  tilings  we  need,  whereas  wealth  expresses  the 
fact  of  our  having  them,  and  want  the  fact  of  our  being  without 
them.  It  is  clear  that  the  wealth  and  the  want  alike  express  our 
condition  or  attitude,  either  of  power  or  of  destitution.  As  satiety 
and  hunger  do  not  consist  in  "  eatable  food,"  though  they  do  de- 
fine our  attitude  toward  them,  so  wealth  and  poverty  can  not  con- 
sist in  exchangeable  commodities,  though  the  first  implies  our 
possession  of  them,  and  the  latter  our  lack  of  them.  Besides, 
when  the  true  idea  of  wealth  as  a  poiver  on  the  part  of  its  posses- 
sor is  grasped,  it  becomes  evident  that  it  must  be  extended  impar- 


*"Manuul,"  p.  0.    "  Wealth  may  be  defined  to  consist  of  every  commodity  w  hich  has 
excliange  value." 


46  ECONOMIC  PIITLOSOPIIY. 

tially  to  all  kinds  of  power,  so  far  as  they  enable  us  to  control  the 
property,  services,  time  and  destinies  of  our  fellow  men,  whether 
they  are  exercised  through  the  medium  of  physical  objects  or 
mental  ideas  or  social  affections,  or  are  exchangeable  or  not. 

When  the  Chicago  Tribune,  iu  the  fire  of  1871,  was  burned  so 
that  not  a  vestige  of  property,  unless  it  may  have  been  the  sub- 
scription and  account  books,  remained — neither  of  which  had  any 
exchangeable  value  as  commodities,  the  concern  was  still  worth 
a  million  of  dollars  as  indicated  by  the  price  which  its  shares  of 
stock  commanded.  All  this  wealth  was  good-will,  but  good-will 
is  not  an  exchangeable  commodity.  It  could  not  be  transferred 
at  pleasure  by  the  Tribune  to  the  Cincinnati  Commercial  or  the 
Chicago  Times.  It  pertained  to  the  Chicago  Tribune  Company 
only  as  ])roprietor,  and  is  wholly  distinct  from  the  shares  of  stock 
in  the  company,  which  belonged  to  the  several  shareholders,  and 
were  exchangeable. 

The  highest  elements  of  wealth  do  not  always  exist  in  a  form 
in  which  they  may  thus  be  seen  to  have  an  economic  value  with- 
out being  in  the  least  exchangeable.  Yet  a  judge's  reputation  foi* 
integrity  on  the  bench,  a  clergyman's  reputation  for  purity,  a 
manager's  reputation  for  successful  enterjjrise,  an  author's  repute 
as  entei-taining,  a  philosopher's  fame  for  profound  generalization, 
indeed,  all  modes  of  intellectual  and  social  power  give  their  pos- 
sessor a  command  over  the  services,  destinies,  and  material  com- 
modities of  othei's,  and  are  therefore  not  only  wealth  but  capital, 
and  yet  are  not  exchangeable.  Character,  religious  faith,  moral 
influence,  courage,  sagacity,  rank,  titles,  political  office,  a  chair 
in  a  university  as  an  instructor,  all  are  wealth,  but  not  exchange- 
able.* 

It  is  even  conceivable  that  in  certain  conditions  of  society  great 
wealth,  or  power  to  command  services,  might  exist  without  any 
commodities  whatever,  and  without  a  solitary  exchange.  In  the 
communities  of  ants,  bees,  and  beavers  great  social  power  is  man- 
ifested, and  in  some  way  association  and  co-operation  on  a  scale 
much  larger  numerically  than  is  known  among  human  beings 
occurs,  and  yet  no  individual  among  them  ever  makes  an  exchange 
of  commodities  with  another. 

These  communities  arrive  at  the  same  facility  of  co-operation 
without  exchange  that  man  arrives  at  by  exchange,  so  perfectly 
that  among  the  ants,  according  to  Sir  John  Lubbock,  each  mem- 

*  This  view  sustained  in  substance  by  Sidgwick,  "  Pol.  Econ.,"  90. 


80CTAL  POVERTT.  47 

ber  of  a  community  of  twenty  thousand  knows  personally,  and 
can  distiuguisli  every  other  member  of  that  conmiunity  from  a 
stranger  of  the  same  species. 

In  a  thoroughly  socialistic  state,  like  the  Mormon  state,  and 
within  every  socialistic  order  like  the  Catholic  monastic  ordei-s, 
the  Shakers,  or  even  in  the  mutual  co-operation  of  the  servants 
of  many  great  corporations,  there  are  no  exchanges,  but  there 
may  be  great  power  to  command  goods  and  services. 

It  would  be  conceivable  that  a  despotism  like  that  of  Egypt  in 
the  pyramid  building  period  may  have  developed  vast  power  in 
its  ruling  class  over  the  services  and  goods  produced  by  the  whole 
people,  and  vast  power  to  produce  goods  and  compel  services, 
without  even  permitting  a  single  trade  to  be  made  between  an 3^ 
two  persons.  In  such  a  case  great  wealth  might  exist,  but  no 
commodities  would  be  on  sale.  Subordination  and  coercion 
would  perform  the  functions  which  in  our  commercial  age  are 
performed  by  exchange.  Those,  therefore,  who  make  wealth 
consist  in  exchangeable  commodities,  grasp  only  a  quality  which 
is  mcident  to  wealth  in  a  commercial  period  ;  wliich  is  partial, 
and  may  be  evanescent.  Those  who  define  it  as  iJOicer  seize  upon 
the  element  in  it  which  is  eternal. 

19.  Savage  Life,  Social  Poverty. — Savage  life  is  usually  con- 
ceived of  by  people  in  civilization  as  a  condition  of  feebler  intel- 
lectual grasp,  of  lower  cranial  development,  weaker  moral  ten- 
dencies, aiul  more  bloodthirsty  social  disposition,  combined  witli 
greater  animalism  than  that  which  prevails  among  civilized  peo- 
ple. The  jurist  sees  in  it  a  feebler  development  of  law,  the  theolo- 
gian regards  it  as  an  eri'oneous  manifestation  of  faith,  or  debas- 
ing consequence  of  super.stition,  the  moralist  recognizes  its 
essential  identity  and  parity  with  vice  and  crime  as  they  appear 
in  civilization,  the  educator  attributes  it  to  lack  of  acquaintance 
with  literature  and  science,  but  the  economist  recognizes  all  sav- 
agery as  arising  from  the  utter  and  complete  ahsence  of  wealtli 
or  capital,  and  consequent  lack  of  organization  of  an  industrial 
or  working  society.  This  contrast  between  the  poverty  of  savage 
nations  and  the  wealth  of  civilized,  seems  by  many  economists  to 
be  described  as  an  incident  of  savage  life  rather  than  recognized  as 
its  essence.  It  should,  liowever,  be  more  pointedly  stated  that  the 
lack  of  wealth  in  its  broad  sense  is  the  essence  of  savagery,  and 
that  every  man  would  become  a  savage  in  the  degj-ee  tliat  the 
means  of  living  in  civilization  were  denied  him.  As  his  ability 
to  maintain  his  wife  and  family  in  c(jmfort  slide  away  fi'om  under 


48  ECONOMIC  PHILOSOPHY. 

him,  his  domestic  affections  are  changed  to  coarse  and  •  brutal 
rudeness.  Slrip])ed  of  his  clothing,  the  virtue  of  decency  becomes 
impossible.  Take  away  his  bread,  and  to  a  starving  man,  the  law 
even  excixses  theft,  because  it  knows  that  nothing  else  remains. 
As  Schiller  says : 

Etwas  muss  er  seln  eigen  nennen, 

Oder  der  Mensch  wlrdmorden  und  brennen.* 

This  truth  is  expressed  by  the  maxim,  "Self-preservation  is  the 
first  law  of  nature,"  meaning  that  no  other  law  can  restrain  a 
savage  from  any  act  which  he  deems  adapted  to  save  himself 
either  from  destruction  or  from  suffei'ing.  Destroy  his  private 
title  to  his  home  and  he  not  only  becomes  a  wanderer  like  the 
Arab,  or  gipsy,  but  almost  of  necessity  a  plunderer  and  thief. 
The  growth  of  wealth,  therefore,  is  simply  the  economic  aspect  of 
the  growth  of  civilization. t     Even  the  degree  of  evolution  which 


*iVIan  must  claim  something  as  his  ovvu. 
Or  he  will  either  kill  or  burn. 

t  Faiucett,  p.  7,  says  :  "  The  most  striking  variations  in  wealth  are  exhibited  by  the 
same  nation  in  different  ages,  and  by  different  nations  in  the  same  age.  There  was  a 
time  when  England  was  as  poor  as  any  country  which  is  now  consigned  to  the  wander- 
ing savage,  and  yet  she  possessed  then  those  same  natural  resources  which  now  so  ma- 
terially contribute  not  only  to  form  but  to  sustain  her  present  wealth.  .  .  Each  stage 
through  which  progressive  nations  have  advanced  from  barbarism  to  civilization,  is 
preserved  at  the  present  time  in  some  parts  of  the  globe.  The  savage  still  exists  who 
lives  by  hunting  and  fishing.  .  .  The^e  gr.'at  differences  in  wealth  are  partly  due  to 
physical  causes,  but  they  depend  mainly  on  social  circumstances,  etc." 

AdmnSmith  says  (p.  1),  of  savage  nations  :  "  Such  nations,  however,  are  so  misera- 
bly poor  that  from  mere  want  they  are  frequently  reduced  to  tiie  necessity  some- 
times of  destroying  and  sometimes  of  abandoning  their  infants,  old  people  and  those 
afflicled  with  lingering  diseases,  to  be  devoured  by  wild  beasts.  Among  civilized  and 
thriving  nations,  on  the  contrary,"  etc. 

Dr.  Carey  in  "  Past,  Present  and  Future,"  p.  414,  says:  "  Civilization  lias  in  all  ages 
aud  countries  been  found  where  men  have  accumulated  wealth,  by  means  of  which  they 
have  been  enabled  to  subject  to  cultivation  the  rich  soils  of  the  earth  ;  and  it  has  disap 
peared  as  they  have  been  forced  to  fly  to  the  poor  soils  of  the  hills  for  safety." 
"  With  the  division  of  land  and  ihe  diffusion  of  wealth  the  power  of  the  few  tends  to 
diminish  .  .  and  moral  feeling  improves  because  of  the  increased  facility  of  obtaining 
the  necessaries,  conveniences,  and  comforts  of  life  Improvement  and  a  tendency 
toward  perfect  equality  of  moral  feeling  are  therefore  characteristics  of  civilization. 
With  each  step  in  this  progress,  jealousy  and  avarice  disappear  and  woman  becomes  the 
companion  of  man  and  ceases  to  be  his  slave,  .  .  parents  cease  to  be  tyrants  and  chil- 
dren res  ect  and  love  them,  and  he  becomes  more  and  more  animated  by  hope  .  .  learns 
more  and  more  to  appreciate  the  comforts  indicated  by  the  £rood  old  English  word 
Home,  and  more  and  more  to  find  in  the  great  command  to  '  do  unto  others  as  he  would 
that  others  should  do  unto  him,'  the  guide  of  all  his  thoughts,  his  feelings  and  his 
actions."  Again,  (p.  427),  he  says:  'The  past  says  to  the  people  of  the  present- 
civilization  comes  with  wealth  and  the  cultivation  of  the  rich  soils." 


SOCIALISM  OF  THE  TRIBE.  49 

;^.  A/. 
exists  among  savages  is  measured  by  their  capital.  Those  which 
have  no  bows  or  aiTows,  slings,  darts,  or  weapons,  subsist  on 
worms  and  bugs  and  vermin.  Those  whicli  have  these  first  ele- 
ments of  capital,  live  upon  fish,  flesh,  and  fruits.  Those  which 
have  flocks  of  cattle  among  the  North  American  Indians  are  far 
in  advance  of  those  which  have  none. 

20.  Owuersliip  by  the  Tribe.— (Barbarism.)  While  society  is 
emerging  from  the  savage  state  all  ownership  of  proi^erty  is  in 
the  tribe  and  assei'ts  itself  at  first  about  equally  as  to  persons,  per- 
sonal proj)erty  and  laud;  i.e.,  at  first  each  person  is  owned  by  his 
gens,  clan  or  tribe,  whicli  claims  his  services,  communally  and 
socially,  to  the  extent  .that  it  needs  them.  There  may  be  a  condi- 
tion anterior  to  this,  of  absolute  anarchy,  or  absence  of  all  govern- 
ment and  of  all  property,  whei'e  no  person  belongs  to  or  knows  of 
any  tribe  or  clan,  and  no  rights  are  asserted.  Tlie  native  Austral- 
ians are  alleged  to  be  of  this  low  type,  without  tribe,  property, 
or  title.     Each  man  is — 

"  Only  a  pauper  whom  nobody  owns." 

Savage  life  generally,  however,  is  tribal,  and  recognizes  the 
ti'ibe  as  owning  in  common  for  all  its  members,  both  goods  and 
land.  Tiiis  socialistic  ownership  does  not  arise  from  generosity, 
for  such  a  feeling  liardly  exists,  but  from  the  con.sciousness  that 
nothing  weaker, than  the  aggregate  strength  of  the  ti'ibe  can 
secure,  or  assert,  or  protect  a  title  to  any  thing.  Freedom  has  not 
yet  developed  to  the  point  where  an  individual  can  oAvn  any  thing, 
because  brute  force  lias  not  yet  given  place  to  law  in  the  degree 
required  before  a  private  person  can  defend  or  sustain  ownership 
in  any  thing,  or  court  of  law  can  exist.  Eoscher  (Polit.  Econ. 
vol.  i,  sec.  Ixxxiii,)  declares  that  "  in  all  the  lower  stages  of 
civilization,  a  community  of  goods  exists.  Out  of  this  condition 
private  jiroperty  is  evolved  only  as  well-being  and  culture  have 
been  evolved,  private  property  being  at  once  the  cause  and  eft'ect 
of  such  well-being." 

The  North  American  Indians  own  all  lands  onl}^  as  tribes.  To 
fence  lands,  for  private  owiier.ship,  is  to  theiii  a  dangerous  mon- 
opoly, fatal  to  the  business  of  hunting  and  fishing.    At  first,  luuler 

Wolowsld  (Introduction  to  American  Edition  of  Iloscher's  Pol.  Econ.,  p.  80.)  says  : 
"  The  increa'-e  of  production  then  appears  as  an  instrument  of  elevation  in  the  moral 
order.  It  is  energy  of  soul,  intelligence  and  manly  virtue  which  constitute  the  chief 
source  of  the  wealth  of  nations  ;  whicli  create  it,  develop  it  and  preserve  it.  Wealth 
increases,  declines  and  disappears  with  the  increase,  dccluie  and  disappearance  of  these 
noble  attributes  of  the  soul." 


^0  ECONOMIC  PHILOSOPHY. 

the  Roman  law,  all  private  aijpropriation  of  land  on  rivers  and 
coasts  was  subject  to  the  anterior  rights  of  fishermen  to  take  so 
much  land  astliey  needed  for  cleaning-  fish  and  mending  and  dry- 
ing their  nets.  But,  in  the  United  States,  the  fisherman's  riglithas 
become  subordinate  to  the  private  right  of  the  adjoining  owner. 
Roscher  (above  cited)  says  :  "  Diodorus  describes  community  of 
goods  and  of  women  as  existing  among  tlie  Ichthyopliages  on  tlie 
Red  Sea,  who  lived  in  caves,  went  naked  for  tlie  most  part,  plun- 
dered all  shipwrecked  people,  and  never  reached  an  advanced 
age."  Strabo  says  the  same  of  the  Scythians,  Plutarch  of  the 
early  Spaniards,  Dio  Cassius  of  the  Rhetians,  Isocrates  of  the  Tri- 
balli.  The  Caribs  also  had  community  of  goods,  performed  all 
their  work  in  common,  ate  at  a  common  table  and  had  common 
stores  and  supplies.  (Fetr.  Martyr,  Dec.vii,  1 ;  Rochefort,  ii,  c.  16.) 
Among  the  Kuskowimers  of  Russian  America,  all  the  able-bodied 
men  of  the  tribe  live  together,  {v.  Wrangell,  Nachrichten,  129.) 
Among  the  inhabitants  of  the  Aleutian  Islands,  in  times  of 
scarcity  of  food,  the  product  of  the  fisheries  is  divided  according 
to  their  need. 

"  The  hospitality  of  the  inhabitants  of  the  Friendly  Islands  bor- 
ders on  community  of  goods.  {Mariner,  Freundschaftsinseln,  75, 
81.)  So  also  among  the  Eskimaux.  In  Mexico  the  Spaniards 
found  land  ownership  among  the  most  distinguished  of  the 
natives,  but  only  a  species  of  possession  in  common  and  common 
storehovises  among  the  peasantry.  (Robertson,  "  Hist,  of  North 
America.  ")  In  Peru  they  found  an  advance  on  mere  village  or 
tribal  communism,  viz.,  state  socialism— a  partial  community  of 
goods  presided  over  by  the  state  ;  a  yearly  division  of  all  lands 
among  the  peo])le  in  proportion  to  their  rank  ;  the  cultivation  of 
these  lands  in  common,  under  the  superintendence  of  the  state 
and  to  the  sound  of  music.  Both  Peru  and  Mexico,  however,  were 
relatively  poor.  Peru  had  only  one  city,  no  beasts  of  burden,  no 
plows,  no  trades,  no  commerce.  In  Mexico  the  farming  was  so 
slender  that  the  advance  of  the  little  arm 3^  of  Cortez  produced  a 
famine. 

The  Spartans  under  the  constitution  of  Lycurgus  had  commu- 
nity of  goods,  meals  in  common,  public  education,  the  authorization 
of  stealing,  the  prohibition  of  trade,  of  the  precious  metals  and  of 
fine  furniture,  the  equal  division  of  property,  land  made  inaliena- 
ble, etc.  The  Tcherkesses  of  Circassia  consider  robbery  honorable 
provided  the  robber  is  not  caught  in  the  act.  (Bell,  Journal,  etc.) 
Similar  notions  prevailed  in  ancient  Egypt  relative  to  their  or- 


TUANSIENT  TITLE.  51 

ganized  robber  bands,  which  were  sociahstic  within  aud  predatory 
without.    (Diodor.,  180.) 
21.  Tribal    Ownership    Depends  on   Occupancy    and 

Use. — In  this  early  period  of  socialism  or  communal  ownership 
of  land,  so  far  as  private  right  to  land  begins  to  exist  at  all,  it 
usually  depends  on  its  private  possessor  improving,  tilling  or 
occupying  it.  The  United  States  have  usually  made  occupation 
and  residence  on  government  lands  by  a  settler  a  condition  to  his 
gaining  title.  All  systems  of  law  give  preference  to  an  occupant 
over  one  having  no  title,  as  is  indicated  by  the  familiar  maxim, 
"  possession  is  nine  points  in  the  law."  "  Mining  titles  in  Califor- 
nia and  Australia  rest  on  possession,  and  are  lost  in  a  brief  time  if 
the  mines  are  not  worked  ;  so  Roscher  says  ( Political  Economy, 
sec.  Ixxxviii):  "This  is  the  practice  in  Taway  (Ritter);  and  also  in 
ancient  Germany  {Grimm).  Right  of  the  'dead  fire'  in  Spain 
and  Portugal  during  the  middle  ages  (S.  Rosa  de  Viterbo).  In 
many  parts  of  Persia,  the  land  belongs  to  any  one  who  has  pro- 
vided it  with  water  by  canals  or  wells.  (Fraser,  Journey  in 
Chorasan,  ch.  7.)  Especially  after  the  Mongolian  devastation 
about  the  beginning  of  the  fourteenth  century,  it  was  decreed  that 
land  that  had  remained  uncultivated  for  a  long  time  should  be- 
long to  the  person  who  made  it  productive.  (cVOhsson,  "Hist, 
des  Mongols,"  iv,  418.)  In  the  time  of  the  ancient  Persians  (Polj'b., 
x.,  28.3)  the  harvest  for  the  first  five  years  belonged  to  the  person 
who  first  irrigated  the  land.  On  the  Upper  Euphrates  likewise 
the  land  is  very  often  neither  sold  nor  leased.  Any  one  who  will 
till  it  and  pay  one-tenth  of  the  produce  to  the  bey  may  have  it 
for  nothing.  (Ritter,  x,  G69.)  So,  too,  among  the  Fulah  and 
Maudingo  negroes,  and  even  among  the  Tscherkessans  {Klemni 
"Kulturgeschichte,"  iii,  337).  Theodosius  and  Valentinian  de- 
creed that  deserted  fields  should  after  two  years  cultivation  belong 
to  the  pos.sessor  (L.  S.  Cod.  Just.,  xi,  58)." 

22. — Tribal  Precedes  State  Ownership. — In  Europe,  and 
esi^ecially  in  England,  rights  to  the  forests,  to  pastures,  to  gather 
turf,  and  to  take  fish  remained  in  common  long  after  the  arable 
land  had  become  private.  Upward  of  two  thousand  acts  of  par- 
liament were  passed  for  converting  the  land,  that  had  been  com- 
mons, into  private  titles  by  inclosure,  and  such  acts  were  deemed 
necessary  to  admit  of  the  cultivation  essential  to  a  moj-e  dense 
population.  In  Germany  the  change  covered  tlie  first  half  of  the 
present  century.  In  Russia  the  comnmnal  ownership  still  ai)i)lies 
to  the  greater  part  of  the  lands.     In  Congo  and  on  the  Gold 


52  ECONOMIC  PIIILOSOPHT. 

Coast  of  Guinea,  saysEoscher,  "  tlielaiid  in  whole  villages  is  tilled 
in  common,  and  the  harvest  distributed  among  the  families  per 
capita.  Wherever  absolutism  reigns,  the  prince  is  also  the  owner, 
(in  his  capacity  as  prince)  of  all  the  lands.  {Klemm,  iii,  337.) 
In  China,  where  the  original  tenure  in  common  of  the  land  by 
all  was  broken  through  in  the  third  century  before  Christ,  all 
the  land  of  the  country  no^v  belongs,  strictly  sx^eaking,  to  the 
state,  and  the  possessor  of  land  who  permits  it  to  go  untilled  is 
punished.  {Plath,  in  the  Phil.  Hist.  Sitzungsberichten  der  Miin- 
chener  Akad,  1873,  793  ff.)  In  Corea,  private  property  in  land  is 
unknown.  Arable  land  is  divided  by  the  state  according  to  the 
number  in  a  family.  (Ritter,  vi,  633.)  The  example  on  the 
largest  scale  of  a  country  without  private  property  in  land  is  the 
British  East  Indies.  {Ch.'  Camjjhell,  System  of  Land  Tenure  in 
Various  Countries,  Cobden  Club  Essay)."  But  when  law  has 
become  so  far  develoiJed  as  to  protect  private  ownership  in  land, 
the  communal  has  never  been  preferred  to  the  private,  by  any 
race  or  people,  on  the  ground  of  its  greater  productiveness,  or 
more  equal  diffusion  of  comfort. 

23.  Charitable  and  Religious  Comiiiuiiism. — In  a  few 
instances  persons  actuated  largely  by  a  religious  or  social  enthu- 
siasm have  preferred  the  communal  to  the  private  system,  but  it 
has  seldom  been  claimed  to  be  preferable  by  pei'sons  seeking  only 
to  better  their  material  condition.  Those  who  have  reached  back- 
ward toward  the  communal  system  have  usually  been  persons 
who  had  seen  little  of  its  working,  but  whose  moral  feelings  were 
shocked  by  the  inequalities  and  hardships  incident  to  the  strug- 
gle for  subsistence  under  the  system  of  individual  property, 
which  is  necessarily  that  of  free  competition,  softened  by  social 
and  state  aid  to  those  who  fail.  The  community  of  goods  of  the 
first  Christians  at  Jerusalem  (James  i,  1)  was  recommended  as  a 
scheme  of  charity,  and  not  as  an  economic  scheme  of  i^roduction 
— an  act  of  love,  but  not  a  right  which  the  destitute  could  assert 
(Acts  v,4),  and  it  extended  to  the  use  only  and  not  to  the  ownership. 
(Acts  iv,  32.)  "  Spite  of  all  this,"  says  Roscher  ( Political  Economy, 
sec.  Ixxxi),  "it  produced  a  chronic  state  of  poverty  in  the  church 
at  Jerusalem,  which  Paul  had  to  meet  with  collections  taken  up 
on  all  sides,  without,  however,  anywhere  establishing  a  similar 
institution.  (Romans  xv,  26;  1  Corinth,  i,  16.)  Among  the 
Christian  fathers  many  like  Chrysostom  and  Clemens  recommend- 
ed community  of  goods  on  economic  grounds.  Three  centuries  of 
the  experiment  demonstrated,  however,  in  Judea,  Greece,  Alex- 


SOCIAL  MOTIVES  WEAK.  63 

andria,  Spain,  and  Italy,  that  the  more  expert  the  pleadings  of  the 
church  hecame  for  the  means  to  provide  for  the  poor,  the  more 
intense  became  the  poverty  against  which  they  were  everywliere 
powerless  to  provide.  Community  of  goods,  cattle  and  land  was 
practiced  among  the  first  settlers  in  New  Haven,  Massachusetts 
Bay  and  Pennsylvania  {Roscher,  id.),  and  Virginia,  but  Bancroft 
says  (1  History  United  States,  16),  as  much  work  was  performed  in 
a  day  after  tlie  system  was  abandoned  as  was  done  under  it  in  a 
week,  and  as  much  by  thi-ee  workmen  as  previously  by  thirt}'. 
The  Catholic  Church,  in  its  priesthood  and  orders,  owns  its  prop- 
erty as  a  commune,  though  the  government  of  the  comniune  is 
monarchical.  It  is  the  most  numerous  and  wealthy  socialistic 
organization  in  Christendom,  and  proves  that  socialism  in  owner- 
ship does  not  imply  equality  of  individuals  in  control. 

24.  Relative  Iiiduceiiient  to  Eifort  under  both  Sys- 
tems.— The  dilTei'ence  in  the  strength  of  the  two  systems,  social 
and  individual  ownership,  as  stimulants  to  endeavor,  may  be  seen 
at  once  in  the  family.  A  family  exhibits  the  social  system,  and 
admits  the  right  of  each  of  its  members  to  all  he  needs  for  his 
welfare.  Every  child  knows  that  it  costs  to  maintain  him  from 
one  to  two  dollars  per  day,  but  this  would  not  incite  him  to  special 
effoi't,  because  he  feels  that,  whatever  is  the  cost  of  his  sup- 
port, he  is  entitled  to  it,  and  it  will  come,  whether  he  puts  forth 
any  effort  or  not. 

When,  therefore,  a  parent  wishes  to  urge  his  child  to  special 
effort,  he  makes  no  account  of  the  dollar  or  two  he  daily  expends 
in  the  child's  ordinary  support,  but  promises  him  as  wages  per- 
haps a  quarter  of  a  dollar,  and  is  sure  of  his  child's  utmost  effort. 
A  small  wage,  earned  with  the  feeling  that  it  is  our  own,  and  that 
we  have  free  choice  whether  to  earn  it  or  not,  is  more  stimulating 
than  a  large  dividend  guaranteed  on  socialistic  principles,  whether 
it  be  issued  on  the  basis  of  general  merit,  need  or  past  services. 

Among  barbai'ous  races  all  ownership  is  tribal,  and  not  in- 
dividual, the  tribe  being  in  this  stage  of  development  the  only 
power  sti'ong  enough  to  protect  and  defend  a  title.  Private  own- 
ership only  evolves  as  law,  and  juridical  or  law- derived  notiims 
of  right  and  wrong  become  sufficiently  strong  to  protect  a  title 
in  the  individual. 

25.  Wealth  Deponrtcnt  on  Kxchanj'e. — How  Far. — 
Wealth  exists  long  before  exchange  exists.  Indeed,  a  very  con- 
siderable organization  of  lalwr  by  force  or  slavery  might  endure 
for  a  long  period  without  exchange,  the  central  despot  or  social 


54  ECONOMIC  PIIILOSOPUY. 

governors  regulating-  by  orders  what  each  subject  should  do  and 
receive,  and  the  latter  accepting  such  dictation  as  the  substitute 
for  the  present  mode  of  inducing  labor  by  money.  Within  the 
family,  and  indeed  within  all  organized  gens,  communes,  com- 
munities, armies,  corporations,  tribes,  or  clans  which  practice 
community  of  land,  goods,  or  services,  the  aggregated  will  or  exec- 
utive judgment  of  the  chief  becomes  a  substitute  for  wages  and  for 
exchange,  in  the  sense  that  each  member  of  the  community  rendei's 
many  services  to  the  other  without  payment  in  any  other  foi'ni 
than  as  he  profits  by  the  success  of  the  commune,  tribe  or  clan. 
If  we  should  conceive  of  an  entire  nation  as  being  organized  in  this 
way,  and  if  the  experiment  were  successful  in  tliat  it  provided 
for  the  wants  of  all  as  successfully  as  the  present  system,  it  is 
evident  the  wealth  would  be  as  great  as  it  is  now,  since  all  would 
command  in  an  equal  degree  the  services  of  others,  but  no  ex- 
changes would  occur,  and  the  distribution  of  wealth  would  take 
place  on  a  basis  of  agreed  ratios  or,  in  effect,  of  rank.  No  values 
would  exist,  as  none  now  exist  within  the  family,  and  nothing 
would  have  exchangeable  value.  In  the  government  post-oflBce, 
for  instance,  the  earnings  of  the  aggregate  force  are  expressed  by 
the  aggregate  sum  received  for  postages,  which  is  distributed  ac- 
cording to  the  salary  schedule.  But  neither  member  of  the  force 
earns  any  thing  save  as  he  is  assisted  by  the  others,  since  no  one 
carries  a  letter  to  its  destination.  There  is  therefore  gx'eat  co- 
operation in  labor  to  the  same  end,  but  no  economic  exchange  of 
services.  As  the  only  function  of  wealth  is  to  induce  co-operation 
in  rendering  services,  and  as  this  may  be  done  by  authority,  slavery, 
rank,  aifection  or  socialism  without  exchange  and  without  the 
element  of  value  being  the  basis  of  co-operation,  we  can  not  agree 
with  the  many  who  hold  that  wealth  consists  only  of  exchange- 
able values,  nor  with  the  socialists  who  imagine  it  would  improve 
present  conditions  to  return  to  the  tribe.  Wealth,  however,  may 
consist  of  that  very  power  over  the  services  of  others,  obtained 
through  chieftainship  or  official  place,  which  employs  and  com- 
mands all  without  performing  any  act  of  exchange  whatevei".  It 
can,  perhaps,  be  said  that  with  the  growth  of  civihzation  private 
wealth  comes  more  and  more  by  exchange,  and  less  and  less  by 
force,  authority  or  compulsion,  or  by  rank  which  is  the  outcome 
and  consequence  of  these. 

26.  Private  or  Individual,  Including  Corporate 
Wealth. — Persons  who  compare  America  with  Europe  ob- 
serve that  in   the  former  the  individual   is  more — the  govern- 


PRIVATE   WEALTH.  55 

ment  is  less.  lu  the  latter  only  the  government,  or  those  closely 
identified  with  it  either  as  state  or  church,  show  wealth.  In 
America  wealth  characterizes  the  home  and  the  person.  In 
Europe  it  marks  a  palace  or  the  dignitary.  But  in  Europe  in  mod- 
ern times  the  diffusion  is  greater  than  anciently,  or  than  now  in 
most  parts  of  Asia.  As  civilization  ad  vances  wealth  vests  more 
hi  tlie  individual.  It  takes  the  form  of  hahitations  which  are 
not  mere  places  of  shelter,  but  edifices  erected  with  a  view  to 
architectural  style,  artistic  effect,  and  extended  hospitality.  They 
are  sm'rounded  by  imposing  parks  and  gi'ounds,  and  conservatories 
for  the  cultivation  of  rare  plants  and  flowers.  They  become  scliools 
for  the  manifestation  of  the  a^stlietic  sense.  Inside  the  rooms  ai-e 
made  suggestive  of  travel  and  mental  I'ange  by  souvenirs  au«l  hric- 
a-brac,  by  paintings,  engravings,  frescoes,  and  diversified  and 
dui'able  furniture.  Music,  literature,  and  art  elevate  the  tone,  b/ 
enlarging  the  x>ossibiUties  of  enjoyment,  in  these  homes,  and  the 
extent  and  diversity  of  the  tastes  to  which  they  minister. 

In  America  also,  where  private  wealth  has  reached  a  degree  of 
development  never  before  or  elsewhere  known,  the  shops  of  trade 
and  manufactories  of  goods,  the  great  office  buildings  for  rental  and 
hotels  for  the  accommodation  of  guests,  as  well  as  railway  cars 
for  their  transportation,  become  indices  of  individual  wealth  ap- 
plied to  social  or  industrial  uses.  They  overtop,  in  luxurious 
appointments,  those  expenditures  for  the  purpose  of  indicating 
rank  or  sovei'eignty,  which  in  earlier  periods  or  in  countries  of  less 
rapid  growth  in  private  wealth,  have  been  possible  onlj^  to  the 
state.  The  growth  of  private  and  personal  wealth  is  the  economic 
aspect  of  the  increase  of  private  and  personal  freedom,  of  private 
and  personal  intelligence,  independence  of  thought  and  the  free 
and  untrammeled  exercise  of  pi'ivate  judgment.  In  proportion 
to  the  number  who  attain  this  condition  the  coercive  function  of 
the  state  disappears  and,  in  a  certain  sense,  it  may  be  said  that 
the  number  of  those  who  could  do  without  the  state  increases. 
The  state,  meanwhile,  adapts  itself  to  these  new  conditions  by 
diminishing  its  coercive,  and  enlarging  its  attractiv^e  and  instruc- 
tive, functions.  Its  armies  lessen  as  its  schools  increase.  Its 
navies  decline  as  its  industries  nniltiply.  It  builds  fewer  gibbets 
but  sends  out  more  connnittees  of  investigation  into  the  economic 
causes  of  suffei'ing.  It  prizes  wealth  itself  less  and  life  and  maia 
more.  It  punislies  fewer  crimes  with  death  and  studies  and  de- 
bates whether  society  has  not  in  some  way  erred  toward  the  pau- 
per and  the  felon.     Every  cause  which  is  believed  to  stand  iden- 


56  ECONOMIC  FIIIL OSOPIl  Y. 

tifiecl  with  a  lai'ger  altruism  and  ti*uer  benevolence  is  sure  of  effi- 
cient revenue  from  the  spontaneous  offei-ing  of  a  more  than  satis- 
fied egoism.  Hence,  in  countries  where  there  is  a  large  difFvision 
of  individual  and  private  wealth,  the  effective  organization  of 
charities  becomes  a  means  of  revenue  to  their  originators  and  con- 
ductors, so  sure  and  ample  that  the  most  vigilant  measures  are 
required  to  prevent  the  mercenary  from  resorting  to  schemes  of 
philanthrojjy  as  affording  a  larger  profit  than  those  of  productive 
industries. 

The  combination  of  individuals  in  capitalized  corporations  adds 
to  the  power  which  wealth  po.ssesses  in  the  hands  of  a  private  per- 
son, the  iimnense  advantages  of  perpetuity,  a  government  of  checks 
and  balances,  a  deliberative  council  for  the  guidance  of  enter- 
prises, and  an  executive  headship  selected  with  refei'ence  to  skill 
*and  personal  capacity  for  command  in  industiy.  Freedom  from 
a  part  of  the  x^ersonal  risk  on  the  part  of  the  corporation  has  also 
had  its  influence  in  promoting  the  tendency  to  place  all  complex 
and  influential  industries  in  the  control  of  corporations.  Fi*om 
these,  and  other  causes,  from  two-thirds  to  three-fourths  of  the  in- 
dividual wealth,  i)roductively  employed  by  the  people  of  the 
more  advanced  nations,  is  managed  by  corporate  companies. 
This  intensifies  its  activity  as  compared  with  its  control  by  indi- 
viduals in  a  degree  as  great  as  that  which  accompanied  its  earlier 
transition  from  communal  to  private  property.  The  corporation 
is  by  as  much  a  more  intensive  productive  agent  than  the  indi- 
vidual, as  the  individual  is  more  productive  than  the  connnune. 
The  individual  has  many  whims  and  caprices  to  gratify  besides 
the  sense  of  profit  or  the  si^ecific  end,  whatever  it  may  be,  of 
corporation.  He  seeks  wealth  and  profit  more  singly  and 
absorbingly  than  the  connnune,  but  less  assiduously  than  the 
corporation.  The  corporation  can  be  held  absolutely  to  its  one 
pui'pose  night  and  day,  year  in  and  out,  without  caprice,  diversion, 
amusement,  or  dissolution.  In  productive  uses  it  supplants  and 
survives  in  competition  with  the  individual,  for  the  same  reasons 
that  the  individual  supplants  the  connnune.  x4.  higher  and  liner 
stage  of  law  is  essential  to  corporate  ownership  than  to  individual. 
But,  given  the  stage  of  legal  protection  adequate  to  render  its  ex- 
istence possible,  it  supersedes  the  individual  whenever  energy, 
skill,  and  power  ai'e  conditions  of  success.  Corporate  wealth, 
therefore,  is,  in  its  title,  the  most  intensified  and  subtle  form  of 
individual  wealth,  and  that  which  carries  private  right  over  pro 
ductive  property  to  its  highest  stage  of  dominion.     Through  the 


PUBLIC  WEALTH.  57 

corporation  au  individual  may  securely  invest  in  business  and 
industries  of  which  he  has  almost  no  knowledge,  and  may  thus 
give  effective  aid  to  many  enterprises  without  the  labor  of  master- 
ing their  details.  At  tlie  same  time,  through  the  ordinary  secur- 
ity he  feels  in  that  judgment  of  character  which  all  men  practice, 
he  can  exercise  his  just  share  of  influence  over  the  managers  of 
these  great  trusts,  and  so  may  still  invest  wisely,  where  if  it  were 
an  individual  instead  of  a  corporate  enterprise,  he  would  be  in- 
vesting ignorantly. 

While  corporations  pursue  wealth  more  singly  than  individu- 
als, they  are  also  permitted  by  their  longer  tenure  and  divided 
risk  to  pursue  it  more  patiently  as  to  time,  with  a  smaller 
need  of  clutching  immediate  returns,  and  more  broadly  as  to 
means  where  that  which  is  to-day  a  means  of  sowing  may  be  in 
the  future  a  means  of  reaping.  Hence,  on  the  whole,  corpora- 
tions, while  more  single  in  their  devotion  to  gain  than  individu- 
als, are  also  frequently  more  generous  in  their  methods,  more 
peaceful,  more  dispassionate,  and  less  despotic  in  the  exercise  of 
authority. 

27.  The  Coiuinoiivvealth.— In  the  advance  toward  civiliza- 
tion the  wealth  that  is  common  to  the  whole  state,  and  ordinarily 
not  exchangeable,  increases  absolutely,  though  it  declines  rela- 
tively to  that  of  individuals.  Public  roads,  rivers,  canals,  seas 
and  baj'S,  navies,  fortresses,  custom-houses,  public  schools,  court- 
houses, prisons,  jails,  hospitals,  poor-houses,  work-houses,  libra- 
ries, parks,  streets,  canals,  markets,  docks,  light-houses,  capitols, 
pavements,  sidewalks,  sewers,  gas  fixtures  and  sometimes  the 
works  for  gas  manufacture,  treasuries,  mints,  mines  and  lands  are 
a  formidable  fund  of  common  wealth  whose  power  does  not  lie  in 
its  exchangeable  value.  In  monarchical  countries  the  royal  parks 
and  palaces  and  crown  lands,  pictures  and  jewels,  and  in  coun- 
tries having  an  established  state  religion,  the  churches  and  mon- 
asteines  are  state  pro])erty. 

Society  has  two  concurrent  forms,  the  state  life  and  private 
life.  The  former  is  socialist,  i.  e.,  in  all  that  concerns  state  life 
the  state  is  regarded  as  controlling  the  individual.  The  latter  is 
individualist,  and  within  this  sphere  the  individual  is  left,  at  least 
for  the  i^resent,  uncontrolled  by  tlie  state. 

It  would  not  be  doubted  that  a  very  great  revolution  must 
occur  in  human  thought  before  it  would  be  regarded  as  within 
the  province  of  the  enlightened  state  to  determine  whotlior,  and 
whom  and  at  what  age,  a  man  should  marry,    whatsliould  bo  his 


5  8  ECO  NO  Ml  C  FlUL  OSOPII Y. 

course  of  diet  as  to  food  and  drinks,  apart  from  intoxicatnig' 
stimulants  or  i)oisons,  what  should  be  his  style  or  cost  of  cloth- 
ing or  its  materials,  where  he  should  reside,  or  how  much  prop- 
erty he  should  be  permitted  to  accumulate,  what  should  be  his 
occupation,  or  how  much  he  should  be  permitted  to  charge  or 
receive  for  his  services  or  commodities,  or  how  many  children  he 
might  have,  or  how  much  property  he  must  have  before  having 
any  children,  or  how,  short  of  the  use«of  undue  violence,  he  shall 
maintain  the  order  of  his  household,  and  many  similar  things. 
Each  of  these  iwints  has,  however,  been  made  the  subject  of  exte- 
rior social  regulation,  either  by  the  state  or  by  the  governing- 
power,  in  communities  formed  on  the  socialist  basis. 

In  the  modern  state,  the  citizen  is  not  in  practice  subordinate  to 
the  commonwealth  in  all  things,  but  has  reserved  rights  which  it 
is  one  of  the  functions  of  the  commonwealth  to  respect.  By  this 
it  is  not  meant  to  assert  that  the  conmion wealth  might  not  in  the 
course  of  its  evolution  cliange  into  one  of  a  different  sort,  which 
might  oust  him  of  these  supposed  reserved  rights.  But  this  con- 
tingency is  remote.  Nor  is  it  meant  that  there  is  any  legal  limi- 
tation on  the  powers  of  the  commonwealth  in  these  cases,  but 
only  a  consensus  in  behalf  of  the  inexpediency  of  its  exercise. 

The  right  of  the  state  to  the  unlimited  service  of  the  citizen  in 
war,  and  the  right  of  the  state  through  its  sheriff  and  county  offi- 
cers to  call  upon  the  posse  comitatus  or  power  of  the  citizens  of 
the  county  generally  to  aid  him  in  executing  jirocess,  are  surviv- 
ing relics  of  state  socialism,  as  to  the  person.  The  exercise  of  the 
power  of  eminent  domain,  or  the  right  to  take  private  property 
for  public  use — as  for  forts,  for  the  supply  of  an  army  in  war,  for 
all  public  buildings,  roads  or  ways,  is  also  an  assertion  of  state 
socialism  as  to  property.  The  collection  of  debts,  the  punishment  of 
slanders,  assaults  and  crimes,  and  the  compulsion  of  persons  by 
law  to  perform  certain  duties  toward  others,  as  of  parties  to  per- 
form contracts,  of  parents  to  support  or  educate  their  children,  or 
husbands  to  support  their  wives,  and  the  exercise  by  the  state  of 
superintendence  over  marriage  and  of  the  power  to  grant  divorces 
is  an  assertion  of  state  socialisna  as  to  the  conscience.  The  sup- 
port of  the  poor  and  of  convicts  by  enforced  taxation,  and  in 
return  the  power  exercised  by  the  state  to  hold  paupers  and  con- 
victs in  enforced  labor  or  state  slavery,  are  the  continuance  of 
state  socialism  in  those  respects.  The  tribal  relation,  as  it 
exists  among  savages,  lies  folded  up  and  dormant,  as  it  were, 
within  the  civilized  state,  ready  to  restore  savageism,  commu- 


RESTOBIXG  SOCIALI.^M.  59 

nisni,  anai'chy  and  slavery,  in  the  form  of  prisons,  jails  and  work- 
houses, gallows,  transportation  and  colonization  among  savages, 
to  all  whose  conduct  exhibits  that  thev  are  fetill  in  the  savage 
state. 

Crime  constitutes  such  an  exhibition.  It  matters  not  that 
crime  results  from  destitution  or  incapacity  to  accept  the 
restramts  of  civilization.  The  criminal  by  his  crime  expresses 
his  preference  for  the  tribal  relation,  and  by  his  punishment  he  is 
remitted  back  to  that  which  he  prefers.  To  steal  is  equivalent  to 
saying:  "I  would  that  all  property  were  held  in  common," 
which  is  the  tribal  condition.  To  be  arrested  and  have  his  arms 
pinioned  is  to  come  under  the  brute  dominion  of  the  strong,  which 
is  also  the  tribal  condition  To  commit  rape  or  burglary,  arson 
or  murder  is  to  say  :  "I  prefer  the  savage  life  to  the  civilized." 
To  seize  and  punish,  shoot  or  hang  the  ravisher,  burglar,  incen- 
diarj'  or  murderer  is  to  say  :  "  Society  meets  you  on  the  plane  that 
you  prefer,  that  of  brute  force."  It  can  not  be  said  that  these 
brute  punishments  are  either  very  deterrent  from  crime  or  very 
reformatory  to  the  criminal.     But  they  are  extremely  logical. 

Equally  logical,  and  far  more  reformatory  to  the  criminal,  is  the 
system  of  colonization  of  criminals  in  new  countries.  In  Job  the 
transportation  of  criminals  is  mentioned.  In  Rome  deportation 
to  an  island  was  so  familiar,  that  a  law  was  passed  to  limit  it  to 
cases  in  which  a  trial  in  comitia  had  occurred,  which  by  transla- 
tion into  Magna  Charta  became  the  origin  of  our  trial  by  jury. 
All  European  countries,  during  the  period  in  which  they  had 
charge  of  the  colonization  of  the  new  world,  used  the  latter  as  a 
place  of  banishment  for  their  criminals.  England  continued  the 
custom  to  a  late  date  in  Australia,  and  with  marked  success  as  a 
means  of  reform.  Assuming  that  crime  as  well  as  pauperism 
indicate  that  iuaptness  and  unfitness  for  the  restraints,  complexi- 
ties and  intensity  of  industry  which  distinguish  civilized  life,  the 
natural  remedy  would  be  to  remove  the  criminal  or  pauper  to  an 
environment  where  greater  indolence  of  life  and  laxity  of  morals 
would  be  tolerated  and  where  the  conditions  of  life  would  be  sim- 
pler and  existence  would  involve  less  toil.  This  is  done  by  depor- 
tation to  savage  lands  where  the  climate  is  not  severe  and  where  the 
soil  is  good.  Among  savages,  and  compared  with  them,  one  who 
would  be,  in  civilization,  a  criminal  or  an  anarchist,  would  be  likely 
to  be  changed  into  an  advocate  of  government,  law  and  virtue. 

Criminals  in  our  ])enitentiaries,  and  the  poor  in  workhouses, 
are  treated  to  fai"  better  and  more  abundant  fare  than  is  usually 


60  ECONOMIC  PlIILOSOrilY. 

secured  by  savages  in  the  hunter  state.  The  savage  obtains  his  food 
with  great  irregularity,  sometimes  having  httle  or  none  for  several 
days  and  at  other  times  eating  at  one  repast  what  a  civilized  man 
would  divide  between  three.  Convicts  and  felons  are  more  regu- 
larly and  wholesomely  fed,  are  infinitely  better  housed,  clad, 
instructed  and  are  in  a  condition  of  greater  secuinty  from  danger, 
less  liability  to  bodily  harm,  and  of  kinder  general  treatment 
even  from  the  most  unfit  or  cruel  keepers  than  savages  usually 
award  to  each  other.  Notwithstanding  the  natural  indolence  of 
the  savage  and  the  fact  that  he  works  only  under  the  immediate 
pressure  of  danger  or  hunger,  such  is  the  constancy  of  both  dan- 
ger and  hunger  that  it  is  doubtful  if  the  average  savage  does  not 
woi-k  more  contuiuously  and  severely  than  the  average  convict 
or  pauper. 

Under  whatever  system  emi)loyed  it  is  a  work  of  great  diffi- 
culty and  requiring  rare  skill  in  management  to  render  either  con- 
victs or  paupers  self-supporting.  Of  all  the  prisons  in  the  United 
States  only  four  or  five  attain  this  i-esult.  The  cost  of  support  of 
the  prisoners  averages  about  forty  cents  a  day,  after  prisons  and 
other  conveniences  are  built  and  machinery  provided.  The  sys- 
tem of  letting  their  labor  l)y  contract  to  manufacturers  who  can 
use  unskilled  labor  is  probably  the  more  usually  economical, 
while  that  of  introilucing  workshops  and  selling  the  products  is 
more  educating  and  reforming. 

28.  The  Family,  and  its  Wealth.— In  the  earlier  stages  of 
society  the  family  relation  merges  into  that  of  the  tril^e  and  both 
merge  into  that  of  slavery.  All  three  contain  in  so  nearly  a  like 
ratio  the  elements  of  communism,  socialism  and  anarchy,  together 
with  the  germs  of  government,  that  writers  have  been  prone  to 
find  the  origin  of  all  government  at  times  in  the  Patriarch,  at 
others  in  the  chief,  and  again  in  the  great  owner  of  men-servants 
and  maid-servants,  flocks  and  herds.  The  three  are  not  generi- 
cally  distinct.  Under  the  Eoman  law  the  power  of  an  owner 
applied  to  the  father  over  his  children,  male  and  female,  until  he 
died.  A  Roman  citizen,  in  the  absence  of  a  direct  act  of  manumis- 
sion, would  still,  with  his  household  and  goods,  be  the  propei-ty 
of  his  fatlier  in  theory,  even  though  he  might  have  risen 
to  the  highest  offices  in  the  state,  or  might  be  in  command  of 
armies.  Tlie  husband  owned  his  wife  in  as  complete  a  sense 
as  he  owned  his  slave.  Every  family,  includirig  children,  slaves, 
goods  and  persons  who  had  come  into  it  by  marriage  or  adoption 
had  its  paterfamiUcts,  who  was  its  executive  head  or  chief,  eiiti- 


POSITION  OF  WOMEX.  61 

tied  to  its  service  and  invested  with  power  to  enforce  obedience. 
It  was  a  sort  of  corporation  to  which  the  jjaterfaniilias  was  both 
president  and  board  of  directors. 

In  an  age  like  this  when  money  is  the  basis  of  almost  the  entire 
work  of  creating  and  distributing  wealth,  when  every  smallest 
service  is  paid  for  in  cash,  and  when  even  families  are  often  dis- 
solved if  the  supply  of  money  fails,  and  its  members  will  attach 
themselves  to  some  new  protector  who  has  more  money,  it  is  ditli- 
cult  to  conceive  of  the  part  ])layed  by  the  family,  as  well  as  by  the 
tribe  or  gens,  under  the  Roman  state,  as  the  substitute  for  money 
and  the  organizer  of  industry.  The  gens  differed  only  from  the 
famih"  in  being  a  collection  of  families  supposed  to  be  descended 
from  common  ancestors,  and  to  have  the  same  household  goods 
or  ancestral  worship.  Often  the  gens  partook  of  the  industrial 
unity  and  despotism  which  belonged  to  the  family.  The  principle 
of  subordination  to  authority,  and  affection  for  the  familj-  name 
and  headship,  produced  an  effective  organization,  both  for  war 
or  for  politics,  and  for  industry. 

Among  the  Greeks,  on  the  other  hand,  there  was  but  little  cohe- 
rency to  the  family.  Among  the  Spartans  woman's  rights  and 
the  ownership  of  ])ropei'ty  by  women  prevailed  so  extensively 
that  Aristotle  declared  that  women  owned  a  third  of  the  land  in 
Lacedemou.  Thrpughout  Homer  great  individuality,  independ- 
ence and  wisdom  is  shown  by  the  women.  The  Jewish  women 
occupied  a  medium  position,  less  free  than  among  the  Greeks,  less 
enslaved  than  among  the  Romans.  Among  the  Teutonic  races 
women  were  more  laborious  than  among  the  Greeks,  but  hardly 
less  free. 

Subjection  of  the  women  to  the  men  is  not  an  invariable  though 
a  usual  characteristic  of  savage  life.  Among  the  North  Amer- 
ican Indians  it  is  severe,  but  among  many  of  the  Africans  of  the 
Soudan  and  the  Congo  the  women  are  the  merchants  and  traders 
and  necessarily  more  free.  The  degi'ee  in  which  the  family  is 
conspicuous  in  the  ownership  of  wealth,  as  distinguished  from  the 
individual,  varies  widely  according  to  a  race  principle  the  causes 
of  wliich  are  lost  in  the  mazes  of  race  development.  Some  birds 
return  and  rebuild  every  year  in  the  same  spot  after  migrating  to 
a  home  several  thousand  miles  distant,  thus  manifesting  a  senti- 
ment of  property  in  the  family.  Sealsalso  have  a  strong  sense  of 
property  in  particular  localities. 

Tlie  influence  of  the  Roman  idea  of  the  family,  contending 
against   the   Greek  and  Saxon    idea,   has  been   felt   thi-ougliout 


62  EcuyoMic  riiiLu^oruY. 

Europe  and  America.  At  times  the  tendency  to  give  stability  to 
the  family  as  the  unit  of  society  has  caused  the  laws  to  lean 
toward  entail,  primogeniture  and  inheritance,  securing  the  estate 
in  the  wife  and  children  beyond  the  power  of  the  temporary 
head  of  the  family  to  convey,  squander  or  dissipate.  This  is  seen 
ni  the  homestead  laws,  particularly  in  the  Western  States,  in  which 
the  homestead,  however  valuable  in  some  states,  is  exempt  from 
execution  and  must  be  conveyed  with  peculiar  care  relative  to 
the  rights  of  wife  and  child. 

It  is  sometimes  asserted  that  the  family  and  not  the  individ- 
ual is  the  unit  on  which  the  state  rests.  It  is  on  this  principle 
alone  that  political  rights  and  duties,  such  as  military  service, 
police  service,  fire  service,  service  on  the  posse  comitatus,  on 
juries  and  in  olRce,  together  with  voting  are  cast  upon  adult 
males  as  distinguished  from  both  women  and  infants. 

The  family  relation  is  the  most  powerful  of  all  incentives  to 
industry,  and  closely  connected  with  it  is  the  desire  to  transmit 
property  to,  and  provide  for  one's  children.  An  intimate  rela- 
tion exists  in  history  between  tTie  degree  in  which  the  integrity 
of  the  family  is  preserved  and  the  durability  of  the  state.  Where 
the  family  tie  is  feeble,  as  among  the  Greeks  and  Jews  and  all 
nomadic  tribes,  and  family  autliority  is  not  made  continuous 
through  several  generations,  by  transmitted  wealth  and  inherited 
station,  the  people  do  not  differentiate  into  cultured  classes  on  the 
one  hand  and  laborious  classes  on  the  other,  nor  do  they  greatly 
ditl'erentiate  in  their  occupations.  In  such  a  condition,  the  state  is 
transitory  and  revolutions  frequent.  Rome,  which  endured  as  a 
government  for  1000  years,  and  Great  Britain,  wliich  is  in  many 
things  the  successor  of  the  Roman  Empire  in  the  modern  world, 
find  in  the  continuity  they  give  the  family,  tln-ough  the  heredit- 
ary transmission  of  wealth,  one  of  the  chief  causes  of  their  greater 
stability  and  permanency  as  states. 

In  the  vegetable  world  the  grass  which  dies  down  to  its  roots 
with  each  succeeding  year  does  not  give  rise  to  timber  for  great 
sti'uctures.  So  in  the  social  world  the  family  system  which  per- 
mits each  generation  to  inherit  nothing  of  the  success,  means,  cul- 
ture and  gentility  of  its  predecessor,  will  render  the  state  perish- 
able as  the  grass.  It  is  moreover  worse  than  in  vain  to  bring  into 
tlie  world  a  generation  of  young  men  and  yomig  women  tenderly 
reared  and  accustomed  to  the  security  and  refinement,  leisure  for 
mental  impi-ovement  and  tlie  cultivation  of  forecast  and  the 
habit  of  command,    order  and   methodical  management  "which 


niGIIER  MOTIVES.  63 

come  with  the  early  possession  of  ample  means,  if  at  the  death  of 
every  parent  these  means  are  to  be  confiscated  and  the  child  is  to 
be  thrown  upon  a  condition  of  physical  toil  for  whicli  he  is  less  fit 
than  he  would  be  to  direct  the  industry  of  others. 

Experience  proves  that  families  have  a  continuous  identity 
through  generations.  Many  families  manifest  as  closely  the  same 
inherited  characteristics  through  centuries  of  varied  experiences, 
as  a  person  would  at  different  periods  in  the  same  life.  This  family 
life  sliows  itself  in  some  instances  in  successive  generations 
of  honorable  preferment  ;  in  others  in  a  long  succession  of  legal 
or  forensic  skill  ;  another  will  be  full  of  inventors.  One  will  fol- 
low the  sea,  one  will  consist  of  great  fax*mers,  and  another  will 
turn  out  generation  after  generation  devoted  to  art,  theology  or 
learning.  In  America,  where  the  republican  spirit  is  strong, 
great  pains  are  taken  by  law  to  equalize  men,  as  to  their  start  in 
life,  and  their  legal  rights  to  the  end  of  the  race.  Hereditary 
merit  and  social  skill,  however,  not  only  assert  themselves  in  indi- 
vidual cases  but  are  transmitted  along  with  their  result  in  fami- 
lies. No  ranks  and  titles  exist,  but  the  achievements  and  suc- 
cesses of  each  are  none  the  less  recognized  by  its  members  and  by 
society,  and  constitute  an  element  of  transmitted  power,  contin- 
uous from  one  generation  to  another. 

29.  Social  and  Spiritual  Wealth.— The  evolution  of  soci- 
ety from  barbarism  toward  civilization,  like  that  of  the  individ- 
ual from  poverty  toward  wealth,  if  well  rounded  and  harmonious, 
will  be  marked  by  a  decline  of  the  primary  motives  in  human 
conduct,  or  the  vital  passions,  and  a  rise  of  the  secondary  motives 
or  those  Avhich  are  only  indirectly  and  remotely  connected  with 
existence.  It  is  usual  to  style  the  latter  the  higher,  and  the  for- 
mer the  lower,  parts  of  our  emotional  nature.  The  appetite  for 
food,  the  desire  for  shelter  of  some  sort,  the  passion  for  sexual 
as.sociation,  and  the  determination  to  defend  the  spot  of  ground 
one  has  selected  for  his  den  or  lair,  are  qualities  which  man  shares 
with  all  the  higlier  brutes.  But  the  love  of  effecting  useful 
results  through  industry,  the  passion  to  be  deemed  ti'uthful, 
prompt,  kind,  observing,  faithful,  sj'^stematic,  sagacious,  coura- 
geous, enteriwising,  learned  or  thorough,  are  all  passions  which 
are  only  indirectly  connected  with  the  struggle  for  existence.  In 
the  degree  that  they  develop,  life  is  ennobled  and  dignified, 
made  charming  and  attractive  to  others,  and  living  becomes  a  fine 
art  to  him  who  lives. 

Labor  and  production  also  become  a  source  of  enjoyment  when 


64  ECONOMIC  PHILOSOPHY. 

the  processes  connected  with  them  are  elevated  into  an  art  which 
gratifies  the  taste  apart  from  the  service  it  renders  to  others  or 
the  gain  it  brings  to  ourselves.  In  the  degree  that  society 
advances  toward  civilization  and  occupations  multiply  and  each 
is  pursued  with  the  skill  of  an  artist  and  a  specialist,  the  propor- 
tion of  those  who  labor  passionately  and  for  love  of  their  occupa- 
tions increases  relatively  to  the  number  of  those  whose  struggle 
is  simply  an  animal  one  for  subsistence. 

Thus  a  wide  range  of  occupations  opens  up  in  which  reputation, 
fame,  social  distinction,  are  pursued  as  ends.  Others  in  which 
altruism  or  the  common  good  is  tlie  motive.  In  others  the  good 
of  a  special  class  is  looked  after.  The  public  teacher  and  critic  of 
life  and  of  morals,  whether  he  be  in  the  pulpit,  the  editor's  chair, 
or  in  the  presidency  of  a  college,  draws  around  himself  a  ncAV 
form  of  social  wealth  in  the  circle  of  pu]>ils  to  whom  he  imparts 
instruction,  a  form  of  wealth,  which  he  could  not  afford  to 
exchange  for  blocks  or  stocks.*  Each  is  the  Plato  of  his  own 
academy — the  autocrat  of  his  own  breakfast  table.  The  artist  has 
his  circle  of  patrons,  whose  interest  in  his  works,  though  merely 
an  intellectual  and  aesthetic  attraction,  is  more  valuable  and  con- 
genial to  him  than  a  baronial  castle  surrounded  by  acres  of  land 
tenanted  by  a  dull  peasantry,  and  furnishes  the  artist  with  a  sup- 
port as  generous,  a  circle  of  friends  as  wide,  and  associations  as 
agreeable,  as  those  enjoyed  by  the  baron.  Thus  social  wealth 
embraces  all  those  sources  of  attraction  among  men  arising  out  of 
politics,  war,  scholarship,  enterprise  in  industry,  art,  authorship, 
science,  religion,  philosophy,  and  all  those  sources  of  attraction 
among  women  arising  in  personal  charms,  conversational  accom- 
lilishment,  wit,  social  prestige  and  rivalry,  grace,  taste,  tact,  and 
the  entire  repertoire  of  means  whereby  happiness  is  maximized 
through  social  contact.  Material  wealth  reaches  its  ultimate 
function  and  utility  when  it  aids  in  furnishing  the  accessories 
and  aids  whereby  social  wealth  can  thus  manifest  itself.  Material 
w^ealth  may  build  its  dining-hall,  purchase  the  viands,  and  spread 
the  feast  ;  but  unless  the  guests  bring  with  them  the  elements 
of  social  wealtli,  intellect,  wit,  wisdom,  the  fame  of  public  utility, 
virtue  and  beneficence,  tact,  courtesy,  kindness,  and  culture,  the 

*  Roscher  ("  Political  Economy,"  book  i,  chap.  1,  p.  138,)  enumerates  six  varieties 
of  economic  labor,  the  last  of  which  is  :  /.  Service?,  in  the  more  limited  sense  of  the 
term,  which  embrace  personal  as  well  as  incorporeal  goods  ;  as,  for  instance,  the 
labors  of  the  doctor,  teacher,  virtuoso,  of  the  statesman,  judge,  and  of  preachers, 
whose  office  it  is  by  way  of  eminence  to  produce  and  preserve  the  immaterial  wealtli 
known  as  the  State  and  the  Church. 


RICH  AM)  POOR  iY47T0JVS.  65 

outlay  of  material  Avealth  fails.  It  is  in  exchanges  of  social 
wealth  that  man  attains  his  highest  happiness.  Social  wealth 
includes,  therefoi^e,  all  the  means,  spiritual,  intellectual,  moral, 
and  pliysical,  whereby  man  is  brought  into  pleasurable  association 
with  his  fellow-men. 

30.  The  Wealth  of  Nations.— Certain  nations  are  rich 
relatively  to  others,  as  individuals  are.  Certain  nations  pass 
through  successive  pei-iods  of  poverty  and  riches.  Some  are  rich 
in  one  or  two  aspects,  as  in  area,  mines,  fertility,  government 
revenues,  manufactures  or  the  like,  and  lackhig  in  others.  Early 
writers  on  political  economy,  especially  of  the  mercantile  or 
international  school,  taught  that  the  foremost  object  of  the  science 
was  to  teach  the  means  by  which  one  nation  jnight  enrich  itself 
relatively  to  others.  Stress  was  laid  upon  colonial  possessions, 
mines,  shipping,  large  importations  of  coin,  or  exports  of  manu- 
factures, or  growth  of  foreign  commerce.  Of  late  political 
economy  has  tended  more  to  become  social  economy  than  inter- 
national economy.  It  has  been  occupied  more  in  studying  the 
relation  of  classes  to  each  other,  such  as  in  England,  the  land- 
lords, the  farmers  and  the  laborers,  or  the  manufacturers  and  the 
employes.  It  can  not  be  said  that  the  relations  of  nations  to  each 
other,  or  the  means  by  which  they  may  impoverish  others 
or  enrich  themselves,  or  vice  versa,  has  ceased  to  be  a  topic 
among  economists,  whether  practical  or  theoretical.  Mr. 
Boui-ne's  recent  essays  on  the  "Dependence  of  England  upon 
Foreign  Countries  for  Food,"'  are  as  anxious  a  discussion  of  inter- 
national gain  and  loss  by  a  foi'eign  trade  in  food,  as  Mr.  Mun's 
"  England's  Treasure  in  Foreign  Trade"  of  two  centuries  ago, 
only  Mr.  Bourne  is  not  so  certain  as  Mr.  Mun  was  that  the  for- 
eign trade  is  so  great  a  treasure,  relatively  to  the  domestic. 

Difference  in  relative  national  wealth  may  appear  in  difference 
in  the  capacity  to  put  a  fighting  force  in  the  field  for  defense,  in 
difference  in  annual  production  and  consumption,  diiference  in 
the  .standard  of  living,  as  to  the  average  quality  of  tlic  habita- 
tions, clothing  and  food  in  use  among  the  people,  difference  in 
accunmlations  of  fixed  capital,  machinery,  implements,  and 
buildings,  diffei'ence  in  the  relative  abundance  of  gold  and  silver 
in  circulation  as  money,  and  in  tlie  abundance,  stability  juid 
security  of  the  paper  money  in  circulation,  and  the  degree  in 
which  it  is  safely  suljstituted  for  coin  ;  the  difference  in  the  rela- 
tive development  of  science,  literature,  art,  luxury  and  leisure — 
but  all  these  differences  are  likely  to  l>e  measured  with  (olcM-able 


66  ECON()\rW  PIITLOSOPHY. 

fairness  by  a  difference  of  income  per  capita  as  measm^ed  in 
money  and  in  necessaries  of  life.  The  two  Imn  dred  millions  who 
inhabit  British  India  are  computed  by  the  late  minister,  Sir 
Evelyn  Baring,  to  have  an  average  annual  income  of  twenty- 
seven  rupees  (£2  14s.)  per  head.  The  thirty -six  millions  of  people 
inhabiting-  the  United  Kingdom  of  Great  Britain  and  Ireland 
have  an  average  uicome  of  £35  per  head.  The  former  earn 
five  hundred  and  forty  millions  of  pounds  sterling  per  year  ;  the 
latter,  though  only  one-sixth  as  many  in  number,  earn  twelve 
hundred  and  fifty  millions  sterling  per  year.  Assuming  that  the 
British  Kingdom  is  two  and  a  half  times  stronger  than  tlie 
country  it  has  conquered,  it  will  be  seen  that  its  national  power 
is  proportionate  to  the  aggregate  annual  incomes  of  its  people, 
and  is  out  of  all  proportion  to  their  relative  numbers. 

The  doctrine  which  has  caused  many  economic  writers  to 
regard  the  relative  rights  of  nations,  and  the  means  of  their  rela- 
tive growth  in  wealth,  as  having  been  eliminated  from  the  science 
of  political  economy  is,  that  since,  in  all  exchanges  between  mer- 
chants in  different  countries,  the  exporter  in  each  country  gets 
an  equivalent  value  for  that  which  he  exports,  and  a  profit, 
therefore  the  country  importing  must  always  grow  richer  by  the 
trade.  This  is  the  famous  sliibboleth  of  "  equivalence  of  values 
in  trade  "  by  which  the  Manchester  school  of  economists  claim  to 
have  established  as  a  fundamental  truth  in  political  science,  that 
the  only  function  a  government  can  wisely  exercise  in  the  matter 
of  trade  is  to  "let  it  alone."  To  this  tlie  answer  comes,  "  Let  it 
alone — ivhen  f "'  Let  it  alone  after,  by  centuries  of  armed  con- 
quest, corrupt  treaty  and  profligate  legislation,  it  has  been  throt- 
tled, felled  to  the  ground,  bound  and  gagged  't 

"Letting  trade  alone  "  would  mean  as  between  Great  Britain  and 
India,  that  the  former  should  withdraw  her  armies  and  leave  the 
Hindoos  to    run   their  country.'-      It    should    have  let    Indian 

*  A  writer  in  the  Contemporary  Review  for  June,  1-86,  Mr.  Samuel  Smith,  says  :— 
'' I  said  that  another  reason  why  the  natives  looked  with  jealousy  on  the  growth  of 
the  foreign  trade  of  India  was,  that  it  was  largely  at  the  expense  of  their  home  Indus, 
tries.  It  is  hardly  realized  ia  England  that  our  chtap  machine-made  goods  have 
destroyed  the  bulk  of  the  old  handmade  manufactures  of  India.  At  one  time  a  con- 
siderable part  of  the  population  was  employed  in  these  industries.  India  now  imports 
about  thirty-five  millions  worth  of  manufactured  goods,  chiefly  cotton  cloth,  hardware, 
and  pottery,  which  were  once  made  at  liome.  If  we  allow  £2  per  head  as  the  annual 
income  of  each  person  in  India,  tlie  making  of  their  goods  must  once  have  sustained 
about  seventeen  millions  of  people.  Now  they  are  imported,  no  doubt  at  a  clicajjcr 
cost,  and  according  to  the  formuUe  of  political  economy,  the  labor  and  cajjital  so 
employed  can  be  turned  to  more  iirofltable  directions,  and  India  be  a  great  gainer  ;  but 


NATIONAL  PliOFITS.  67 

trade  alone  from  the  fii"st  iii  order  to  claim  its  action  to  be  in 
accordance  with  any  wise  or  just  theory  of  laissez  faire. 

Many  things  are  wealth  and  profit  to  individuals  which  are  not 
wealth  or  profit  to  the  nation  of  which  they  are  citizens,  and  vice 
versa.  Many  things  are  part  of  the  wealth  of  a  nation  which  are 
no  part  of  the  private  wealth  of  the  people.  Public  and  private 
debts  generally  are  individual  wealth,  but  they  are  in  the  first 
count  or  point  of  view  only  deductions  from  the  wealth  on  which 
they  are  liens,  and  therefore  leave  the  aggregate  of  national 
wealth  unchanged.*  On  the  contrary,  mountain  peaks,  inac- 
cessible to  the  foot  of  man,  lakes,  rivers,  and  untouched  mines 
and  forests,  i-oads  and  highAvays,  laws  and  the  general  standard 
of  civilization,  the  army  and  navy,  may  be  wholly  inappropriable 
by  individuals,  and  yet  may  form  chief  elements  and  cause?  of 
the  nation's  wealth.  The  mountain  peaks  attract  and  control  the 
air  currents  and  the  rainfall,  without  which  fertility  could  not 
exist,  and  a  continent  could  be  only  a  Sahai'a.  The  army  and 
navy,  as  in  the  case  of  England  and  India,  may  be  the  cause  of  a 
diversion  of  the  trade  of  one  country  to  the  producers  of  another 
and  so  may  be  of  great  industrial  importance  to  the  country 
maintaining  it,  and  a  leading  source  of  its  wealth.  So,  while 
Roman  laws  and  roads,  or  Greek  art  and  culture,  were  not  citizen's 
wealth  and   did   not  make  one  Greek  or  Roman   richer  than 


it  so  happens  that  the  hand-loom  weavers  and  the  snia!!  artificers  who  made  these 
goods  in  this  simple  native  fashion,  and  as  a  hereditary  calling,  had  no  other  trade  to 
turn  to.  The  capi'al  which  was  their  trained  handicraft  was  destroyed,  and  they  had 
either  to  starve,  or  take  up  vacant  land  for  farming,  or  become  coolies.  Most  of  them 
took  to  agriculture  ;  but  it  was  a  hard  struggle  to  live,  for  all  the  good  soil  was  already 
taken  up,  and  they  had  to  reclaim  from  the  jangle  barren  land,  on  which  they  could 
barely  subsist.  The  general  result  has  been  to  make  India  more  than  ever  a  country 
of  poor  peasants,  with  little  variety  of  pnr^uit8.  Of  course  this  process  <;rcatly 
increases  the  foreign  trade.  The  people  of  India  require  to  export  a  large  portion  of 
the  produce  of  the  soil  in  order  to  buy  their  clothing  and  utensils,  and  ano'l  er  large 
portion  to  liquidate  the  "Home  charges  "  and  private  remittances  made  to  England, 
When  thus  analyzed,  it,  will  be  seen  that  it  is  futile  to  reckon  increase  of  foreign  trade 
as  equivalent  to  increase  of  wealth  ;  it  is  rather  a  substitution  of  fon^ign  for  domestic 
exchange.  The  food  and  raw  produce  are  exchanged  ngainst  the  cloth  and  hardware 
of  England,  instead  of  against  the  products  of  innumerable  Bmali  makers  at  home." 

♦  Professor  Sidgwick  ("  Politica  Economy,"  p.  40),  hoWs  that  "credit  is  a  source  of 
wealth  of  which  the  value  is  measurable  by  the  additional  profit  that  it  enables  him  to 
obtain."  In  other  words  the  value  of  credit  is  the  capitalized  sum  or  principal  on 
which  the  additional  profit  it  brings  us  would  be  the  interest.  In  this  sense  the  volume 
of  cn-ilit  ordinarily  outstanding  in  a  country  is  an  addition  to  the  country's  wealth  not 
to  the  extent  of  th"  credit,  but  to  the  extent  of  the  cai)italized  sum  by  which  the 
credits  stimulate  production  and  increase  earnings  so  as  to  pay  the  current  rates  of 
interest  on  such  sum. 


08  ECONOMIC  PHILOSOPHY. 

another,  tliey  had  great  potency  in  making  Rome  and  Greece  as 
republics  and  the  empire  of  Macedon,  as  well  as  tluit  of  Rome, 
wealthy  relatively  to  other  nations.  The  growth  of  private 
wealth  depends  on  the  stability  with  which  free  exchange  of 
commodities,  lands,  and  services,  is  made  to  take  the  place  of 
individual  mob  force  and  of  foreign  conquest  as  a  means  of 
obtaining  the  satisfaction  of  human  desires.  This  stability  of 
exchange  depends  on  the  certainty  with  which  succession  to  office 
in  established  order  is  preserved,  whether  it  be  by  elections,  by 
rank,  or  by  birth,  as  well  as  on  the  fidelity  with  which  official 
decisions  are  obeyed  or  their  obedience  compelled  by  sheriffs, 
police,  armies,  and  navies.  In  this  manner,  of  two  countries 
having'  equal  advantages,  at  the  same  time,  one  may  be  growing 
in  Avealtli  because  it  has  a  good  government  or  an  efficient  army 
and  navy,  or  vigorous  laws,  or  a  good  police,  while  another  may 
be  declining  in  wealth  or  may  be  suddenly  subjected  to  vast  cost 
for  want  of  them. 

The  United  States  profess  to  be  one  of  the  few  nations  which 
may  safely  exist  without  other  army  or  navy  than  that  which  it 
can  recruit  or  build  after  the  emergency  which  calls  it  into  use 
shall  have  arisen.  If  this  claim  be  sound  it  still  would  not  follow 
that  either  of  the  great  European  powers  could  with  safety 
imitate  such  an  example.  Nor  was  the  United  States,  on  the 
occasion  of  its  recent  war,  able  to  enlist  an  army  so  much  more 
i-apidly  than  its  Confederate  foe  as  to  commend  the  example  per- 
emptorily to  govei'nments  encompassed  by  greater  dangers  and 
inheriting  a  habit  of  greater  caution. 

In  these  armies  and  navies,  revenues  and  national  credit, 
administration  of  justice,  ways  of  transit  and  means  of  exchange 
and  pajnnent,  are  found  forms  of  national  wealth  which  would 
not  be  included  in  any  aggregations  of  private  wealth. 

As  national  wealth  rests  on  bases  not  entirely  identical  with 
private  wealth,  so  also  does  national  profit  rest  on  other  bases 
than  private  profit.  It  is  because  many  occupations  present  a 
vei'y  poor  field  for  private  profit,  but  are  of  great  national  advan- 
tage, while  others  ali'ord  an  easy  and  large  private  profit,  but 
are  a  great  public  injury,  that  the  state  seeks  to  wield  the  taxing 
or  punishing  power  to  suppress  the  latter  and  develop  the  former. 
It  taxes  the  liquor-sellers  and  pays  over  the  fund  to  the  school- 
teachers and  the  courts,  because  liquor-selling,  though  easily  prof- 
itable to  the  merchant,  is  injurious  totlie  people.  In  vain  might 
any  pretended  economist  argue  that  because  a  farmer  buys  all 


DEAR  CHEAPNESS.  69 

the  whisky  laecessary  to  inebriate  him  at  less  than  the  market 
price,  there  is  a  perfect  equivalence  of  exchange  between  tlie 
value  of  the  farm  he  is  drinking  up  and  the  value  of  the  whisky 
he  is  getting  in  exchange  for  it.  Tlie  answer  would  be  that 
there  can  be  no  clieapness  in  the  purchase  of  things  that  it  is 
a  loss  to  accept  as  a  gift.  The  Trojan  horse  was  not  cheaj)  because 
the  Greeks  supplied  it  for  nothing.  Neither  is  any  importation 
cheap  which  contains  within  its  belly  the  means  of  pei*manently 
destroj'ing  an  important  industry. 

31.  Tlie  Evanescence  of  Wealth. — Wealth  disappears 
by  consumption,  which  may  be  either  productive  or  unproductive, 
by  depreciation  and  by  decay.  Of  these  modes  of  disappearance 
depreciation  is  the  mei-e  decline  of  demand,  or  abandonment  of 
the  use  by  society  of  that  which  once  was  wealth,  wliereby  it 
ceases  to  be  wealth  though  it  still  exists.  Suj)posing  a  pojiulatiou 
to  have  once  existed  in  Babylon  or  Nineveh  comparable  in  num- 
bers and  wealth  to  that  which  now  exists  in  Fi'ance  or  the  United 
States,  there  must  have  been  a  gradual  extinguishment  of  land 
values  in  those  countries  about  equal  to  the  entire  present  land 
values  in  these  two  modern  nations.  The  extinction  of  values  in 
India  by  the  extinguishment  of  manufactures  has  been  very 
great.  Before  its  partial  conquest  by  the  Portuguese  and 
English,  it  was  the  synonym  for  great  national  wealtli,  insomuch 
that  Milton  could  build  no  higher  metaphor  by  which  to  define 
infinite  riches  than 

—  all  the  wealth  of  Orinuzd  and  of  Iiid. 

To-day  India  is  the  pauper  nation,  a  burden  to  those  who  have 
fed  on  her  riches.  In  Persia,  Arabia,  Turlvcy,  Egypt,  Morocco, 
Algiers,  Spain,  Italy,  and  Greece,  there  has  been  a  disapi^earance 
of  wealth  which  goes  far  toward  balancing  the  modern  increase 
of  wealth  in  France,  Germany,  the  Netherlands,  Great  Britain, 
and  the  two  American  continents. 

All  forms  of  wealth  have  their  term  of  life  or  duration,  from 
that  of  the  flower  which  fades  in  an  evening  to  that  of  a  civiliza- 
tion which  lasts  for  centuries.  From  all  society  may  witlidraw 
its  demand,  and  with  that,  however  durable  the  structure,  the 
value  ceases.  In  parts  of  Asia  the  people  are  proud  to  wear  the 
clothing  worn  by  tlieir  ancestors,  but  decline  to  dwell  in  their 
habitations,  even  though  they  be  princely  castles.  Hence  in 
Persia  every  city  is  made  up  one-half  of  ruins,  and  in  time  suc- 
cessive cities  rise  near  the  same  spot,   as  Seleucia,   Ctesiphon, 


^0  ECONOMIC  PHILOSOPHY. 

Almadiu,  Kufa,  and  Bagdad  were  ])uilt  successively  from  the 
ruins  of  Babylon. 

In  modern  times,  and  in  the  most  prosperous  countries,  deserted 
villages  and  abandoned  farms  mark  spots  where  wealth  has  been 
sunk  by  mere  depreciation,  the  current  being  led  elsewhere  by 
the  opening  of  canals  or  railways  which  tapped  instead  of  feeding 
the  old  localities.  Even  in  the  heart  of  New  York  city,  when  the 
wholesale  dry-goods  merchants  removed  from  Pearl  and  Water 
Sti'eets  in  1847  to  1857,  over  to  Chambers  and  Warren  Streets, 
property  on  the  former  streets  fell  to  one-tenth  its  former  value, 
from  which  it  recovered  by  becoming  a  center  of  the  oil  traffic. 
Ireland,  since  1846,  and  Portugal,  have  receded  largely  from  for- 
mer conditions  of  prosx^erity ;  though  in  the  last  quarter  of  the  last 
century  Ireland  gained  several  millions  in  population,  notwith- 
standing her  absentee  landlords  and  her  Celtic  effervescence. 

The  destruction  of  wealth,  essential  to  the  creation  of  govern- 
ment or  maintenance  of  nationality,  is  by  some  classed  as  unpro- 
ductive, and  by  others  as  productive  consumption.  It  cost  France 
one  million  lives  and  seventeen  hundred  millions  of  dollars  to 
maintain  under  Napoleon  twelve  years  of  war  with  the  allied 
powers.*  It  probably  cost  the  United  States  in  loss  of  wealth  in 
all  forms  about  nine  thousand  millions  of  dollars  to  suppress  the 
war  for  secession  by  the  slave-holding  states,  including  the  losses 
in  both  sections  of  the  Union.  But  this  was  offset  as  to  the 
Northern   States  by  so  extraordinai-y  a  quickening  of  internal 


*  "From  1803  to  1815,  twelve  campaigns  cost  ns  nearly  a  million,  of  men,  who  died 
in  the  field  of  battle,  or  in  the  prisons,  or  on  the  roaJs,  or  in  the  hos])iials,  and  six 
thousand  millions  of  francs.    .     .     . 

"Two  invasions  destroyed  or  consvined,  on  the  soil  of  old  France,  fifteen  hundred 
millions  of  raw  jyroducts.  or  of  manufactures,  of  houses,  of  rvoi'kshops,  of  machines,  and 
of  animals,  indispensable  to  agriculture,  to  tnamijactures,  or  to  commerce.  As  the 
price  of  peace  in  the  name  of  the  alliance,  our  country  has  seen  herself  compelled  to 
pay  fifteen  hundred  additional  millions,  that  she  mit,'ht  not  too  soon  regain  her  weil- 
beine;,  her  splendor,  and  her  power.  Tiiiiif^d.,  in  twelve  years,  nine  thousand  millions 
of  francs.'''  (sevtnteen  hundred  millions  of  dollars),  "taken  from  the  productive 
industry  of  France  and  lost  forever.  We  found  ourselves  thus  dispossessed  <  f  all  our 
conquests,  aud  with  two  hundred  thousand  stiangers  encamped  on  our  territory,  where 
thfy  lived,  at  the  expense  of  our  glory  and  of  our  fortune,  until  the  end  of  the  year 
\9,l%r—Dupin. 

The  effect  for  a  time  is  thus  described  by  an  eminent  French  engineer: — "I  have 
frequently  traversed  in  different  departments,  twenty  fquare  leagues,  without  meeting 
with  a  canal,  a  road,  a  factory,  or  even  an  inhabited  estate.  The  country  sc  med  a 
place  of  exile  abandoned  to  the  m  serable,  whose  interests  and  whose  wan's  .ire 
equally  misunderstood,  and  whose  distress  is  constantly  increasing,  because  of  the  low 
prices  of  their  products,  and  the  cost  of  transportation."—.!/.  C'orditr. 


VAmSHI^iG    VALUES.  71 

and  exteinial  commerce,  and  of  both  agriculture  and  manufac- 
tures, as  to  make  the  net  increase  in  wealth  dui'ing  this  decade 
rather  greater  than  the  usual  increase. 

The  disappearance  of  wealth  by  decline  of  values  in  advancing 
states  like  Great  Britain  and  America,  is  a  fact  to  which  the  cen- 
sus gives  no  adequate  recognition  for  three  reasons,  viz. : 

1.  Because  in  modern  times  by  various  means  the  volume  of 
money  is  constantly  on  the  increase,  and  hence  all  values  ai'e 
being  measured  by  a  medium  wliose  measuring  value  is  con- 
stantly lessening,  and  which  tends  therefore  to  swell  the  money 
terms  in  which  all  aggregate  valuations  are  expressed,  whether  of 
lands,  labor  or  commodities.  This  is  one  of  the  deceptive  feat- 
ures about  all  tables  of  increase  in  national  wealth.* 

2.  Interest  prompts  a  loud  mention  of  new  enterprises  and 
silence  regarding  those  that  disappear. 

3.  The  machinery  of  statistical  inquiry  has  never  been 
devised  with  the  view  of  collecting  dei)reciations  and  losses  of 
wealth. 

Dr.  Carey  estimated  t  that  the  whole  value  of  the  land  of  Great 
Britain,  with  all  tlie  improvements  expended  upon  it  fi'om  tlie 
beginning,  would  not  equal  one  years'  wages  of  those  who  are  in 
some  way  concerned  in  the  work  of  production  upon  its  surface  ; 
also  that  the  cost  of  making  the  improvements  on  the  surface  of 
the  land  in  New  York  and  Pennsylvania,  has  been  at  least  five 
times  greater  than  the  existing  value  of  the  improvements.  Tlie 
course  of  production  is  first  of  labor  into  consumable  conmiodi- 
ties,  food,  clothing,  etc. ,  as  when  the  farmer  raises  corn.  Then  a 
conversion  of  these  into  reproductive  wealth  or  implements  of 
production  which  are  not  in  themselves  consumable  except  by 
wear  and  tear.  Then  a  loss  of  value  on  the  part  of  these  which 
sooner  or  later  extinguislies  it  altogether.  The  last  process  of 
extinguishment  may  require  years  or  centixi'ies,  but  so  far  as  the 
possibility  of  deriving  enjoyment  chrectly  from  its  consumption  is 
concerned,  such  possibility  is  extinguished  forever  the  instant  it  is 
converted  into  reproductive  wealth.  Tlie  ready  perishability  of 
all  enjoyable  wealth  renders  necessary  to  each  person  who  obtains 
or  produces  more  of  any  one  form  than  he  can  consume  that  he 
sball  exchange  it  for  reproductive  wealth  as  the  only  means  of 
avoiding  its  total  loss. 

*  The  term  money  as  used  in  this  sentence,  must  be  understood  as  comprehending 
all  transferable  credit  aa  defined  in  chapter  on  money. 
t  "  Social  Science,"  by  McKean,  p.  92. 


72  EGONOMW  PIIILOSOFIIT, 

The  facility  with  which  reproductive  wealth,  i.e.,  lands,  mines, 
factories,  railways,  etc. ,  can  be  exchanged  for  enjoyable  or  con- 
sumable wealth  should  not  conceal  from  us  the  fact  that,  as  enjoy- 
able wealth,  it  is  lost  to  society  forever  for  all  enjoyable  purposes. 
Mankind  can  never  eat,  drink  or  wear  their  farms,  factories, 
banks,  railways,  money  or  ships.  The  stoi'age  of  values  into  these 
forms  precludes  the  enjoyment  of  them  finally  and  irrevocably, 
though  they  are  still  exchangeable  for  those  we  can  enjoy.  If  it 
can  be  said  to  be  abstinence  for  one  who  has  provided  for  himself 
all  the  corn,  meat,  apples  and  fish  he  desires,  to  exchange  what  he 
can  not  consume  for  some  form  of  non-consumable  wealth  such 
as  money,  land  or  ships,  then  it  inay  be  said  that  capital  dates 
from  abstinence.  It  rather  dates  from  an  excess  of  sustenance. 
This  excess  is  exchanged  for  money,  stocks,  cars  and  ships,  con- 
cerning which  abstinence  is  impossible  because  enjo^'ment  is 
impossible.  The  first  law  of  wealth  is  therefore  that  the  surplus 
of  sustenance  over  one's  own  capacity  to  consume  can  only  be 
made  to  profit  its  possessor  by  exchanging  it  for  means  of  produc- 
tion. Of  these,  the  rate  of  consumption  is  slower  and  the  sole 
enjoyment  obtainable  from  them  is  that  which  Hows  from  custody, 
control  or  power. 

The  operation  of  the  law  of  evanescence  is  slowest  on  those 
forms  of  property  of  which  the  uses  are  almost  social.  A  book, 
considered  as  a  literary  work,  is  an  extremely  social  form  of  prop- 
erty, because  the  greater  the  number  of  others  who  read  it  the 
greater  is  our  enjoyment  in  reading  it.  The  best  readers  can 
only  afford  to  read  a  book  when  it  is  certified  to  them  that  the 
number  of  others  Avho  read  it  is  very  great.  Its  value  to  each  is 
proportionate  to  its  diffusion  among  many.  But  great  books  are 
more  nearly  imperishable  than  any  other  form  of  wealth.  A 
Chicago  publishing  house  adopts  as  its  motto  the  legend,  "  Words 
are  the  only  things  that  never  die."  It  is  very  doubtful  whether 
some  of  the  narratives  in  Genesis  are  not  older  as  writings  than 
the  pyramids.  But  as  sayings  or  legends  not  reduced  to  writing 
there  is  reason  to  believe  they  are  the  older  of  the  two. 

So  the  use  of  all  inventions  and  discoveries  is  necessarily  social, 
and  the  wealth  they  give  rise  to  is  imperishable— albeit  it  is  often 
too  social  in  its  use  to  be  the  subject  of  any  private  appropriation 
whatever. 

Works  of  art  and  architecture  are  tolerably  permanent  in  dura- 
tion, compared  with  food  and  clothing,  but  far  less  permanent 
ban  are  the  books  which  pass  into  universal   use.     They  are 


1, 


SOCIAL    U8ES  OF  riUVATE   WEALTH.  73 

therefore  >sociul  iii  their  uses,  compared  with  food  and  clothing, 
since  they  nnist  be  seen  by  many  at  once  to  give  the  highest 
pleasui'e  either  to  their  creator,  possessor,  or  viewer.  Tliey  are 
less  social  than  the  great  books  of  the  world,  however,  such  as 
the  Bible,  Homer's  Iliad,  the  Zend  Avesta,  Justinian's  Institutes, 
and  Shakspeare,  since  but  a  few  scores  of  people  may  behold 
them  at  once,  and  then  only  by  much  cost  and  pains  of  ti'avel, 
while  these  great  books  can  be  read  by  inillions  at  once  at  the 
cost  of  less  than  a  common  meal. 

Thus  wealth  is  evanescent  in  the  degree  that  it  is  vitally  neces- 
sary to  an  individual  and  capable  only  of  a  selfish  use  except  as 
it  may  be  exchanged.  It  is  enduring  only  as  it  is  incapable  of 
either  a  vital  or  selfish  or  merely  personal  u.se,  but  must  be  put 
to  social  use.  A  large  farm  is  in  social  use  because  its  crops  must 
feed  society.  They  can  not  be  eaten  wholly  by  those  who  cul- 
tivate them.  A  small  farm  is  in  a  more  personal  use  because  it 
may  feed  only  those  who  till  it.  A  lane  is  a  more  social  use  of 
land  than  an  enclosure.  A  highway  is  more  social  than  a  lane. 
A  railway  is  more  social  than  a  highway.  Hence  it  is  easy  to 
close  up  a  lane,  difficult  to  close  up  a  highway,  and  since  rail- 
ways were  built,  hai'dly,  excej)t  in  China,  has  one  ever  been  closed. 

The  sj)ecies  of  wealth,  whose  use  is  of  all  others  perhaps  the 
most  social,  is  money,  since  the  very  function  of  mone_v  is  to 
bring  men  who  do  not  know  each  other,  and  have  no  interest  of 
an  emotional  kind  in  each  other,  into  relations  of  reciprocal  utility 
and  mutual  help,  either  as  employers  and  workmen,  sellers  and 
buyers  of  goods  or  lands,  lenders  and  borrowers  of  money  itself 
or  the  like.  The  use  of  money  being  thus  social,  its  value  is  the 
most  enduring  perhaps  of  any  merely  material  commodity — 
meaning  by  inaterial  commodity  one  that  may  peiiiaps  serve 
ideas  but  contains  none,  in  the  sense  that  great  books,  discourses 
or  works  of  art  embody  ideas.  Twenty  kinds  of  money,  however, 
have  prevailed  and  disappeared  in  England  since  Ossian  wrote 
his  address  to  the  sun,  but  that  brief  poem  shows  no  symptom  of 
decay.  The  pound  changes  to  the  broad,  the  broad  to  the  guinea, 
the  guinea  to  the  sovereign,  but  no  subserviency  of  fasliion  over- 
takes the  lines  : 

Oh,  thou  tliat  rollest  above 
Round  as  the  shield  of  my  fathers, 
Whence  are  tliy  beams,  O  bun, 
Thine  everlasting  liglit ! 

Yet,  compared  with  something  less  social  in  its  uses  than  money, 


74  ECONOMIC  PUILOSOPHY. 

as,  for  instance,  with  a  reigning  house,  a  titled  family,  or  a  single 
possessor  of  wealth,  money  itself,  the  pound  sterling,  for  instance, 
seems  imperishable.  A  lineal  descendant  of  the  Plantagenets, 
it  is  said,  sells  meat  at  a  butcher's  stall  in  London.  The  titles  of 
prominent  English  nobles  are  of  very  recent  date,  and  the  aver- 
age life  of  a  great  fortune  seldom  equals  that  of  a  ci^ow. 

Doubtless,  many  possessors  of  wealth  have  practised  abstinence 
at  that  critical  period  in  early  life,  when,  their  earnings  being 
small  and  their  savings  meagre,  and  such  as  might  easily  have 
been  spent  in  a  night  of  debauchery,  they  have  denied  every 
temptation  in  the  determination  to  use  their  savings  as  capital. 
All  capitals  must  begin  in  a  pin's  value,  as  all  life  begins  in  a 
germ  cell. 

In  the  sense  in  which  life  is  the  fruit  of  the  germ  cell,  wealth 
is  the  fruit  of  abstinence.  But  as  no  multitude  of  germ  cells  are 
the  equivalents  of  one  life,  so  no  multitude  of  abstinences  are  a 
fortune.  Life,  besides  the  germ  cell,  implies  a  period  of  growth 
by  a  continually  increasing  organism.  So  relative  wealth,  besides 
abstinence,  implies  along  period  of  growth  in  the  active  assimila- 
tion of  profit,  /.e.,  in  the  active  conversion  of  an  excess  of  income 
over  expenditure  into  the  means  of  creating  wealth. 

Mr.  Grunlund  believes  that  he  has  disproved  the  proposition 
that  wealth  is  the  fruit  of  abstmence,  when  he  shows  that  a 
laborer  earning  two  dollars  a  day  and  saving  one  dollar  would 
need  to  live  three  thousand  years  to  accumulate  one  million. 
The  answer  is,  that  this  singular  hypothesis  assumes  that  the 
laborer  keeps  right  on  working  for  wages  without  using  his  past 
acquisition  as  a  capital,  but  simply  keeping  it  as  a  hoard.  Such 
a  man  being,  according  to  the  assumption,  a  curse  to  society  in 
the  economic  sense,  since  he  is  daily  withdrawing  a  given  stock 
of  wealth  from  the  world's  use  instead  of  employing  it  in  the 
world's  service,  ought  not  to  be  permitted  to  accumulate  a  million 
in  any  length  of  time  whatever.  He  would  be  a  nuisance  after 
he  had  reached  from  one  thousand  dollars  to  five  thousand  dollars 
if  he  did  not  give  it  a  social  use  of  some  kind.  But  should  he 
give  it  a  social  use  of  any  kind,  whether  in  employing  labor, 
building  houses,  or  selling  goods,  he  will  i^ass  out  of  the  germ 
stage  of  accumulation.  As  we  shall  show  in  our  chapter  on 
profit,  if  he  employs  one  thousand  men  at  two  dollai's  a  day  each, 
judiciously,  his  own  gross  returns  may,  and  would  be  likely  to 
rise  lo  one  thousand  dollars  a  day,  and  in  that  case  he  would 
obtain  the  million  of  dollars  in  a  few  years. 


XO  MORE  SPUR.  75 

The  various  forms  of  storing  wealth  permanently  are  usually 
cemeteries  of  human  labor  and  the  means  of  ostentation  and  dis- 
])lay.  Gold  and  silver,  and  perhaps  diamonds,  are  means  of 
storing  wealth,  the  former  of  which,  through  their  use  as  money, 
have  also  been  of  inestimable  service.  But  when,  as  in  the  build- 
ing of  the  great  pyramid  of  Cheops  or  Gizeh,  the  toil  of  three 
hundred  and  sixty  thousand  men  is  employed  for  twenty  years 
on  a  mountain  of  stone,  the  economist  is  puzzled  to  know  whether 
this,  however  permanent  the  structure,  is  a  storage  of  value  or 
an  unrelieved  waste  of  toil. 

32.  Can  Poverty  Be  Abolished  ? — All  exchanges  are  made 
out  of  fullness,  i.e.,  by  those  who  have  something  to  give  for  what 
they  get.  But  it  can  hardly  be  claimed  that  the  exchange  of  sub- 
serviency on  the  j)art  of  the  slave  for  despotic  protection  on  the 
part  of  his  master  is  made  out  of  the  slave's  fullness  of  courage, 
strength  and  force.  It  is  rather  out  of  his  emptiness  or  laclv  of 
these  qualities,  and  his  fullness  of  meekness,  timidity  and  other 
negative  qualities  that  he  is  enslaved. 

So  the  exchange  of  the  laborer's  time,  strength  and  will  for  the 
wage  whicli  he  gets  for  his  labor  may  imply  fullness  of  health, 
strength  and  muscle  on  the  part  of  the  laborer,  but  it  in  nearly  all 
cases  implies  relative  emptiness  of  purse.  From  three-fourths  to 
nine-tenths  of  mankind  labor  for  the  wage,  salary  or  fee  whicli 
they  get  for  the  labor,  and  because  but  for  the  means  of  obtaining 
the  food,  shelter  and  clothing  which  they  buy  with  their  wages 
from  week  to  week,  they  would  perish  within  a  very  few  weeks. 
The  vital  question  to  the  humanitarian  is  whether  this  system  of 
living  "from  hand  to  mouth  "  on  the  part  of  so  large  a  portion 
of  mankind  is  an  economic  necessity,  in  the  same  sense  that  the 
regular  return  of  winter's  cold  and  summer's  heat  is  a  physical 
necessity. 

The  opinion  is  rapidly  becoming  popular  that  we  are  approach- 
ing a  period  when  poverty,  in  the  sense  of  an  immediate  and 
pressing  necessity  that  one  shall  work  in  order  to  escape  physical 
suffering  from  hunger  and  nakedness,  will  be  abolisiied  absolutely 
as  to  everybody.  When  the  advocates  of  this  opinitm  are  asked 
if,. as  men  are  now  constituted,  they  will  not  cease  working  the 
instant  they  are  relieved  from  the  fear  of  hunger,  cold  and  home- 
lessness  they  reply,  "No!  men  a)id  women  will  so  far  have  risen 
out  of  their  present  enthralled  condition  as  to  be  disposed  to  work, 
as  Fourier  defines  it,  passionately  and  because  they  enjoy  the 
work,  and  will  select   each  the  work  he  most  enjoys,  and  which 


^6  ECONOMIC  PHILOSOPHY. 

^Yill  at  the  same  time  profit  all  the  most."  This  is  not  only  the 
root  idea  of  Fourierism  and  of  all  socialism,  but  finds  a  large 
encouragement  also  in  many  of  the  altruistic  teachings  and  ten- 
dencies of  the  Christian  and  Buddhist  religions. 

One  can  hardly  believe  that  the  industrious  labors  of  the  bee, 
the  ant  and  the  beaver  are  prompted  by  either  the  love  of 
gain  or  acquisition  on  the  one  hand  or  by  fear  of  suffering  on  the 
other.  Yet  if  the  bee  be  taken  to  a  couiitry  in  which  the  flowers 
bloom  all  the  year  round,  it  (or  rather  its  immediate  kinsman,  for 
the  average  life  of  the  neutral  worker  is  only  one  working  sea- 
son) will  cease  after  one  season  to  lay  up  honey  in  a  country  in 
which  the  store  can  never  be  wanted  ;  conceding  that  there  is  an 
irresistible  instinct  of  labor  in  certain  insects  and  anmials,  there 
certainly  is  not  in  man.  He  can  not  be  depended  on  to  render 
many  of  the  services  now  essential  to  the  maintenance  of  society 
after  he  is  beyond  the  need  of  the  wages  he  will  earn.  In  casual 
instances  he  will  do  so.  But  one  has  only  to  reflect  how  long  he 
would  have  to  wait  before  a  two  cent  morjiing  paper  or  a  cup  of 
coffee  would  be  brought  to  him,  if  every  person  in  the  world  were 
a  millionaire,  to  see  that  for  all  the  smaller  and  cheaper  subdivi- 
sions of  human  service,  on  which  the  comfort  of  our  daily  life 
depends,  he  is  indebted  to  the  fact  that  the  person  who  renders  it 
is  poor. 

The  industries  of  society  may  be  compared  to  a  low  pressure 
engine  in  which  the  piston  works  with  wealth  pushing  on  one 
side  and  poverty,  or  an  exhausted  receiver,  pulling  on  the 
other. 

When  the  economist  urges  that  if  all  the  wealth  on  the  surface 
of  the  earth  were  converted  into  food  and  clothing  it  would  not 
support  the  world's  population  three  years  ;  that  in  fact  the  act- 
ual food  and  clothing  now  produced,  under  the  stimulus  and 
pressure  to  which  mankind  are  subjected,  would  last  but  little 
more  than  one  year,  and  hence  that  the  continued  pressure  of 
impending  pain  is  necessary  to  induce  a  degree  of  industry  ade- 
quate to  sustain  the  population  of  the  world  in  its  present  degree 
of  comfort,  the  socialist  re])lies  :  "  I  concede  that  that  is  now  true, 
but  it  does  not  follow  that  it  will  always  be  true." 

So  far  as  the  socialist  bases  his  comi)laint  on  the  assertion  that 
the  wealth  accumulated  in  the  hands  of  the  few  wealthy  is  so 
much  abstracted  or  withdrawn  from  the  stock  of  goods  that  would 
be  consumable  by  the  poor,  he  is  evidently  in  error  :  for,  as  will 
appear  more  fully  in  chapters  IV.  and  V. ,  the  surplus  wealth  of  the 


THE   WANT  PBE.SSURE.  77 

rich  must  be  invested  in  such  modes  as  to  give  society  the  use  of 
it,  or  it  can  earn  no  income. 

So  far  as  we  can  see,  the  fear  of  impending  suffering,  as  well  as 
the  prospect  of  enjoyment  or  rest  from  the  possession  of  wealth,  is 
necessary  to  insure  a  degree  of  wealth-production  sufficient  to 
keep  mankind  alive.  Wlioever  could  awake  to-moiTow  morning 
on  a  world  in  which  every  human  being  should  be,  by  wliatever 
means,  relieved  from  the  possibility  of  suffering  in  case  he  should 
render  no  service  to  others,  would  awake  on  a  world  in  which 
wealth,  or  the  ability  to  command  the  services  of  others,  would  no 
longer  exist.  One  might  as  well  imagine  a  world  in  which  the 
food  would  consist  of  strains  of  music.  If  mankind  were  fed  at 
all  it  could  only  be  as  the  prophet  was  fed  by  the  ravens.  It 
would  not  be  an  economic  world,  and  its  conditions  are  so  impos- 
sible that  it  is  idle  to  speculate  on  what  it  would  be. 

In  the  existing  world  the  pressure  of  economic  want,  presenter 
prospective — in  short,  poverty — is  as  potent  a  force  in  wealth  pro- 
duction as  hunger  is  in  causing  the  body  to  be  fed  or  cold  in  caus- 
ing it  to  be  clothed.  Publicists  agree  that  the  isothermal  limits 
witliin  wliich  tlie  highest  intellectual  culture  is  possible  are  those 
in  which  the  body  can  not  be  sustained,  without  almost  continu- 
ous labor,  but  within  which  by  continuous  labor  comfort  is  possi- 
ble. The  want-pressure  essential  to  provoke  the  maximum  of 
effort  does  not  seem  heretofore  to  have  resulted  in  the  production 
of  more  of  the  necessaries,  luxuries,  and  conveniences  of  life  than 
were  at  all  times  necessary  to  a  fair  average  degree  of  comfort. 
Presumptively,  therefore,  the  want-pressure  has  not  been  in  excess 
of  what  was  needed.  In  so  far,  however,  as  instances  can  be 
adduced  in  wliich  men  work  on  just  as  usefully  as  ever  after  this 
want-jiressure  is  removed,  the  economist  will  be  prepared  to 
admit  that  its  prospective  complete  removal  presents  an  improved 
appearance  of  1)eing  consistent  with  the  complete  performance  of 
the  labors  essential  to  the  maintainance  of  mankind. 

Meanwhile,  is  it  either  cruel  or  fallacious  to  assume  that  there 
are  forms  of  wealth  or  power  fully  equal,  in  value  to  their  pos- 
sessor, to  pecuniary  power  ?  Health  and  muscular  power  are 
usually  sacriffced  in  the  successful  pursuit  of  wealth,  but  are 
usually  retained  and  enjoyed  in  a  life  of  moderately  hard  and 
steady  labor.  "In  the  sweat  of  thy  brow  thou  shalt  earn  thy 
bread,"  is  found  to  be  a  curse  pregnant  with  a  blessing,  when  it 
happens  that  those  who  pride  themselves  on  having  escaped  the 


^8  ECONOMIC  PHILOSOPHY. 

curse  of  toil  betake  themselves  to  the  physician  for  medicines 
whicli  will  restore  the  perspiration. 

The  wealtli -pursuit,  when  most  successful,  often  hardens  the 
heart  and  steels  the  disposition  of  the  pursuer  into  a  degree  of 
callousness  to  all  the  more  generous  impulses  whicli  becomes 
fatal  to  the  enjoyment  of  wealth  when  obtained. 

In  such  cases  the  highly  successful  man  financially  becomes  a 
failure  in  life  socially.  Tliere  is  a  certain  respect  and  faith  on  the 
part  of  his  fellows  which  many  poor  men  have  never  lost  but 
which  he  is  powerless  to  gain. 

It  is  also  true  that  the  "  hand-to-mouth  "  or  "  happy-go-lucky  " 
life  of  those  who  do  not  strain  after  more  than  the  privilege  of 
living  in  a  humble  way  escapes  much  of  the  torture  and  care 
incident  to  a  life  of  winning  and  losing  on  a  large  scale. 

If  by  the  ''abolition  of  poverty"  is  meant  the  ensuring  a  rea- 
sonable certainty  of  comfortable  support  to  all  who  are  ready  to 
do  what  tliey  can  to  be  useful  to  their  fellow-men,  it  may  be 
doubted  whether  any  humanly  invented  system  can  effect  much 
improvement  on  the  one  now  in  force.  The  notion  that  poverty 
can  be  abolished  is  a  flattering  gospel,  far  more  attractive  to  our 
human  impulses  than  to  have  the  poor  always  with  us,  and  espe- 
cially than  to  be  ourselves  the  poor.  Without  professing  the 
least  faith  in  the  efficacy  or  convincingness  of  epithets,  we  are 
compelled  to  feel,  though  we  may  not  say,*  with  Franklin,  "  He 
that  tells  you  you  can  succeed  in  any  way  but  by  labor  and  econ- 
omy is  a  quack." 

*  Quoted  thus  by  Wolowski  in  Eoscher  Pol.  Econ.,  Am.  Edin.,  p.  ;il. 


CHAPTER  III. 

VALUE  AND  PRICES. 

33.  What  Is  Value  ? — Value  is  the  degree  of  esteem,  affection, 
appreciation  or  desire  felt  for  an  object,  by  those  wishing  to  pos- 
sess it,  and  expressed  in  terms  of  the  other  objects  of  esteem,  affec- 
tion, and  desire  with  which  tliey  bring  it  into  comparison.  It  is 
the  sense  persons  have  of  the  worth  of  things.  If  they  already 
have  the  things,  their  value  is  what  they  will  forego  having 
rather  than  part  with  them.  If  they  have  them  not  the  value  of 
them  is  what  they  will  give  for  them.  Hence  value  is  a  sense  of 
relation  or  equation  between  two  things,  and  both  have  to  be  esti- 
mated. In  this  sense  it  is  like  weiglit,  measurement,  size,  etc.,  in 
all  which  conceptions  two  things  are  held  in  mind  for  comparison, 
viz.,  the  object  and  the  pound,  foot-rule,  cubic  yard,  ton,  or  other 
standard  with  which  it  is  compared  and  without  naming  which 
no  idea  of  weight  or  measurement  or  size  can  be  conveyed.  As 
the  idea  that  a  stick  is  two  feet  long  cannot  be  thought  of,  except 
by  comparing  the  stick  with  a  standard  called  a  foot  which  was 
originally  a  man's  foot,  so  the  idea  of  value  cannot  be  thought  of 
except  b\^  comparing  the  thing  valued  with  some  standard,  as  a 
penny,  a  sheep,  or  an  ox.  To  say  one  cow  is  worth  four  sheep  is  a 
statement  of  value  as  truly  as  to  say  it  is  woi-th  forty  dollars.  * 

*  Adam  i'wij^/t  ("Wealth,"  etc.,  p.  15)  says:  "  At  all  times  and  placesthat  is  dear  which 
it  is  difficult  to  come  at,  or  which  it  costs  much  labor  to  acquire,  and  that  cheap 
wliich  is  to  be  had  easily  or  with  very  little  labor.  Labor  alone,  therefore,  never  vary- 
ing in  its  own  value,  is  alone  the  ultimate  and  real  standard  by  which  the  value  of  all 
commodities  can  at  all  times  and  places  be  estimated  and  compared.  It  is  their  real 
price;  money  is  their  nominal  price  only.  .  .  As  a  measure  of  quality,  such  as  the  natural 
foot,  fathom,  or  handful],  which  is  continually  varying  in  its  own  quantity,  can  never  be 
an  accurate  measure  of  the  quantity  of  other  things,  so  a  commodity  which  is  itself 
continualy  varying  in  its  own  value  can  never  be  an  accurate  measure  of  the  value  of 
other  commodities.  Equal  <iuantiLies  of  labor  at  all  times  and  places  may  be  said  to 
be  of  equal  value  to  the  laborer.  In  his  ordinary  ttate  of  health,  strengtD,  and  spirits,  in 
the  ordinary  degree  of  his  skill  and  dexterity,  he  must  always  lay  down  the  same  por- 
tion of  his  ease,  his  liberty,  and  his  happinc.-s.  The  price  which  he  pays  must  always 
be  the  same  whatever  the  quantity  of  goods  which  he  receives  in  return  for  it.  Of 
these,  indeed,  it  may  sometimes  purchase  a  greater  and  sometimes  a  smaller  qumitity, 
but  it  is  their  value  which  varies,  not  tliat  of  the   labor  which   purchases   them." 

H.  C.  Carey  says  "  value  is  the  measure  of  the  resistance  to  be  overcome  in  obtaining 
those  commodities  required  for  our  purposes— of  the  power  of  nature  over  man--th« 


80  ECONOMIC  PHILOSOPHY. 

Adam  Smith  supposed  that  labor  is  the  standard  of  value  of  all 
commodities,  and  that  it  iiad  a  fixed  value  in  itself.  He  did  not 
seem  to  conclude  that  value,  like  weight  or  length,  is  not  a  quahty 
of  one  thing,  but  a  ratio  between  two.     He  does  not  tell  us  what 


cost  of  reproduction  (making  or  getting  another  of  tlie  same  kind)  being  tlie  limit 
whicli  value  cannot  exceed." 

Roscher  says  ("  Political  Economy,"  vol.  1,  cb.  1,  sec.  iv):  "The  economic  value  of 
goods  is  the  importance  they  possess  for  the  purposes  of  man,  considered  as  engaged 
in  economy  (housekeeping,  husbandry),  the  quality  which  makes  them  exchangt-abie 
against  other  goods.  A  clear  distinction,  liowever,  should  be  made  between  utility 
and  value  in  use.  Utility  is  a  quality  of  things  themselves,  in  relation,  it  is  true,  to 
human  wants.  Valuu  in  use  is  a  quality  imputed  to  them,  the  result  of  man's  thought 
or  of  his  view  of  them.  Thus  in  a  beleagured  city  stores  of  food  do  not  increase  iu 
utility  but  their  value  In  use  does." 

Karl  J/a;'a;("Kapital,"  vol.  1,  p.  6)  Bays,  "  that  which  determines  the  magnitude  of 
the  value  of  any  article  Is  the  amount  of  labor  socially  necessary,  or  the  labor  time 
socially  necessary,  for  its  production  .  .  .  the  mas^nitude  of  this  value  is  measured  by 
the  quantity  of  the  value-creating  substance,  the  labor  contained  in  the  article.  The 
quantity  of  labor  is  measured  by  its  duration,  and  labor-time  in  its  turn  finds  its  stand- 
ard in  weeks,  days,  and  hours."  This  he  explains,  however,  to  be  "  not  idle  and  unskil- 
ful labor-time  but  a^e^age  homogeneous  labor  power,"  i.  e.,  what  the  average  laborer 
will  do  in  the  given  time.  By  this  he  measures  the  time  socially  necessary.  The  intro- 
duction of  machinery  lessens  the  time  socially  necessary. 

"  The  labor-time  required  changes  with  every  variation  in  the  productiveness  of 
labor  "  (p.  7). 

(P.  6S.)  "  The  value,  or  in  other  words,  the  quantity  of  human  labor  contained  in  a 
ton  of  iron  is  expressed  in  imagination  by  such  a  quantity  of  the  money  commodity  as 
contains  the  same  amount  of  labor  as  the  iron." 

Bastlat  ("  llaimonies  of  Political  Economy,  Sterling,"  135)  :  "  "Value  is  the  relation 
of  two  services  exchanged." 

Cairnes  ("  Leading  Principles,"  p.  11)  defines  value  as  "  the  ratio  in  which  commodi- 
ties in  open  mat  ket  are  exchanged  against  each  other." 

F.  A.  Walkei'  ("  Political  Economy,"  p.  5)  says  "  value  is  the  power  which  an  article 
confers  upon  its  possessor,  irrespective  of  legal  authority  or  personal  senti. rents,  of 
commanding  in  exchange  for  itself  tlie  labor  or  the  product  of  the  labor  of  others  " 

Cherbtiliez  ("Precis  de  la  Science  Economique,"  vol  I.,  p.  203)  says  "  the  value  of  a 
product  or  of  a  service  can  be  expressed  only  as  the  products  or  services  which  it 
obtains  in  exchange  .  .  .  If  I  exchange  the  thing  A.  against  B.,  A.  is  the  value  of 
B.;  B.  is  the  value  of  A." 

Jevons  (Primer,  p.  98)  defines  value  as  proportion  in  exchange. 

Periij  (A.  L.),  following  Bastiat,  defines  value  as  "the  relation  of  mutual  purchase  es- 
tabli.<hed  between  two  services  by  their  exchange."—"  Political  Economy,"  p.  136. 

Z«  !«.««««■  says,  ("  Precis  d' Economic  Politique,  p.  175)  "the  relation  resulting 
from  Exchange— /«  rappirt  resultant  de  Vechange." 

Locke,  Mc  Cidloiigh,  Ricardo,  and  Carey  agree  in  making  labor  the  sole  cause  of  value. 

The  most  vigorous  opponent  of  this  theory  of  value  is  Henry  Dunning  MacLeod, 
of  Cambridge,  who  argues  as  follows  (■•Principlea  of  Econ.  Philosophy,"  vol.  I,  p.  303): 

I.  "  //■  Laboi-  he  the  sole  cause  of  value,  then  whatever  thing  labor  is  bestmoed  v]}on  mvst 
(always  thereafter  continue  to)  have  a  value  (proportionate  to  the  labor  bestowed  upon 
it)."  The  parts  in  brackets  are  our  own,  but  are  essential  to  a  complete  statement, 
and  are  embodied  in  MacLeod's  fourth  point. 

If  this  proposition  were  true,  no  person  could  ever  make  a  loss  by  expending  labor  on 


MACLEOD   ON  VALUE.  81 

he  means  by  labor,  viz.,  whether  it  means  working  for  a  certain 
time  a  day  for  instance,  without  regard  to  results  accompHshed, 
or  working  with  a  certain  intensity,  /.  e.,  until  fatigue  sets  in,  with- 
out regai'd  to  either  time  or  results,  or  working  with  a  certain  ef- 


things  not  needed,  whereas  this  is  one  of  the  most  frequent  sources  of  loss.  The  Brit- 
ish Government  expended  in  1864-70  £'30,000,000  on  a  class  of  armored  gunboats  which, 
before  any  use  was  made  of  them, were  condemned  as  worthless, owing  to  improvements 
in  the  construction  of  guns.  They  expended  large  sums  on  iron  guns  which  became 
useless  by  substitution  of  steel  guns,  etc. 

A  telegraph  company  expended  large  sums  of  money  in  constructing  a  line  through 
Siberia  and  Alaska  whereby  to  get  telegraphic  communication  between  New  York  and 
London  via  San  Francisco  and  Behrings  Straits,  which  was  made  totally  worthless  by 
the  laying  of  the  first  Atlantic  Cable.  Indeed  values  are  constantly  passing  out  of  all 
forms  of  wealth  by  supersedure  through  substitution  of  other  forms  and  fashions  as 
well  as  by  use.    MacLeod's  other  points  were  : 

II,  If  labor  is  the  cause  of  all  value,  then  all  variations  in  value  must  be  due  to  vari- 
ations in  labor.  To  this  he  urges  that  certain  land  in  London  is  worth  £1,000,000  per 
acre  irrespective  of  the  value  of  any  labor  bestowed  on  it.  Yet  some  day  this  entire 
value  would  have  disappeared  as  it  now  has  from  Nineveh  and  Babylon. 

When  a  fair  is  held  in  a  town  the  booths  at  the  fair  acquire  a  value.  At  the  end  of 
the  fair  they  lose  it. 

Timber  trees  have  value  when  no  labor  has  been  bestowed  on  them.  Cattle, 
herds,  and  flocks  have  value,  though  they  pasture  and  multiply  of  themselves  without 
the  aid  of  human  labor. 

The  owners  of  ore  mines  and  quarries  attach  a  value  to  them  before  any  labor  is 
bestowed  on  them. 

A  whale  stranded  on  the  beach. in  the  Firth  of  Forth  sold  as  it  lay,  the  free  gift  of 
nature,  for  £70. 

The  cast-off  skins  of  snakes  at  the  zoological  gardens  in  Paris  sell  to  chemists  for  the 
uric  acid  in  them  for  9  shillings  the  pound — not  a  product  of  human  labor. 

MacLeod's  third  point  is  :  "  If  labor  be  the  sole  cause  of  value,  then  all  things  pro- 
duced by  the  same  amount  of  labor  must  be  of  equal  value." 

If  so,  if  a  sportsman  shoots  a  pheasant  with  one  barrel  and  a  crow  with  the  other, 
they  ought  to  have  equal  value.  A  pearl  and  its  shell,  a  diamond  and  the  rubbish  it  is, 
found  in,  a  salmon  caught  on  one  hook  and  a  dog  fish  on  the  other  of  the  same  line 
would  have  equal  value. 

IV.  If  labor  be  the  sole  cause  Of  value  the  value  must  ie  proportional  to  the  latmr  (in- 
cluded in  our  point  I.) 

V.  If  labor  be  the  sole  cause  of  value  a  thing  once  produced  by  labor  must  always 
have  value  and  the  same  value. 

On  the  contrary,  a  thing  has  value  in  one  place  and  not  in  anot^erandat  one  time  and 
not  at  another.  The  Jesuits  buying  provisions  of  the  savages  of  Polavri  offered  gold 
and  were  laughed  at.  The  savages  would  take  only  iron.  A  professor's  learning  in 
Greek  or  mathematics  has  value  in  a  university  but  none  in  the  Hebrides.  A  lawyer's 
abilities  have  value  in  London  but  none  in  Timbuctoo. 

Medical  knowledge  has  no  value  whore  no  one  is  ill. 

VI.  If  labor  is  the  sole  cause  of  value  what  is  the  cause  of  the  value  of  labor  ? 
MacLeod  sums  up  thus  (p.  317)  :  "  Hence  we  see 

"L  That  there  are  vast  quantities  of  property,  both  corporeal  and  incorporeal,  which 
have  value,  upon  which  no  labor  was  ever  bestowed. 

"2.  That  quantities,  both  corporeal  and  incorporeal,  may  be  produced  by  labor  which 
has  no  value. 


82  ECONOMIC  PHILOSOPHY. 

ficieucy,  as  for  instance  until  a  field  is  planted,  without  regai'd  to 
either  time,  intensity,  or  results,  or  working  until  a  certain  result 
is  obtained,  as  for  instance  a  chair  is  made.  To  say  that  labor 
can  be  measured  in  quantity  by  mere  time,  without  regard  to  re- 

"3.  That  the  same  quantity  of  labor  may  produce  products  one  of  which  has  value 
and  the  other  no  value. 

"4.  That  quantities  produced  by  varying  quantities  of  labor  have  the  same  value. 

"5.  That  things  produced  by  labor  may  have  value  in  some  places  and  not  in  other 
places  ;  and  at  some  times  and  not  at  other  times. 

"6.  Tliat  things  produced  by  less  labor  may  have  greater  value  than  things  produced 
by  more  labor." 

■  From  these  indisputable  propositions,  the  result  of  practical  experience,  the  undeni- 
able iuference  is  that  labor  is  not  in  any  way  whatever  the  form  or  the  cause  of 
value  ,  or  even  necessary  to  value  ;  and  in  fact  in  this  commercial  country  the  enor- 
mously greater  proportion  of  valuable  property  is  not  the  result  of  labor  at  all. 

(—p.  323  )  Seeing  that  Labor  and  Utility  altogether  fail  to  stand  the  test  of  being  the 
cause  of  value,  what  remains  ?  The  only  thing  which  ancient  writers,  Aristotle,  the 
author  of  the  "  Eryxias,"  and  the  Roman  Lawyers,  in  modern  times  the  Physiocrates, 
Smith,  Condillac,  Whately,  Bastiat,  J.  B.  Say  and  many  other.s  have  observed- 
Exchangeability.  And  what  does  Exchangeability  depend  upon  ?  If  I  offer  something 
for  sale  what  is  necessary  in  order  that  it  may  be  sold  ?  Simply  that  some  one  else 
should  Demand  it.  Aristotle  said  long  ago  that  it  is  chre'ia  or  demand  that  binds  society 
together. 

Here  it  is  quite  clear  that  we  have  now  got  the  true  source  or  origin  or  cause  of  value. 
\i'\s  Demand.  Value  is  not  a  quality  of  an  object,  but  an  affection  of  the  mind. 
The  sole  origin,  source,  or  cause  of  value  is  Human  Desire. 

(—p.  336).  It  is  value  or  demand  which  is  the  cause  of  or  inducement  to  labor.  Bois- 
guillebert  saw  this  most  clearly;  he  s  lys  (  "Factum  dela  France,'"  ch.  v.)  consumption 
(consommation  or  demand)  is  the  principle  of  all  wealth.  All  the  most  exquisite  fruits 
of  the  earth  and  the  most  precious  products  would  be  nothing  but  rubbish  if  they  were 
not  consumed.  So  Hume  says  ("Essay  on  Commerce  "):  "  Our  passions  (desires  or  de- 
mand) are  the  only  causesof  labor."  Genovesi  ("  Lezioni  de  Economia  Civile,''  part  ii, 
ch.  i.)  points  out  that  though  money  is  the  apparent  or  proximate  measure,  the  ultimate 
measure  to  which  not  only  things  but  their  price  is  referred  is  man  himself.  Nothing 
has  value  where  there  are  no  nun,  and  the  very  few  things  which  .have  a  low  price 
where  men  are  few  have  a  very  high  price  where  there  are  many  people.  And  this  is  a 
reason  why  things  and  services  have  a  much  higher  price  in  the  capital  than  in  the 
distant  provinces. 

So  Beccaria  says  {Del disordine  e  de  rimedj  delle  mone/e  nelloslatodi  Milano):  "Value 
is  the  substance  which  measures  the  estimation  in  which  men  hold  things." 

Condillac  says,  (Le Commerce etle  Gouvernment,  ch  1,)  "This  esteem  is  whatis  called 
value.  Since  the  value  of  things  is  founded  on  the  want  of  them  or  the  demand,  it  is  nat- 
ural that  a  want  more  strongly  felt  gives  things  a  greater  value,  and  a  want  less  felt 
gives  them  a  less  value.  .  .  A  thing  has  not  value  because  it  has  cost  much,  as  is  com- 
monly said,  but  people  bestow  expense  on  it  because  it  has  value." 

Even  Adatn  iSmith  (Book  1,  ch.  ii)  describing  the  vineyards  from  whose  grapes  the 
best  wines  are  produced,  says,  "For  though  such  vineyards  are  in  geutral  more  care- 
fully cultivated  than  most  others,  the  high  price  of  the  wiue  seems  to  be  not  so  much 
the  effect  as  the  cause  of  this  careful  cultivation."  Smith  here  perceives  that  instead 
of  labor  being  the  ca  ise  of  value  it  is  the  value  that  causes  the  labor  to  be  performed. 
Value  then  in  its  true  sense  signifies  an  aff-ction  of  the  mind  and  not  a  quality  in  an 
object  or  the  result  of  labor.  The  usual  phrase  is,  "  I  value  so  and  so."  It  is  the  force 
of  attraction  between  tlie  mind  and  some  external  obj(  ct. 


CAREY  OX   VALVE.  m 

suits,  intensity,  efficiency,  etc.,  is  absurd.  Nor  does  Dr.  Smith 
make  it  clear  whether  the  labor,  hx  which  the  value  of  a  commod- 
ity is  gauged,  is  the  labor  expended  in  bringing  it  into  existence  or 
in  bringing  into  existence  the  commodity  which  is  given  in  ex- 
change for  it.  These  two  quantities  of  labor  are  quite  distinct,  both 
are  involved  in  the  equation,  and  they  may  be  very  unlike. 

Dr.  Carey  describes  value  and  utility  by  a  generalization  and 
not  by  a  definition.  He  says:*  "  Utility  is  the  measui'e  of  man's 
power  over  nature  ;  value,  the  measure  of  nature's  i^ower  over 
man.  The  former  grows,  the  latter  declines,  wath  the  power  of 
combination  among  men.  Moving  thus  in  opposite  dii-ections, 
they  exist  always  in  the  inverse  ratio  of  eacli  other."  Many 
instances  might  be  cited  in  which  this  genei'alization  holds  true 

Says  MacLeod  again  (p.  332) .-  "'  All  production  is  founded  upon  speculations.  Pro- 
ducers find  out  or  think  of  what  other  people  want  and  then  they  produce,  and  if  none 
want  or  will  buy  what  is  produced,  such  an  article  has  no  value.  All  production,  then, 
is  founded  on  speculation, varying  through  all  degrees  of  prudence,  certainty,  and  risk. 
All  producers  speculate  that  there  will  not  only  be  buyers  who  will  want  their  products, 
bat  will  want  them  to  such  a  degree  of  intensity  as  to  be  willing  to  pay  a  sum  at  least 
sufficient  to  pay  the  cost  of  production  and  a  profit  besides.  Hence,  as  a  fundamental 
truth,  speculation  is  the  mother  of  production  and  demand  is  the  origin  of  value." 

7et'on«C' The  Theory  of  Political  Economy,"  p.  178)  says:  "If  no  use  could  be  found  for 
the  Great  Eastern  steamship,  its  value  would  be  nil  except  for  the  utility  of  some  of  its 
materials.  On  the  other  hand,  a  successful  undertaking,  which  happens  to  possess 
great  utility,  may  have  a  value  for  a  time  at  least,  far  exceeding  what  has  been  spent 
upon  it,  as  in  the  case  of  the  Atlantic  cable.  The  fact  is  that  labor  once  spent  has  no 
influence  on  the  future  value  of  any  article;  itis  gone  and  lost  forever.  In  commerce 
bygones  are  forever  bygones;  and  we  are  always  startiiig  clear  at  each  moment,  judging 
the  values  of  things  with  a  view  to  future  utility.  ludustry  is  essentially  prospective, 
not  retrospective;  and  seldom  does  the  result  of  any  undertaking  exactly  coincide  with 
the  first  intentions  of  its  promoters.  .  .  It  is  equally  to  be  remembered  that  labor  is 
itself  of  unequal  value.  I  hold  labor  to  be  essentially  variable,  bo  that  its  value  must 
be  determined  by  the  value  of  the  produce  not  the  value  of  the  produce  by  that  of  the 
labor." 

Rlcardo  (Pol.  Econ.,  p.  11)  says  :  "  Adam  Smith,  after  most  ably  showing  the  insuffi- 
ciency of  a  variable  medium  such  ms  gold  and  silver,  for  the  i)urpose  of  determining  the 
varying  value  of  other  things,  has  himself,  by  fixing  on  corn  or  labor,  chosen  a  medium 
no  less  variable.  Possessing  utility,  commodities  derive  their  exchangable  value  from 
two  sources,  from  their  scarcity  and  from  the  quantity  of  labor  required  to  obtain 
them."  Ricardo  afterward  takes  in  the  quality  of  labor,  and  the  amount  of  capital 
invested  in  production,  the  durability  of  the  capital  and  the  frequency  with  which  it 
can  be  turned  over,  and  denies  that  there  can  bo  any  absolute  standard  of  value- 

Mill  defines  value  as  the  general  power  of  purchasing  commodities  as  distinguished 
from  price,  which  is  the  power  of  purchasing  money  only.  Mr.  Mill  sometimes  speaks 
of  "the  natural  value,  i.  e.,  the  cost  of  production,"  as  if  the  quantity  of  labor  only  were 
in  his  mind,  and  at  others  of  "  the  cost  of  production  with  the  ordinary  profit,  in  other 
words  such  as  will  give  to  all  producers  the  ordinary  profit  on  their  outlay,"  thus  recog. 
Dizing  capital  as  the  producer. 

♦  "  Social  Science  Condensed,"  by  McKean,  p.  197. 


84  ECONOMIC  PHILOSOPHY. 

in  a  certain  peculiar  and  rather  evasive  and  secondary  sense,  but 
it  is  born  rather  of  the  love  of  paradox,  and  fondness  for  antith- 
esis, which  distinguishes  the  aggressive  mind,  than  of  the  accu- 
racy of  scientific  exposition.  For  instance,  as  man  increases  in 
civilization  many  tilings  become  useful  to  him  for  which  as  a 
bai'barian  he  could  have  no  use,  such  as  books,  paintings,  imple- 
ments of  industry,  money,  etc.  As  to  society  at  large,  they 
undergo  a  decline  in  value,  /.  e.,  in  cost,  pari  iKissu  with  their 
increase  of  utility  to  the  individual,  because  as  they  are  more 
numerously  made  they  can  be  made  at  less  cost.  But  it  could  not 
be  truly  said,  as  to  a  savage  ignorant  of  the  use  of  money,  for 
instance,  that  as  he  became  acquainted  with  its  use  its  utility 
would  increase  but  its  value  would  decline.  While  a  savage  it 
would  have  neither  utility  nor  value.  And  to  the  individual 
advancing  from  barbarism  to  civilization  its  value  and  utility 
would  grow  together.  So  it  could  not  be  said  of  the  land  on 
which  a  ten-story  building  is  erected  in  New  York  City  that  its 
value  declines  as  its  utility  increases.  It  is  useful  in  proportion 
to  the  number  of  people  it  accommodates  and  the  volume  and 
value  of  the  exchanges  effected  in  its  rooms  and  offices.  But  just 
in  this  proportion  do  its  rents  rise,  which  constitute  its  value. 
Carey  arrives  at  his  pai'adox  by  considering  utility  and  value 
only  relatively  to  collective  society  at  different  periods  of  time, 
and  relatively  to  manufactured  goods.  It  may  be  truly  said  that 
as  man  advances  in  civilization,  food,  books,  and  implements 
accomplish  more  good  for  mankind  at  large  and  cost  it  less. 
They  are,  therefore,  to  man,  collectively,  more  useful  and  to  each 
individual  less  costly.  But  it  could  not  be  said  in  the  case  of  an 
individual  tliat  the  more  useful  his  services  become  to  society  or 
to  himself  the  more  their  value  would  decline. 

So  far  as  scarcity  is  an  element  in  the  cost  of  useful  goods,  the 
fact  of  their  utility  tends  to  so  concentrate  human  effort  on  their 
production  as  to  cause  a  decline  in  their  value.  In  this  way  util- 
ity tends  to  destroy  cost  by  multiplying  the  useful  thing.  This 
is  a  view  of  value  which  is  limited  to  pi'oducible  objects,  when 
looked  at  from  the  standpoint  of  collective  society,  and  the  com- 
parison relates  to  successive  periods  of  time.  An  unproducible 
object,  a  picture  by  Raphael  for  instance,  may  grow  dearer  while 
cotton  goods  are  growing  cheaper. 

34.  Fallacy  of  Resting  Value  on  Labor. — In  fact,  how- 
ever, the  labor  of  the  man  who  either  has  no  .skill  or  power  or 
spii'it  or  opportunity  to  do  anything  has  no  value,  as  the  man 


THE  VALUE  OF  LABOR.  85 

himself  is  a  mere  walking  appetite,  consuming  and  not  producing. 
Labor  rises  in  value  where  there  is  competition  among  employers, 
and  falls  in  value  where  there  is  only  competition  among  laborers. 
What  Dr.  Smith  assigns  as  the  causes  of  the  invariableness  in  the 
value  of  labor  are  both  untrue  and  inadequate.  It  is  not  trvie 
that  the  laborer's  surrender  of  ease,  liberty,  and  happiness  is  equal 
in  all  cases.  In  some  cases,  and  to  some  persons,  labor  is  a  pleas- 
ure, and  just  the  class  of  amusement  the  laborer  would  delight  in 
if  he  got  no  pay  whatever.  In  other  cases  tbe  toil  is  very  irksome 
and  of  a  kind  that  many  persons  having  the  power  to  perform 
would  not  perform  at  any  price.  Again,  a  "  .surrender  of  ease, 
liberty,  and  happiness  "  is  not  a  basis  of  value.  It  can  not  be 
measiu'ed.  It  has  no  desirable  quality  in  it,  to  the  purchaser  of 
the  labor  or  its  product.     He  does  not  think  of  it. 

There  is  a  more  direct  and  logical  reason  why  labor  can  not  be 
a  measure  or  standard  of  value,  viz. :  that  it  has  no  value  in  itself 
and  can  not  have,  since  as  fast  as  it  creates  value  the  value  passes 
into  the  form  of  Avealth  or  capital  which  it  creates.  As  distin- 
guished from  caijital,  which  includes  all  labor  performed,  labor 
is  really  labor  awaiting  performance.  In  short,  the  term  labor  is 
an  abridged  term,  the  full  term  being  '  ^  capacity  to  labor. "  Before 
a  man  begins  his  work  for  the  day,  that  day's  work  can  not  yet 
be  said  to  have  a  value,  because,  not  baving  been  done,  it  does 
not  exist,  and  that  which  has  no  existence  can  have  no  worth. 
When  the  day's  work  is  done  the  whole  value  to  which  it  has 
given  rise  can  not  be  said  to  inhere  in  the  labor  as  a  separate 
entity  from  the  thing  upon  which  the  labor  was  done,  for,  the 
whole  object  of  the  labor  being  to  add  value  to  that  thing,  all  the 
value  to  which  it  has  given  rise  is  in  the  tiling,  and  the  labor,  as 
an  entity  apart  from  the  thing  on  which  it  was  done,  having 
ceased  to  be,  can  have  no  value.  Hence,  though  labor  supjilies  the 
commodity  to  which  value  attaches,  the  value  itself,  as  fast  as  it 
exists  at  all,  is  in  the  commodity,  and  not  in  the  laboi*.  The  sole 
value  of  labor  is  the  value  it  exchanges  for,  viz. :  its  wages. 

To  this  it  may  perhaps  be  objected,  if  there  be  no  value  in  labor, 
why  does  it  exchange  for  value,  viz.,  for  wages  ?  Wages  are  paid 
to  induce  the  performance  of  the  labor  which  will  produce  or 
supply  the  commodity.  Wages  are  a  payment  for  service  ;  and, 
since  nobody  values  services  for  their  own  sake,  but  only  for 
what  they  will  effect  or  produce,  it  follows  that  the  value  or  the 
element  which  is  appreciated  will  always  be  in  the  ulterior  thing 
which  labor  is  performed  to  supjjly.  For  instance,  A  is  employed 


86  ECONOMIC  PHILOSOPHY. 

« 

by  B  to  catch  wild  pigeons.  For  this  pui-pose  A  walks  two  miles 
early  in  the  morning  to  the  place  where  the  pigeons  are  expected 
to  fly.  He  builds  a  bower  house  to  hide  behind;  prepares  a  floor 
carefully  for  the  pigeons  to  light  upon;  spreads  corn  upon  it,  and 
lays  his  net  carefully  at  its  border,  so  rigged  that  by  pulling  a 
rope  he  can  spring  the  net  over  the  floor ;  mounts  his  stool  pigeon, 
lets  loose  his  flying  pigeons  to  attract  the  wild  game,  retires  to  his 
bower  house,  and  loads  and  primes  his  gun,  to  be  ready  to 
shoot  such  pigeons  as  shall  alight  on  the  spar.  All  these  acts  are 
his  labor,  but  can  it  be  said  that  they  contain  any  value  in  them- 
selves ?  They  may  all  be  performed  and  no  pigeons  appear.  In 
that  case  A  would  have  earned  his  wages  if  he  worked  by  the  daj^ 
because  he  would  have  performed  the  service  agreed  on.  But  the 
performance  of  the  eiatire  service  would  give  rise  to  no  value. 
All  that  B  values  is  the  pigeons.  He  values  not  the  walk,  the 
net,  the  corn,  the  gun,  the  bower,  the  spar,  the  stool  pigeon,  or 
the  flyer.  All  these  are  parts  of  the  service,  but  no  part  whatever 
of  the  value.  If,  however,  on  the  tenth  day  of  waiting,  a  flock 
of  two  hundred  and  fifty  pigeons  is  snared,  netted,  and  bagged, 
then  he  gets  for  the  first  time  value,  though  he  had,  on  all  the 
other  days,  had  the  same  amount  of  labor  and  service,  but  in  the 
labor  azid  service  of  the  previous  days  thei'e  was  no  value  what- 
ever. 

35.  Whence  Conies  Value  ?  The  Consumer. — Value 
is  not  the  result  of  the  labor  and  service  being  performed,  but, 
on  the  contrary,  the  labor  and  service  are  performed  in  order  to 
get  the  value.  Value  in  the  foregoing  instance  expresses  the  de- 
gree in  which  the  pigeons  are  desired  by  B,  which  estimate 
induces  him  to  employ  A  to  trap  them.  Value,  or  the  feeling  or 
perception  that  there  is  value  in  an  object,  is  what  induces,  cre- 
ates, and  causes  all  labor  to  be  performed.  Because  we  believe 
corn  will  be  worth  fifty  cents  a  bushel  we  plant  it.  It  is  the  ex- 
pected value  that  causes  and  brings  into  existence  our  labor,  not 
our  labor  that  causes  or  creates  the  value. 

While  i>i'oducers  of  commodities  seek,  in  producing  them,  to 
obtain  value,  and  produce  them  only  because  they  expect  them  to 
have  a  value,  it  is  not  they  that  give  the  value  which  they  hope  for, 
since  that  value  is  the  appreciation  felt  for  the  commodity  by  the 
purchaser,  or  objectively  it  is  measured  by  the  return  commodity 
or  sez'vice  which  the  purchaser  will  pay  for  it.  In  short,  we  thus 
trace  value  back  to  the  demand  for  consumption,  and  arrive  at 
the  truism  that,  while  the  producer  of  the  commodity  produces 


DEMAND   CAUSES    VALUE.  87 

the  supply,  the  consumer  makes  the  demand  ;  and  it  is  this  effec- 
tive demand,  meaning  what  the  consumer  will  give  in  exchange, 
that  causes  and  fixes  value. 

But,  since  demand  for  consumption  regulates  value,  and  value 
regulates  the  quantity  of  labor  which  will  be  employed  in  pro- 
ducing the  thing  in  demand,  our  circle  brings  us  back  to  the 
point  that,  in  a  general  way,  the  quantity  of  labor  which  will  be 
put  into  the  jiroduction  will  be  proportionate  to  the  value,  but 
not  for  the  old  supposed  reason  of  Adam  Smith  that  the  labor 
creates  the  value,  but  for  the  more  accurate  reason  that  the  value 
(or  demand)  creates  (regulates  the  quantity  of)  the  labor  which 
will  be  invested  in  supplying  it. 

This  deduction  of  value  from  demand  furnishes  us  with  that 
long-sought  ''wage  fund,"  which  has  been  to  the  economists 
what  the  philosopher's  stone  was  to  the  alchemists,  successively  a 
faith,  a  fraud,  and  a  truism. 

The  wage  fund  is  so  much  of  the  expected  price,  to  be  obtained 
for  commodities,  as  enterprisers  will  advance  in  payment  for  labor- 
time,  and  for  organized  obedience  to  the  employer's  will,  rather 
than  forego  the  prospect  of  the  profit,  which  the  enterpriser  ex- 
pects to  reap  out  of  the  remainder  of  such  price,  after  paying  such 
wages,  and  also  I'epairs,  interest,  rent,  insurance,  taxes,  wear  and 
tear,  etc.  For,  though  the  hope  of  pi'ofits  is  the  lure  that  tempts 
the  enterpriser  from  the  beginning,  the  actual  realized  profits 
are  the  last  distilled  residuum  that  remains  after  every  cost  of 
production  has  been  paid. 

36.  The  Cou.suiiier's  Place  iu  luclustry. — Because  each 
particular  commodity  must  be  produced  before  it  can  be  con- 
sumed, economists  have  been'^ied  to  assume  that  the  natural 
order  in  economics  is  to  treat  production  as  a  fact  philosophically 
antecedent  to  consumption. 

In  history,  consiniiption  precedes  production.  Nearly  all  ani- 
mals consume,  without  producing  anything  for  consumption, 
except  as  their  bodies  become  food  for  others.  Bees,  ants,  bea- 
vers, and  other  social  animals,  however,  produce  social  wealth  of 
their  own  kind  as  truly  as  docs  man,  and  practice  socialism  and 
communism,  but  no  conscious  or  intentional  exchange  of  serv- 
ices. Singularly  enough  the  instant  animals  begin  to  claim  domain 
or  pro])erty,  as  social  birds  and  herds  all  do,  or  produce  wealth,  as 
ants,  bees,  and  beavers,  they  organize  on  the  principle  of  tlie  di- 
vision of  labor  and  ranks  of  s<)ei(^ty,  bosses  and  workers,  .soldiers, 
sentinels,  guides,  as  do  men  in  tlie  tribal  or  communal  state.     Iu 


88  ECONOMIC  PIIIL080PIIT. 

tlie  savag'e  state  man  aims  to  subsist  as  animals  do,  entirely  upon 
nature,  but  the  .scarcity  of  objects  for  coiisuni]3tion  induces  him 
to  supplement  nature  by  care,  first  by  keeping  his  own  flock, 
herd,  jjoultiy,  and  pigs  instead  of  hunting  the  boar,  buffalo, 
and  pheasant,  then  by  planting  roots  instead  of  digging  them, 
until  he  becomes  a  systematic  producer,  first  for  his  own  use, 
and  then  for  others. 

Since  consumption  is  the  prior  and  imperative  motive  whose 
imperious  necessities  suggest  and  compel  at  all  times  the  course 
which  production  will  pursue,  it  is  obvious  that  as  a  cause  in 
economics  consumption  takes  the  lead  and  stands  in  the  same 
relation  to  production  as  the  horse  does  to  the  cart,  as  the  pro- 
pelling power  and  the  steering  force.  It  is  the  prices  proclaimed 
in  the  market  that  rule  production  in  the  factory  and  furnace, 
compelling  a  shut-down  or  an  increase  of  laboi-.  It  is  the  prices 
made  known  on  the  produce  exchange  that  control  the  operations 
of  the  farm  and  induce  farmers  to  stop  raising  corn  and  raise 
cattle  or  fruit  or  tobacco.  Nor  is  it  the  prices  which  an  article 
had  last  year,  or  even  last  month,  but  tho.se  which  it  is  expected 
they  will  have  next  month  oi'  next  year,  which  are  potential  in 
causing  production.  Hence  MacLeod's  aphorism  or  fundamental 
pinnciple  that  "speculation  is  the  mother  of  production  "  follows 
logicall}^  and  closely  upon  his  previously  enunciated  principle 
that  "  demand  is  the  cause  of  all  value." 

Hence  it  is,  too,  that  the  German  socialists  Karl  Marx  and  Lassalle 
stai't  by  adopting  the  theory  of  value  usually  credited  to  Adam 
Smitb,  and  certainly  held  by  Ricardo,  that  "labor  causes  all 
value,"  and  from  thence  infer  that  the  function  of  ascertaining 
the  demand  is  a  useless  one  in  industry,  as  it  certainlj^  would  be 
if  labor  were  capable  of  causing  value.  As  it  makes  no  diifer- 
ence,  according  to  the  socialistic  idea,  whether  a  thing  is  de- 
manded or  not,  provided  labor  be  expended  u^jon  it,  :io  such  con- 
tingency as  risk  or  loss  is  contemplated  as  being  necessary,  and 
hence  no  YQaaon  exists  iov  ih.e  entrepreneur  ov  profit  maker,  and 
no  acknowledgment  is  made  by  the  socialist  that  society  makes 
any  gain  by  having  all  its  industries  begun  and  all  its  machinery 
of  industry  introduced  at  the  private  risk  and  loss  of  the  same 
profit-making  class  which  derives  the  dividends  from  capital  in 
its  successful  ventiu'es.  Hence,  also,  socialism  denounces  all 
profit  as  a  deduction  from  the  just  wages  of  labor,  all  profit- 
makers  as  robbers  of  labor,  and  all  speculators  as  criminals. 

37.     Karl    Marx'.s     Tlieory    of  Value.— The  notions  of 


KARL  MARX.  89 

Marx,*  though  elaborated  with  detailed  complexity  of  statement, 
may  all  be  resolved  into  the  single  proposition  that  as  labor  cre- 
ates all  wealth  the  laborer  ought  to  own  all  wealth,  relieving 
society  of  the  capitalist  as  a  superfluity  in  the  industrial  system. 
His  first  sentence  is  : 

"The  wealth  of  a  community  in  which  the  capitalist  mode  of 
production  prevails  appears  as  an  immense  collection  of  com- 
modities, the  single  conmiodity  being  its  elementary  form." 

To  be  exact,  Marx  should  have  defined  not  what  wealth  "ap- 
pears as,"  but  what  it  is.  It  is  true  that  wealth  "  appears  as  "  com- 
modities, but  it  "is  ''  the  power  its  owner  has,  by  means  of  those 
conunodities,  to  command  the  services  and  products  of  man  and 
the  forces  of  nature.  This  conception  connotes  and  implies  that 
there  must  be  others  who,  not  having  the  wealth,  are  in  that 
state  of  need,  or  want,  or  poverty  which  causes  the  command  to  be 
obeyed  from  a  sense  of  interest,  in  order  to  get  the  commodity 
Avhose  possession  by  one  competent  to  use  it  is  wealth,  not  in  the 
commodity,  but  in  its  owner. 

By  thus  defining  what  wealth  appears  to  be,  viz.,  a  physical 
object,  and  not  what  it  is,  viz. ,  a  social  power,  Marx  avoids  bring- 
ing into  view  the  fact  that  wealth  is  not  an  absolute  but  a  relative 
fact,  inconceivable  except  as  the  antithesis  to  the  opposite  idea  of 
the  need  of  wealth  or  the  want  of  the  commodity  for  use  and 
consumption.  '  Those  possessing  it  are  indebted  for  the  power  it 
confers  to  the  fact  that  tho.se  lacking  it  have  need.  This  relativ- 
ity in  the  idea  of  wealth,  whereby  want  becomes  the  opposite 
phase  of  the  same  fact  and  essential  to  its  conception,  will  easily 
be  grasped  by  reflecting  how  long  one  would  have  to  w-ait  to  get 
his  boots  blacked  by  another  person  if  every  other  person  had 
the  wealth  of  a  Vanderbilt.     Again  Marx  says  : 

"It  is  thus  only  the  quantity  of  socially  necessary  labor,  or 
the  socially  necessary  time  of  labor  for  the  establishing  of  a  use 
value  [meaning  the  creation  of  a  commodity]  which  regulates  its 
extent  of  value." 

This  statement  involves  one  juggle,  or  unnoticed  substitution 
of  one  source  for  value  in  place  of  another,  and  one  mistake  of 
a  consequence  for  a  cause.  If  labor  alone  were  the  cause  of 
value,  tlien  whatever  a  man  worked  at  would  be  valuable  in  pro- 
portion to  the  labor  spent  upon  it.     It  would  need  no  other  cou- 


*"  Capital  ;  A  Criticism  of  Political  Economy."    The  extracts  are  given  aa  trane- 
jjterl  by  John  Broadliouwu  in  To-day, 


90  ECONOMIC  rillLOSOPHY. 

dition.  When  Marx  prefixes  to  labor,  however,  the  quahfication 
"socially  necessary"  he  really  undermines  labor  as  the  sole 
cause  of  value,  or  as  any  cause,  and  sets  up  a  different  and 
wholly  adverse  cause,  viz.,  the  demand  or  desire  of  society.  As 
these  two  factors,  viz.,  the  "labor  invested  in  an  article  "  and 
the  "social  demand  for  the  article,"  stand  in  no  relation  to  each 
other,  except  as  the  social  demand  for  the  article  may  cause  labor 
to  be  invested  in  it,  to  say  that  social  demand  causes  value  is  to 
admit  that  labor  is  not  the  cause  of  any  value,  since  if  social  de- 
mand can  cause  the  value,  it  can  intensify  or  slacken  without  the 
least  regard  to  how  much  or  whether  any  labor  is  invested  in 
the  article,  and  as  the  social  demand  intensifies  or  slackens,  the 
article  must  rise  or  fall  in  exchange  value. 

This  juggle  reveals  the  substitution  by  Marx  of  the  consequence 
in  place  of  the  cause.  For  if  social  demand  regulates  value,  it 
will  also  I'egulate  profits  and  losses,  which  are  the  excess  or  defi- 
ciency of  value  over  or  under  cost  of  pi'oduction.  But  whatever 
i-egulates  profits  must  regulate  the  quantity  of  labor  which  will 
be  devoted  or  expended  in  the  production  of  that  from  which  the 
profit  is  obtained,  as  it  is  only  the  profit-maker  who  will  or  can 
employ  mere  naked  labor,  viz.,  labor  as  divested  of  implements, 
means  of  support,  capital,  organization,  or  job,  at  all.  Hence 
Marx's  effort,  to  make  value  depend  on  quantity  of  labor  expended, 
is  iDregnant  with  an  admission  which  makes  human  desire  to  be 
both  the  cause  of  value  and  the  regulator  of  the  quantity  of  labor 
which  will  be  expended,  in  every  branch  of  production,  while  the 
profit-maker,  as  a  steerer  of  labor  in  accordance  with  social 
demand,  looms  up  as  the  one  worker  whose  service  is  of  all 
others  the  most  socially  necessary. 

At  the  outset,  Karl  Marx's  aphorism  might  be  met  by  the  coun- 
ter proposition  that  as  wealth  is  the  power  to  command  all  pro- 
ducts of  labor,  all  forms  of  service,  and  all  the  productive  forces 
of  nature,  it  becomes,  so  far  as  one  possesses  it,  a  dispensation 
from  labor.  Indeed,  it  is  in  order  to  I'elieve  himself  from  labor 
that  the  laborer  strives  to  get  wealth.  If  he  had  actually  got  it 
in  the  qiumtity  required  to  make  him  comfortable  both  as  to  the 
present  and  the  future,  he  would  cease  to  labor.  Thus  the  reali- 
zation of  the  Karl  Marx  gospel,  that  the  laborer  should  own  all 
wealth,  would  instantly  abolish  the  function  of  wealth  itself,  for 
that  which  all  possessed,  in  a  degree  equal  to  the  desires  of  each, 
would  no  longer  command  the  services  of  any.  And  in  a  state  of 
tilings  in  which  none  could  command  a  single  human  service,  ex- 


ERROR  PRODUCING    UNREASON.  91 

cept  his  own,  all  would  be  paupers,  and  the  condition  barbarism. 
The  process  of  reasonino^  by  which  Karl  Marx  begins  with  Ri- 
cardo,  and  ends  with  thuggism,  is  this: 

(1.)  All  wealth  is  in  commodities. 

(2.)  A  commodity  is  a  product  of  human  labor  socially  neces- 
sary, and  therefore  having  value  in  exchange. 

(3.)  The  value  ir^  the  product  is  proi^ortionate  to  the  quantity 
of  socially  necessary  labor,  or  socially  necessary  time  of  labor, 
spent  in  producing  it. 

(4.)  The  interposition  of  capital,  or  of  the  entrepreneur,  to  em- 
ploy labor,  is  not  "socially  necessary  labor,"  but  is  only  a  privi- 
lege of  deducting  and  appropriating  half  the  product  of  all  so- 
cially necessary  labor  without  rendering  any  part  of  the  service. 

(5.)  Hence,  the  employment  of  labor  by  the  capitalist  or  entre- 
preneur is  in  all  cases  a  robbery  of  labor  to  the  extent  of  the  whole 
share  won  by  the  capitalist  as  profits. 

(6.)  When  capitalists  are  eliminated,  commodities  will  exchange 
against  each  other  accoi'ding  to  the  quantity  of  socially  neces- 
sary time  of  labor  involved  in  them,  and  the  unit  of  money  and 
standard  of  values  will  be  the  certificate  of  associated  labor,  that 
the  bearer  has  performed  an  hour  or  a  day  of  labor,  which  certifi- 
cate will  supersede  gold  and  silver  as  money,  remain  always  at 
par  with  commodities,  put  an  end  to  speculation,  profits,  interest, 
and  all  the  oppressions  of  capital,  and  make  it  possible  for  every- 
body to  get  what  he  wants  by  tendering  to  associated  labor  an 
equivalent,  in  his  own  time,  to  that  expended  in  producing  the 
thing  he  wants,  drawing  his  certificate,  and  forwarding  it  as  a 
draft  on  the  i^roducer.  Thus  the  elimination  of  capitalists  will 
bring  in  the  millennium  !  All  of  this^is  economic  madness.  If, 
as  in  the  case  of  the  seven  anarchists  at  Chicago,  this  madness 
takes  the  form  of  attempted  revolt  against  society,  the  plea  in  de- 
fence which  would  best  consist  with  the  facts,  and  at  the  same 
time  with  legal  principles,  would  be  that  they  become  socially  in- 
sane by  attemi)ting  to  handle  social  problems  to  whose  right  ap- 
prehension they  are  unequal. 

38.  Why  Men  Exchange. — Some  forms  of  wealth  have  no 
function  but  to  be  consumed,  and  their  economic  use  in  any 
other  way  than  as  the  subject  of  exchange  consumes  them  di- 
rectly. Such  are  food,  cloihing,  such  raw  materials  as  undergo  a 
change  of  structure  in  manufacture,  fuel,  drink,  and,  according 
to  the  form  of  statement  adopted  by  Carey  and  others,  labor,  or 
rather  labor-time,  which,  if  not  purchased  at  the  instant  it  exists, 


92  ECOJS'OMIV  PUlLUHOrUl'. 

perishes  forever.*  Other  forms  of  wealth  ai*e  neither  perishable 
nor  enjoyable,  except  in  an  indirect  and  secondary  way,  and  are 
only  consumable  by  wear  and  tear  in  their  use,  over  long  periods, 
as  means  of  creating,  distributing,  transporting,  or  ti'ansform- 
ing  commodities.  Such  are  all  roads  and  the  means  of  transpor- 
tation over  them,  all  mills  and  factories  and  their  machinery,  all 
ships  and  vessels,  land  used  for  farming,  i-esideuce,  mining,  or 
business-blocks  for  rental,  the  shares  and  stocks,  debts,  and  se- 
curities to  which  these  give  rise,  and  all  pro])erty  held  and  used 
because  of  its  power  to  aid  man  in  the  production  of  wealth. 

Two  principles  concerning  value  liav^e  much  to  do  with  giving 
rise  to  this  distinction  between  the  two  kinds  of  wealth,  viz., 
consumable  wealth  and  reproductive  wealth. f     These  are: 

(1.)  Of  any  one  kind  of  consumable  wealth  a  man's  capacity  to 
make  a  pleasurable  personal  use  is  limited  by  nature  with  great 
rigidity,  while  his  capacity  by  aids  of  various  kinds  to  produce 
this  kind  of  consumable  wealth  is  almost  unlimited. 

(2.)  The  portion  of  consumable  wealth  which  he  can  produce 
above  his  own  power  to  consume,  (called  his  market  product  or 
surplus),  would  have  no  utility  could  he  not  find  some  person  who 
needs  it  and  is  able  to  give  a  return  service  iu  exchange  for  it. 
This  ability,  and  desire,  to  give  a  return  service,  is  economic  want 
or  effective  demand.  In  consequence  of  tlie.se  four  facts,  viz.,  the 
limit  on  his  own  consuming  power,  the  absence  of  limit  on  his 
producing  power,  the  inutility  of  his  own  surplus  to  himself,  and 

*Carey  ("Unity  of  Law,"  p.  184)  eays :  "  Of  all  commodities  or  things  the  only  one  that 
disappears  on  the  instant  of  its  production  is  labor-power  or  human  force,  mental  or 
material.    If  not  instantly  utilized,  it  passes  away,  lost  forever." 

We  have  already  shown,  ante  p.  85,  that,  if  used  as  well  as  if  not  used,  the  laboi -power, 
considered  with  reference  to  its  capacity  of  containing  value,  also  passes  away,  into  the 
commodity  or  product  to  which  it  gives  its  value.  So  that,  whether  used  or  not,  labor- 
power  never  contains  in  itself  value,  since  it  is  not  a  thing  in  esse,  but  in  potuisse. 
When  done,  it  is  in  the  commodity,  and  in  the  wages.     Until  then  it  is  not. 

tPro/. /Tmry-S'irf^wic/fc  says  ("Principles  of  Pol.  Econ.,"  86):  "This  .  .  .  showstheneed 
of  a  broad  distinction  between  the  two  portions  of  a  country's  material  wealth,  which 
we  may  distinguish  as  consumer's  wealth  and  producer's  wealth  respectively.  By  con- 
sumer's wealth  I  mean  such  material  things  as,  like  the  consumable  services  before  dis- 
tinguished, are  directly  available  for  satisfying  human  needs  and  desires.  Producer's 
wealth  and,  similarly,  of  course,  producer's  services  being  only  useful  indirectly  as  a, 
means  of  obtaining  the  former." 

Jevons  ('Theory  of  Pol.  Econ.,"  p.  4.3)  says  :  "  The  theory  of  economics  must  be  given 
with  a  correct  theory  of  consumption.  Lord  Lauderdale  says  the  great  and  important 
step  towards  ascertainin?  the  causes  of  ihe  direction  which  industry  takes  in  nations 
seems  to  be  the  discovery  of  what  dictates  the  proposition  of  demand  for  the  various 
articles  which  are  produced.  .  .    We  labor  to  produce  with  sole  object  of  consuming.' 


WEALTH  IS  SOCIAL.  93 

the  fact  that  another  person  exists  who  will  effectively  demand 
the  surplus,  giving  an  exchange  surplus  of  his  own  production 
for  it,  it  comes  to  be  a  law  of  value  (Ij  that  all  surplus  products  of 
human  industiy  have  value  to  their  producer  only  as  he  can  for- 
ward them  to  the  point  of  economic  need,  and  (2)  that  such  pro- 
ducts reward  their  producer,  or  rise  in  value,  in  the  degree  that 
tliey  are  forwarded  to  tlie  point  of  gi'eatest  economic  need  or  most 
effective  demand.  This  tendency  of  values  to  decline  unless  com- 
modities are  exchanged,  and  to  advance  as  they  approach  the 
point  of  effective  demand,  which  is  always  the  point  of  final  con- 
sumption, is  the  cause  of  exchange.  But  Avliile  a  man's  capacity 
to  consume  any  one  form  of  directly  enjoyable  wealth,  such  as 
food,  clothing,  and  shelter,  is  rigidly  limited  by  nature,  his  capac- 
ity to  multiply  his  secondary  or  social  wants,  so  as  to  extend  his 
social  power  by  acquiring  custody  over  tho.se  forms  of  imperish- 
able or  very  slowly  consumable  wealth,  such  as  residences,  parks, 
equipages,  pictures,  statuary,  libraries,  diamonds,  lands,  means  of 
transportation  and  maniifacture,  machinery,  etc.,  the  use  of  which 
must  in  their  nature  be  shared  with  society  in  order  to  be  profit- 
able to  himself,  is  without  limit.  Thisi'esults  in  a  division  of  all 
values  into  tln'ee  chief  kinds,  viz. :  wealth  directly  and  quickly 
consumable  in  sustaining  life  ;  wealth  very  slowly  consumable  in 
ostentation,  a  mode  of  consumption  in  which  the  possessor  neces- 
sarily shares  his  enjoyment  with  a  smaller  or  larger  segment  of 
society;  and  reproductive  wealth,  of  Avliich  society  has  the  use  and 
the  owner  only  the  income.  The  kinds  of  wealth  of  which  man 
has  an  unlimited  faculty  of  acquisition,  corresponding  to  his  un- 
limited power  of  production,  are  therefore  more  and  more  so- 
cially consumable,  and  less  and  less  indi\'idually  consumable,  the 
larger  his  wealth  becomes  and  the  further  it  is  removed  from 
mere  sustentation.  In  plain  words,  the  more  he  gets,  above  his 
bread  and  butter,  the  less  eatable  his  wealth  becomes,  and  the 
more  he  is  compelled,  by  the  nature  of  the  wealth  he  acquires,  to 
give  its  actual  use  to  society,  while  he  retains  toward  it  onl}'  a  re- 
lation of  supervision  and  govei'nment.  By  this  constitution  of 
man's  nature,  lie  is  furnished  with  an  unlimited  capacity,  both  for 
producing  and  acquii'ing  wealth,  without  being  able  to  materially 
increase  the  quantity  which  he  can  permanently  deduct  from  the 
general  stock  for  his  individual  consumption.  He  may  obtain 
the  mastery  of  many  relations  toward  his  fellow  men,  and  of 
many  social  powei-s,  buttbe  profit  he  can  make  out  of  them  de- 
pends on  the  degree  in  which  lie  shall  subordinate  all  to  the  one 


94  ECONOMIC  PHILOSOPHY. 

chief,  unconscious  and  instinctive  purpose  of  society,  viz.,  to  for- 
ward all  enjoyably  consumable  wealth,  from  the  point  where  it 
exists  in  surplus  and  satiety,  to  the  point  where  most  economic  re- 
turn effort  is  being  made  to  obtain  it,  and  where,  therefore,  there 
is  most  effective  demand  for  it.  This,  therefore,  may  be  named 
semi-social  Wealth.  The  economic  facts  or  forces,  in  commodities 
and  services,  which  thus  compel  their  distribution  among  con- 
sumers, are  the  fall  of  values  w^ith  satiety,  and  their  rise  with 
desire,  acting  upon  the  human  instinct  of  gain  or  sense  of  value. 

39.  The  Theory  of  Vahie. — Prof.  Jevons  regards  Hermann 
Heinrich  Gossen  as  having  been  the  first  (in  1848)  to  treat  economics 
as  a  theory  of  Pleasure  and  Pain,  being  the  theory  of  the  pro- 
cedure by  which  each  individual,  and  the  aggregate  of  individ- 
uals constituting  society,  attain  the  maximum  of  pleasure  with 
the  minimum  of  painful  effort. 

Gossen*  states,  as  the  law  which  compels  man  to  find  his  high- 
est pleasure  in  a  change  of  pleasures,  or  in  variety,  that  in- 
crease of  the  same  kind  of  consumption  yields  pleasure,  contin- 
ually diminishing  up  to  the  point  of  satiety — [at  which  point,  he 
might  have  added,  it  begins  to  yield  pain,  continually  increasing 
up  to  the  point  of  destruction]. 

He  classifies  useful  objects  (wealth),  as,  (1)  those  which  possess 
pleasure-giving  powers  in  themselves,  (styled  in  the  jjresent  treat- 
ise enjoyable  wealth,  or  by  Prof.  Sidgwick  consumer's  w^ealth)  ; 

(2)  those  which  only  possess  those  powers  when  in  combination 
with  other  objects,  (styled  in  this  work  ostentatious  Avealth)  ;  and 

(3)  those  which  only  serve  as  means  toward  the  production  of 
pleasure-giving  objects,  (styled  by  Prof.  Sidgwick  "producer's 
wealth,"  in  this  work  reproductive  wealth,  or  semi-social 
wealth).! 

*  "  Bntwickelung  der  Gesetze  des  Menschlichen  Verkehrs,  mid  der  daraus  fliessenden 
Regeln  fiir  menschliches  Handeln."  ("Development  of  the  Laws  of  Human  Commerce 
and  of  the  Consequent  Rules  of  Human  Action.") 

+  Senior  (Encyclopedia  Metropolltana,  Art.  Political  Economy,  p.  133)  had  already 
stated  the  Law  of  Variety  in  human  requirements  from  its  economic  side,  as  Fourier 
had  done  from  its  philosophic  eido  "  The  r.ecessarics  of  life  are  so  few  and  simple 
that  a  man  is  soon  satisfied  in  regard  to  these  and  desires  to  extend  his  range  of  en- 
joyment. His  first  object  is  to  vary  his  food;  but  there  soon  arises  the  desire  of 
variety  and  elegance  in  dress  ;  and  to  this  succeeds  the  desire  to  build,  to  ornament, 
and  to  furnish,  tastes  which,  where  they  exist,  are  insatiable,  and  increase  with  every 
improvement  m  civilization." 

T.  E.  Baufleld,  of  Cambridge,  in  lectures  on  the  organization  of  labor,  in  1844,  said  : 
"  The  first  proposition  of  the  Theory  of  Consumption  is  that  the  satisfaction  of  every 
lower  want  in  ike  scale  creates  a  desire  of  a  higher  character.    If  the  higher  desire  ex- 


UTILITIES  FLUCTUATE. 


95 


Starting  from  these  bases,  Prof.  Jevons  says,  the  utility  of  all 
objects  to  any  one  person  is  not  a  constant  quantity,  but  declines 
as  satiety  is  reached,  decreasing  as  the  quantity  increases,  until 
it  becomes  a  disability  or  a  mischief.  Water,  in  its  totality,  is 
the  favorite  example  of  a  useful  substance.  To  a  thirsting  trav- 
eler a  glassful  may  mean  rescue  from  death.  A  deluge  would  be 
death  itself.  A  single  meal  to  a  hungry  man  has  great  utility. 
A  second  meal  has  none  to  him,  but  will  have  as  much  as  the 
previous  one  in  five  hours.  Dividing  the  quantity  of  food  a  per- 
son will  consume  in  twenty-four  hours  into  ten  equal  parts,  if 
his  food  be  reduced  by  the  last  part  he  will  suffer  but  little  ;  if  by 
the  second  tenth,  he  will  feel  the  want  distinctlj"  ;  the  third  tenth 
will  be  injurious.  "When  half  is  reached  only  time  is  required  to 
complete  his  starvation.  If  each  of  these  tenths  be  called  an  in- 
crement, their  utility  varies  in  the  order  indicated  in  the  diagram, 
proceeding  from  right  to  left. 

Another  and  more 
practical  mode  of  stat- 
ing this  variation  of 
utilities  with  supply 
had  been  made  by  Dr. 
Davenant    or  Gregory 


King' 


in  an  essay  on 


Th^ 


15  14  13  12  U  10  9    8   7    6    5    4    3 


the  balance  of    trade, 
as  follows  : 

"We  take  it  that  a 
defect  in  the  harvest  may  raise  the  price  of  com  in  the  following 
proportions  : 


Defect 

1  Tenth 

2  Tenths 

3  Tenths 

4  Tenths 

5  Tenths  j 


1 


V 

r 


Raises 
the  Price 


Above  the  Common  Rate 

3  Tenths, 
8  Tenths, 

1  and  6  Tenths, 

2  and  8  Tenths, 

4  and  5  Tenths. 


ieterl  previous  to  the  satisfaction  of  tlie  primary  want,  it  becomes  more  intense  when 
tlie  latter  is  removed.  The  removal  of  a  primary  want  commonly  awakens  the  sense  of 
more  tlian  one  secondary  privation.  Thus  a  full  supply  of  ordinary  food  not  only  ex- 
cites to  delicacy  in  eating  but  awakens  attention  to  clothing.  TI.e  highest  grade  in  the 
scale  of  wants,  that  of  pleasure  derived  from  the  beauties  of  nature  and  art,  is  usually 
confined  to  men  who  are  exempt  from  all  the  lower  privations.  Thus  the  dematid  for 
and  the  consumption  of  objects  of  refined  enjoyment  has  its  1  ver  in  the  facility  with 
which  the  primary  wnnts  are  satisfied.  Thin,  therefore,  is  the  key  to  the  true  theory  of 
value.  Without  relative  values,  in  the  objects  to  the  acquirement  of  which  we  dir-jct  our 
power,  there  would  be  no  foundation  for  political  economy  as  a  f^cieiue." 

*  Cited  in  "Theory  of  Political  Economy,"  by  Jevons,  p.  1(J8. 


06  KCONOMIC  PHILOSOPtlY. 

So  that  when  corn  i-ises  to  treble  the  common  rate  it  may  be  pre- 
sumed that  we  want  above  one-third  of  the  common  produce  ; 
and  if  we  should  want  five-tenths,  or  half  the  common  produce, 
the  price  would  rise  to  near  five  times  the  common  rate." 

Thornton*  doubts  the  accuracy  of  this  estimate,  but  Tookef 
and  Chalmers  |  both  approve  or  confirm  it.  Tooke  says  the  price 
of  corn  has  repeatedly  risen  from  one  hundred  to  two  hundred 
per  cent,  when  the  utmost  computed  deficiency  of  the  crop  has 
not  been  more  than  one-sixth  to  one-third  of  an  average.  Chal- 
mers says  "  the  necessaries  of  life  are  far  more  powerfully  af- 
fected in  the  price  of  them  by  a  variation  in  their  quantity  than 
are  the  luxuries  of  life.  Let  the  crop  of  grain  be  deficient  by 
one-third  in  its  usual  amount,  or  rather  let  the  supply  of  grain  in 
the  market,  whether  from  the  home  produce  or  by  impoi'tation, 
be  curtailed  to  the  same  extent,  and  this  will  create  a  much 
greater  addition  than  of  one-third  to  the  price  of  it."  This 
theory  has  been  fully  sustained  by  facts. 

Henry  C.  Carey  shows|§  that  a  crop  of  cotton  six  times  as  large 
in  the  year  1840  as  in  the  year  1815  brought  but  little  more  than 
the  crop  of  1815,  and  not  enough  more  to  pay  for  the  added  cost 
of  transportation. 

The  agricultui'al  reports  published  by  our  government  show 
that  seven  leading  crops  in  the  United  States  in  a  scant  year, 
1881,  sold  for  more  money  than  the  same  seven  crops  in  the  abun- 
dant year,  1880.  Crops  which  were  less  hj  710,678,007  bushels 
sold  for  $127,688,  G23  more  because  of  their  diminished  quantity.  || 

Tooke  estimates**  that  in  1795  and  1796  the  farmers  of  England 
gained  seven  millions  sterling,  in  each  year,  by  a  deficiency  of 
one-eighth  part  in  the  wheat  crop,  not  including  the  considerable 
profit  on  the  rise  of  price  of  other  agricultural  produce.  In  each 
of  the  years  1799  and  1800,  again,  farmers  probably  gained  eleven 
millions  sterling  by  deficiency  (Jevous'  "Theory  of  Political 
Economy,"  p.  172). 

Prof.  Jevons'  statement,  of  the  decline  of  utilities  with  satiety, 
needs  to  be  supplemented  with  the  statement  that  the  utility  re- 
turns as  the  article  is  forwarded  from  the  person  to  whom  it  rep- 

*"  Inquiry  into  Nature  and  Effects  of  the  Paper  Credit  of  Great  Britain,"  p.  270-271. 

t  "  History  of  PriceB,"  vol.  i.,  pp-  1.3-15  i 

$"  Christian  and  Economic  Polity  of  a  Nation,"  vol.  ii.,  p.  280. 

I  •'  Harmony  of  Interests."    ||  Lecture  by  Henry  Carey  Baird  in  Brooklyn. 

**  "  History  of  Prices." 


THE  SUEPfArS  n  COMMODES. 


9- 


\D 


X  y 


resents  a  surplus,  drug,  nuisance,  or,  as  Jevons  calls  it,  a  discom- 
modity, to  the  person  whom  it  will  com- 
mode,  and  to  whom  it   is  a  commodity.  b 

A  farmer    in   Dakota  can    consume  for 

his  own    personal   food   six    bushels    of 

wheat  per  year,  for  tliat  of  his  family  30 

bushels,  and   for  that  of  all   his  servants 

and  as  seed  2,000   bushels  ;  but   he  can 

produce  200,000  bushels.     In  the  absence 

of   a  market  198,000  bushels  would  drop 

in  value  in  the  manner  indicated  by  line 

BC,  Ax  indicating-  the  utilitj^  of  the  first 

6,  Dy  of  the  next  30,  and   Ez  of  the  next 

2,000  bushels,    which   is   far   beyond  the 

limit  of    personal    utility,    since  a    few 

quarts  may  suffice  as  seed  for  planting, 

had  he  no  market.     The    198,000  bushels,   in  the  absence  of  a 

market,  would  have  so  small  a  utility  that  they  would   not  have 

been  produced  at  all. 

Meanwhile,  however,  there  is  a  point,  viz.,  Lowell,  or  Lynn,  in 

Massachusetts,  where  shoes  are  being  made  in  surplus,  the  utilities 

of  wliicli   sink  with  like   rapid- 
/  ^       ity,  say  in  all  for  Lynn  14,000,- 

000  pairs  for  a  population  capa- 
ble of  wearing  1,000,000  pairs 
per  annum.  Of  this  1,000,000 
pairs,  the  utility  declines  rap- 
idly, as  the  last  250,000  pairs 
are  by  no  means  so  necessary 
as  the  first.  The  decline  in  im- 
mediate utility  in  the  absence 
of  a  market  might  be  as  follows  : 
The  utility  of  the  13.000,000 
pairs  which  the  people  of  Lynn, 
in  the  absence  of  a  market  or  ef- 
fective demand,  could  only  lay 
by  as  a  supply  for  13  future 
years,  would  be  so  small  that  it 

would  uot  have  sufficed  to  induce  thoir  production. 
By  distributing,  however,  the  13,000,000  pairs  among  3,000,000 

persons  each  pair  takes  on  a  utility  equal  to  that  which  the  first 

1,000,000  pairs  find  lo  the  people  of  Lj'nn,  i.  e.,  their  utility  rises 


■7 — 

.vc^  / 

,j-  / 

// 

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Qj      / 

V    / 

o  / 

Qj    / 

•s-  / 

x- 

o\ 

^ 

v. 

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5, 

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^ 

1 

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t—' 

98 


ECONOMIC  PUILOSOPII Y 


to  the  point  of  indispensable  necessity.  This  rise,  however,  re- 
quires lapse  of  time,  changes  of  place,  and  several  changes  of 
ownership.  Hence  the  final  utility  is  established  and  known  as 
being  equal,  for  the  entire  13,000,000  pairs,  to  the  utility  which 
the  first  250,000  pairs  needed  for  pi^esent  wear  would  have  had 
to  the  people  of  Lynn,  tlie  moment  it  is  known  that  a  population 
exists  anywhere  which  will  make  a  return  of  effort  in  supplies 
of  wheat  equal  to  that  made  by  the  Lynn  people  in  supplying 
shoes.  But  this  final  utility  takes  the  form  of  added  value,  only 
with  each  step  of  service  whereby  the  shoes  are  expedited  towai'd 
their  consumers,  where  alone  the  maximum  of  final  utility  and 
value  is  restored.  The  movement  forward,  of  the  two  surpluses, 
shoes  and  wheat,  may  be  illustrated  and  the  values  they  acquire 
may  be  shown  thus  : 


Wheat. 


Line  of  ultimate  ntility  apsiirpri  bv  exchange 
on  both  wheat  and  shoee. 


^- 


''iii-^ 


Dakota. 


St.  Paul. 


Chicago, 


Cleveland. 


Lynn. 


Prof.  Jevons  will  seem,  to  some  persons,  to  qualify  his  doctrine 
that  value  is  not  caused  by  labor,  by  the  following  statement  (P.  178, 
' '  Theory  of  Pol.  Econ. ") :  ' '  But  though  labor  is  never  the  cause 
of  value,  it  is  in  a  large  proportion  of  cases  the  determining  cir- 
cumstance, and  in  the  following  way:  Value  depends  solely  on 
the  final  degree  of  utility.*  How  can  we  vary  this  degree  of  util- 
ity ?  By  having  more  or  less  of  the  commodity  to  consume.! 
And  how  shall  Ave  get  more  or  less  of  it  ?  By  spendmg  more  or 
less  labor  in  obtaining  a  supply.  According  to  this  view,  then, 
there  are  two  steps  between  labor  and  value.  Labor  affects  sup- 
pi}^,  and  supply  affects  the  degree  of  utility  which  governs  value, 


*/.  e.,  the  utility  or  degree  of  effective  demand  which    an  article  has  to  its  con- 
sumer, {.  e.,  what  return  he  will  make  to  obtain  it. 
t/.  e.,  to  increase  its  quantity,  and  therefore  to  lower  its  value. 


MITGH  LABOR  LOWERS  VALUE.  99 

or  the  rate  of  exchange.  In  order  that  there  may  be  no  possible 
mistake  about  this  all-important  series  of  relations,  I  will  restate 
it  in  tabular  form  as  follows: 

Cost  of  production  determines  supply. 
Supply  determines  final  degi-ee  of  utility, 
Final  degree  of  utility  determmes  value." 

It  is  evident,  however,  that  cost  of  production  determines  sup- 
ply, in  the  sense  that  as  cost  of  pi'oduction  diminishes  the  supply 
increases;  that  supply  determines  final  degree  of  utility  (or  con- 
sumer's value),  in  the  sense  that  as  svipply  increases  the  value  to 
the  consumer  lessens  ;  and  hence  that  looking  at  the  question  as 
Jevons  here  does,  with  i-eference  to  the  effect  that  collective  (not 
individual)  labor  has  on  the  value  of  collective  commodities,  it 
leads  to  the  conclusion  that  the  greater  the  quantity  of  labor  ap- 
plied to  their  production  the  more  they  decline  in  value.  This, 
however,  makes  labor  a  regulator  of  value,  as  Jevons  says,  but 
only  as  a  reducer  of  value,  whereas  the  Smith-Ricardo-Marx  doc- 
trine sought  to  make  labor  ojily,  always,  and  proportionately  the 
soui'ce  of  rise  in  values.  What  seems,  at  fii'st,  a  qualification  of 
Jevons'  dissent  to  the  theory  which  bases  value  on  labor,  becomes, 
on  analysis,  a  statement  tliat  labor  is  often  a  destroyer  of  value. 

40.  Markets  Are  the  Index  of  Values. — The  aggregate  of 
all  the  demands  for  an  article  being  the  criterion  which  deter- 
mines how  much  of  it  can  be  sold,  and  the  aggregate  of  all  the 
sources  of  supply  determining  in  like  manner  how  much  of  it  can 
be  pui'chased,  it  becomes  important  that  those  who  have  the 
article  to  sell  and  those  who  have  it  to  buy  should  all  meet  in  a 
common  spot,  so  that  the  mosti'apid  communication  may  be  had 
between  each  buyer  and  every  seller,  iintil  that  buyer  who  will 
pay  more  or  buy  more  than  any  other  buyer,  and  that  seller 
who  will  sell  more  or  take  less  than  any  other  seller,  shall  meet 
face  to  face.  Tlie  rate  at  whicli  these  two  interchange  is  the  mar- 
ket or  current  ijrice.  Numerous  other  transactions  may  occui*, 
but  they  will  be  above  and  below  the  market.* 


*Even  in  the  earliest  and  simplest  conditions  of  trade,  markets,  fairs,  and  bazars  tend 
to  establish  themselves  as  the  means  of  satisfyint;  each  buyer  and  seller  that  he  is  buy- 
ing as  cheap,  or  Belling  as  dear,  as  the  ratio  of  the  supply  to  the  demand  admits. 
Throughout  most  parts  of  Central  Africa  the  travelers  And  fairs  conducted  largely  by 
women.  In  Asia  and  primitive  Europe  they  are  held  everywhere  except  where  great 
towns  witli  ample  stores  of  goods  of  every  kind  have  superseded  the  fair  by  furiiii^hing 
a  more  varied  and  better  form  of  market.  Indeed,  the  periodical  fair  is  the  natural 
predecessor  of  the  market  town.    The  Eastern  aud  Michaelmas  fairs  at  Leipsic,  and  of 


100  ECONOMIC  PHILOSOPHY. 

It  is  a  singular  fact  tliat  markets  have  been  the  subject  of  pop- 
ular prejudice  and  moral  objection,  almost  in  proportion  to  the 
perfection  with  which  they  economize  time,  transportation,  and 
effort  and  eq^^alize  jirices.  The  pi'oper  meaning  of  a  market  is 
not  merely  tlie  place  set  apart,  iu  which  buyers  and  sellers  may 
meet  with  their  goods,  but  all  that  territory,  with  its  groups  of 
buyers  and  sellers,  consumers  and  producei-s,  of  which  the  resi- 
dents are  so  brought  into  union  and  contact  with  each  other,  by 
the-  mutual  intelligence  which  arises  through  reciprocal  com- 
merce, that  one  price  is  arrived  at  by  all  with  facility  and  prompt- 
itude. *t     A  market  rises  into  its  highest  efficiency  and  value 

Frankfurt  on  the  Main  in  Germany,  of  Keachta  in  Siberia  and  Nishni  Novgorod  in 
Eussia,  of  Zurzach  in  Switzerland,  Pestli  in  Hungary,  Bergamo  in  Lombardy,  the  cattle 
fairs  of  the  Scottish  Higlilands  still  have  a  wide  celebrity.  The  great  London,  Paris, 
Berlin,  New  York,  and  Philadelphia  world's  expositions  of  products  are  stimulated  by 
the  same  motive  on  the  part  of  exhibitors.  Though  they  malce  no  sales,  their  object  is 
sales  by  sample  60  far  as  manufacturers  and  merchants  are  concerned.  In  all  cities 
the  dealers  in  certain  commodities  by  a  common  instinct  of  buyers  and  sellers  concen- 
trate in  certain  streets,  as  banking  and  brokerage  make  a  money  market  of  Lombard 
Street,  London,  and  Wall  Street,  New'York.  The  swamp  in  New  York  is  the  traditional 
market  of  the  leather  trade.  When  the  wholesale  dry  goods  trade  removed  in  18.57  9 
from  Pearl  and  Front  streets  to  Park  Place,  Warren  and  Chiimbers  streets,  real  prop- 
erty in  the  former  "  dry  goods  market  "  fell  to  one-tenth  its  former  rental,  until  it  be- 
came the  oil  market,  when  it  revived.  The  bonnet  trade  of  New  York  formerly  cen- 
tred in  Division  Street  so  exclusively  that  it  was  difficult  to  buy  elsewhere.  The  book 
trade  in  all  cities  has  its  own  center,  the  lumber  trade  another,  and  even  the  profes- 
sions concentrate  in  one  spot,  seeking  equality  with  competitors,  and  the  other  advan- 
tages incident  to  a  market,  as  the  law  trade  in  London  centers  at  The  Inns  of  Court,  etc. 

*  Cmirnot  ("Recherches sur  les  Principes  Mathematiques  de  la Theorie  des  Richesscs," 
Paris,  1838,  p.  55)  says:  "On  sait  que  les  economistes,  entendent  par  rnarche,  non  pas  un 
lieu  determine  ou  se  consomment  les  achats  et  les  vents,  mats  tout  in  terriioire  dont 
les  parties  sont  unies  par  des  rapports  de  libre  commerce,  en  sorte  que  les  prix  s'yni- 
vellent  avecfaciliteet  promptitude." 

t<7«TO«5("Theory  of  Pol.  Econ.,"92)  says:  "  In  economics  we  may  usefully  adopt  this 
term  with  a  clear  and  well-defined  meaning.  By  a  market  I  shall  mean  two  or  more 
persons  dealing  in  two  or  more  commodities,  whose  stocks  of  those  commodities  and 
intentions  of  exchanging  are  known  to  all.  It  is  also  essential  that  the  rates  of  ex- 
change between  any  tv/o  persons  should  be  known  to  all  the  others.  It  is  only  so  far 
as  this  community  of  knowledge  extends  that  the  market  extends.  Any  persons  who 
are  not  acquainted  at  the  moment  with  the  prevailing  rates  of  exchange,  or  whose 
stocks  are  not  available  for  want  of  communication,  must  not  be  considered  part  of  the 
market.  Secret  or  unknown  stocks  of  a  commodity  must  also  be  considered  beyond 
reach  of  a  market  so  long  as  they  remain  secret  and  unknown.  Every  individual  must 
be  considered  as  exchanging  from  a  pure  regard  to  liis  own  requirements  or  private  in- 
terests, and  there  must  be  perfectly  free  competition,  so  that  any  one  will  exchange 
with  any  one  else  for  the  sliehtest  apparent  advantage.  There  must  be  no  conspira- 
cies for  absorbing  and  holding  supplies  to  produce  unnatural  ratios  of  exchange.  Were 
a  conspiracy  of  farmers  to  withhold  all  corn  from  market,  the  consumers  might  be 
driven  by  starvation  to  pay  prices  bearing  no  proper  relation  to  the  existing  supplies, 
and  the  ordinary  conditions  of  the  marker  would  thus  be  overthrown." 


A  PERFECT  MARKET.  101 

when  it  concentrates  into  one  focus  so  large  a  portion  of  tlie  buy- 
ers and  sellers  of  a  certain  commodity  as  to  become,  in  conjunc- 
tion with  one  or  two  other  markets  of  the  same  kind,  an  authori- 
tative standard  of  prices  of  the  articles  in  which  it  deals,  for  all 
buyers  and  sellers  throughout  the  world.  By  aid  of  the  quick 
intelligence  wliicli  the  telegraph  supplies  and  of  the  swift  trans- 
portation which  steam  affords,  the  Avhole  world  is  thus  converted 
into  one  market,  having  one  price,  subject  only  to  cost  of  trans- 
portation of  the  product  between  the  point  for  which  the  price  is 
quoted  and  all  other  points.  Such  mai-kets  are  the  Bourse  of 
Paris,  for  stocks  and  securities,  the  London  Stock  Exchange  as 
well  as  the  London  Produce  Exchange,  the  Liverpool  and  New 
York  Cotton  Exchanges,  the  New  York  Stock  Exchange,  Pro- 
duce Exchange  and  Real  Estate  Exchange,  and  formerly  tlie  Gold 
Room  and  the  Boards  of  Trade  (Grain  and  Provision  Exchange) 
of  Chicago,  in  conjunction  with  those  of  the  other  Western  cities 
and  that  of  Liverpool. 

Concerning  these  exchanges  Prof.  Jevons  says :  ' '  The  theoreti- 
cal conception  of  a  perfect  market  is  more  or  less  completely  car- 
ried out  in  practice.  It  is  the  work  of  brokers  in  any  extensive 
market  to  organize  exchanges  so  that  every  purchase  shall  be 
made  with  the  most  thorough  acquaintance  with  the  conditions  of 
the  trade.  Each  broker  strives  to  gain  the  best  knowledge  of  the 
conditions  of  the  supply  and  demand  and  the  earliest  intimation 
of  any  change.  He  is  in  communication  with  as  many  other 
traders  as  possible,  in  order  to  have  the  widest  i-ange  of  informa- 
tion and  the  greatest  chance  of  making  suitable  exchanges.  It  is 
only  thus  that  a  definite  market  price  can  be  ascertained  at  every 
moment,  and  varied  according  to  the  frequent  news'"  capable  of 
affecting  buyers  and  sellers.  By  the  mediation  of  a  body  of 
brokers  a  complete  consensus  is  established,  and  the  stock  of 
every  seller  or  the  demand  of  every  buyer  brought  into  the  mar- 
ket. It  is  of  the  very  essence  of  trade  to  have  wide  and  constant 
information.  A  market,  then,  is  theoretically  perfect  only  when 
all  traders  have  pei-fect  knowledge  of  the  conditions  of  su])ply 
and  demand  and  the  consequent  ratio  of  exchange;  and  in  such 
a  market,  as  we  shall  now  see,  there  can  only  be  one  ratio  of  ex- 
change! of  one  uniform  commodityl  at  any  moment. 

*  It  is  notable  that  this  news  never  relates  to  tlie  labor  cost  of  producing  thcconiniod" 
ity,  as  it  should  if  the  theory  is  correct  which  is  contended  by  Adam  Smith,  Mill, 
Iticardo,  and  Karl  Marx,  th<)u<;h  it  does  relate  always  to  the  cost  of  reproducing  itat  the 
present  moment,  or  more  i^roperly  to  the  extent  of  supply  and  demand. 

t Meaning  price.     tUsually  called  "grade  of  goods." 


102  ECONOMIC  PHILOSOPnr. 

A  market,  in  the  broadest  sense,  is  therefore  a  place  where  the 
facts  relating"  to  supply  and  demand  are  converted,  through  an  at- 
trition of  human  intelligence  and  interest,  into  prices;  in  short,  it 
is  a  price  mill. 

4 1.  Freedoni  in  Establishing  Prices.  —Whether  trade  can, 
in  these  markets  of  exchange,  with  advantage  to  any  class  or  to 
the  cause  of  business  integrity  and  virtue,  be  restricted  by  legisla- 
tures, and  whether  these  restrictions  can  be  profitably  and  bene- 
ficially administered  by  courts,  has  been  the  subject  of  much 
controversy.  Boards  of  trade  usually  establish  a  sj'stem  of  arbi- 
tration, or  of  courts  within  themselves,  which  are  more  satisfac- 
tory to  their  own  members  than  the  exterior  courts  of  justice  of  the 
state,  both  because  of  their  greater  promptness  and  of  their  nicer 
familiarity  with  the  class  of  questions  arising  in  the  transactions 
of  the  board.  To  the  extent  of  the  powers  of  such  boards  or 
markets,  therefore,  all  appeal  by  members  to  the  courts  of  law  is 
discouraged.* 

An  extensive  opinion  prevails,  however,  that  the  offense 
anciently  known  as  forestalling,  and  now  known  as  "  cornering 
the  market,"  can  with  prudence,  and  ought  in  sound  moi'als,  to  be 
forbidden  by  law,  and  restrained  or  xjunished  by  the  courts. 
This  is  an  economic  question,  at  the  bottom,  since  the  morale 
or  ethics  of  the  transaction  depends  on  whether  the  public  and 
general  interest  is  promoted  by  leaving  men  perfectly  free  to 
trade  as  they  will,  or  by  an  interference  of  the  state  in  restraint 
of  this  freedom. 

The  grain  trade,  wherever  carried  on  extensively,  involves  es- 
sentially at  least  eleven  parties,  viz. ,  (1)  the  farmer  who  raises  the 
crop,  and  first  sells  it  to  the  buying'  agent  of  the  dealer,  on  the 
Board  of  Trade,  or  commission  man;  (2)  the  buying  agent;  (3) 
the  dealer  on  the  board  or  consignee  ;  (4)  the  railroad  or  carrier 
who  brings  the  grain  itself  to  market  ;  (5)  the  inspector  or  officer, 
jointly  appointed  by  the  city  and  the  Board  of  Trade  to  receive 
the  grain  when  it  arrives,  inspect  it  on  its  way  from  the  car  or 
boat  in  which  it  is  bi'ought  into  the  bin  where  it  is  to  be  stoi'ed 
or  "warehoused,"  who  assigns  it  judicially  its  proper  grade 
according  to  quality,  and  thereupon  orders  it  into  the  proper  bin, 
where  it  is  usually  blended,  but  may  not  be,  with  other  grain  of 
like  gi'ade,  and  who  also  issues  the  grain  certificate  to  the  con- 


*  This  seems  to  have  obtained  from  a  very  early  date,  as  the  petty  marlcets  of  pied- 
poudie  in  England  testify. 


DEALING   ON  THE    BOARD.  108 

signee  of  the  grain  as  for  a  given  quantity,  say  10,000  bushels  (or 
100,000),  of  "Micliigau  white  wheat"  or  Minnesota  No.  1,  or 
Kansas  No.  2,  as  the  case  may  be,  stored  in  Iowa  Elevator  A,  in 
a  bin  designated  by  proper  marks.  This  grain  certificate  is  tliere- 
upon  the  proper  evidence  of  title  to  the  grain,  and  is  the  thing 
bought  or  sold  on  the  board,  as  a  substitute  for  the  grain,  when- 
ever grain  is  sold  by  grade,  though  grain  may  still  be  sold  by 
sample,  as  well  as  by  grade;  (6)  the  warehouseman,  who  is  a 
peculiar  kind  of  a  bailee  or  storer  merely,  and  has  no  title,  but 
only  custody  for  the  Board  ;  (7)  the  Board  of  Trade  or  aggregate 
mass  of  buyers  and  sellers  being  vii'tually  the  market,  on  which 
the  grain  is  offered  and  which  is  in  close  monetary  conmmnica- 
tion  with  all  other  centers  of  supply  and  demand;  (8)  the  seller  of 
the  grain  certificate ;  (9)  the  buyer  or  buyers ;  (10)  the  purchaser  for 
shipment  or  consumption ;  (11)  the  miller,  baker,  or  manufacturer 
in  the  Eastern  States  or  Europe  who  orders  the  purchase  gener- 
ally, sometimes  in  advance,  and  awaits  the  arrival  of  the 
grain. 

Supposing  the'Board  opened,  the  holders  of  grain,  and  the  holders 
of  money  for  investment  in  grain,  necessarily  form  two  parties, 
the  former  wanting  grain  to  go  up,  the  latter  wanting  it  to  go 
down.  Those  who  have  sold  grain,  agreeing  to  deliver  it  at  a  time 
stated,  and  have  not  yet  got  the  grain  for  delivery,  want  grain  to 
go  down,  so  that  they  can  fill  their  contract  below  the  rate  at  which 
they  have  agreed  to  deliver.  Those  who  have  bought  grain  agree- 
ing to  take  it  at  a  future  date  at  a  stated  price,  wish  it  'may  go 
above  that  price,  so  that  they  may  reap  the  difference.  The  former 
are  bears  ;  the  latter  are  bulls.  The  former  have  "  sold  short;"  the 
latter  have  "gone  long." 

Three  independent  economies  exist  in  the  practice  of  buying 
and  selling  for  future  delivery,  say  one,  two,  or  three  months 
ahead,  which  could  not  be  effected  by  buying  grain  on  hand  and 
taking  present  delivery. 

First. — Buyers  for  consumption,  millers,  exporters,  and  foreign 
pui'chasers  can,  through  these,  convert  a  future  unknown  price 
into  a  known  price,  so  far  as  is  necessary  to  enable  them  to  base 
future  contracts  for  production  thereon.  Suppose  a  manufac- 
turer of  cotton  goods  or  iron,  feeding  his  own  men,  as  indirectly 
he  does,  and  obliged  to  estimate  the  rate  at  which  he  can  afford  to 
take  orders  according  to  the  rate  at  which  he  can  buy  bread  and 
provisions,  it  is  plain  that  he  could  "figure"  the  rate  at  which  he 
could  take  orders  more  closely  if  he  could  make  certain  his  own 


lO-t  ECO yo MIC  PlIILOSOPIIY. 

future  rate  of  expenditure  on  liis  supplies  of  food  and  provisions. 
This  he  could  do  by  buying  in  August,  deliverable  in  October. 

Secondly. — Precisely  as  buying  in  a  wide  market  equalizes 
prices  over  a  wide  area  of  country  and  enables  millions  of  persons 
to  produce  the  same  product  in  close  competition  with  each  other, 
so  buying  for  a  considerable  period  of  time,  or  '  'going  long"  spreads 
and  equalizes  over  a  long  period  of  time  the  changes  in  price 
which  are  made  inevitable  by  natural  causes,  such  as  war, 
drought,  flood,  great  or  small  harvests,  and  the  like.  Equaliza- 
tion of  prices  over  time  is  as  esseiitial  to  steady  production  as  equal- 
ization of  prices  over  wide  areas,  and  numerous  groups  of  produc- 
ers and  consumers.  If  arise  of  20  cents  jjer  bushel  in  wheat  is 
made  necessary  by  an  impending  war  between  two  grain  grow- 
ing countries,  and  if  one  buyer  knows  it  tln^ee  months  ahead,  and 
buys  his  supply  at  an  advance  of  two  cents  per  bushel,  he  not 
only  saves  his  own  supply  but  he  brings  the  market  two  points 
nearer  where  it  ought  to  be,  and  thus  serves  millions  of  produc- 
ers and  consumers  who  are  interested  in  the  rise  being  both  early 
and  gradual,  not  late  and  spasmodic. 

Thirdly. — Such  "futures"  originate  with  buyers,  since  if  no  one 
wished  to  buy  ahead  no  one  could  sell  futures.  Each  buyer  pays 
a  margin  on  his  contract,  sufficient  to  secure  the  seller  against 
loss  in  event  of  a  fall  in  price  and  no  delivery.  The  futures  run 
in  links  from  the  consumer  back  to  the  producer.  In  such  cases 
they  cause  a  current  of  advance  payments  to  set  in  from  the 
dealers  in  the  futures  or  purchasers. 

This  is  in  effect  a  movement  of  money  in  advance  from  the 
consumers,  or  their  representatives  on  the  Board  of  Trade,  to  and 
among  the  jDroducei's.  Farmers  are  thus  enabled  to  get  advances 
on  their  grain  and  plantei'S  on  their  cotton,  whereby  the  harvest- 
ing is  virtually  done  with  the  capital  advanced  by  the  consumers. 
This  converts  articles  like  cotton  and  wheat,  for  which  prices  ai'e 
established  by  "futures"  into  "cash"  articles,  or  articles  on 
which  long  advances  are  had,  whereas  cotton  goods,  furniture, 
and  manufactured  articles  are  sold  so  invai'iably  on  long  credits 
that  even  "  cash  "  means  thirty  days  after  delivery. 

42.  Coriiei'ing' the  Market. — Conceding  that  the  economies 
of  the  trade  compel  dealing  in  futures,  let  us  now  analyze  the 
working  of  a  cox-ner.  A  corner  in  grain  occurs  when  a  merchant 
or  a  clique  of  merchants  have  bought  up  so  many  of  their  fellow 
merchants'  contracts  for  future  delivery,  and  at  the  same  time  liave 
/rained  control  of  so  much  of  the  grain  actually  in  market,  that 


DEALING  IN .' '  FUTURES. "  105 

those  who  have  made  the  contracts  are  unable  to  buy  at  the  price 
stipulated,  when  the  grain  is  deliverable.  The  cornered  mer- 
chants must  pay,  to  the  clique,  the  difference  between  the  price 
named  in  the  contract  and  the  price  current  at  the  time  set  for 
delivery.  The  corner  could  be  prevented  by  confining  the  pur- 
chase and  sale  of  grain  to  that  in  sight,  or,  in  other  words,  by 
prohibiting  a  dealer  from  selling,  or  agreeing  to  sell,  what  he  has 
not  yet  purchased. 

It  can  not  always  be  known,  until  the  contest  is  over,  whether 
one  party  is  trying  to  corner  the  market,  or  the  other  to  break  it. 
A  purchaser  may  begin  buying,  to  protect  a  pi-ice  at  which  he  has 
already  bought  and  desires  to  sell.  He  may  believe,  as  Mr.  Keene 
did  in  1879,  that  a  wet  season  in  England  would  send  wheat  up 
from  $1.05  to  $1.35.  In  August  he  buys  500,000  bushels,  deliver- 
able in  October  at  $1.10.  Having  once  agreed  to  take  this  quan- 
tity at  this  rate,  he  does  not  want  the  price  depressed  below  that 
rate,  and  believes  that  whoever  tries  it  will  lose  their  money,  if 
met  with  both  money  and  courage.  He  therefore  buys  all  the 
wheat  offered  for  October  at  $1.10.  He  can  not  always  distin- 
guish between  the  effect  of  his  own  purchases  to  run  up  the  mar- 
ket and  the  effect  of  English  dampness.  When  he  has  bought 
15, 000, 000  bushels  he  would  have  all  the  wheat  the  elevators  in  Chi- 
cago would  hold,  if  he  were  buying  for  present  delivery.  But  as 
he  is  buying  for  October  delivery,  the  sales  can  be  manufactured 
on  him  as  often  as  there  is  a  party  with  courage  and  the  margin. 
Buying  at  prices  ranging  from  $1.10  to  $1.35,  he  has  one  chance 
of  gain  and  two  chances  of  loss.  His  two  chances  of  loss  are  (1) 
that  so  much  wheat  deliverable  in  October  may  be  poured  in  on 
him,  and  the  certainty  of  English  dampness  not  affecting  the 
price  in  the  degree  he  had  expected  may  becomes©  apparent,  that 
either  from  loss  of  courage  or  lack  of  money  he  may  be  com- 
pelled before  October  to  allow  the  market  to  break,  in  which  case 
it  falls  to  pex'haps  90  cents,  and  he  has  lost  the  difference  be- 
tween the  prices  he  paid  and  90  cents.  He  may  have  this  luck 
when  he  is  right  in  his  judgment,  and  when  October  comes  the 
price  may  be  $1.35,  unless  he  also  has  the  coui-age  and  the  money 
to  hold  the  market  against  the  beai's.  (2)  His  second  chance  of 
loss  is  that,  in  buying  to  sustain  his  price,  lie  may  have  much 
"  cash  wheat  "  on  hand  which  he  must  sell  out  at  a  decline.  His 
one  chance  of  profit  is  that,  if  his  judgment  was  correct,  he  will 
have  only  sent  up  the  market  in  advance,  to  the  point  where  the 
ratio  of  supply  to  demand  would  have  compelled  it  sooner  or 


106  ECONOMIC  PHILOSOPHY. 

later  to  go,  with  the  advantage  that  he  will  reap  as  profit  the  rise 
on  all  he  has  bought. 

In  the  case  of  the  Keene  wheat  deal  of  1879,  the  result  showed 
that  lie  operated  against  the  true  and  proper  course  of  the  mar- 
ket, by  underestimating  the  capacity  of  the  American  supply 
and  overestimating  the  potency  of  the  English  deficiency.  By 
expanding  the  American  export  of  wheat  fi-om  152,075,000  bush- 
els hi  1878-9  to  176,426,000  bushels  in  1879-80,  and  our  export  of 
corn  from  79,431,000  bushels  to  103,450,000  bushels,  with  a  like  in- 
crease from  India  and  elsewhere,  the  deficiency  was  filled  with- 
out any  serious  rise  in  price. 

In  1881  the  New  York  legislature  ordered  an  investigation  of 
the  causes  of  the  extraordinary  rise  in  prices  in  Chicago  and  ces- 
sation of  shipments  of  wheat  eastward  and  to  Europe. 

Railway  managers  of  high  repute  testified  that  the  difficulty 
was  due  to  gambling  in  futures  on  the  Chicago  Board.  The  facts, 
when  fully  sifted,  showed  that  the  Board  of  Trade  was  right  and 
wise  in  preventing  the  export  of  wheat  necessary  for  our  own 
consumption,  and  which,  if  we  had  sent  abroad,  we  must  have 
brought  back  at  a  still  greater  advance.  The  total  corn  crop  of 
the  United  States  had  fallen  from  1,754,861,535  bushels  in  1880  to 
1,194,916,000  bushels  in  1881,  a  decline  of  559,945,535  bushels,  or 
more  than  five  times  the  amount  of  our  exjjort  in  1880.  Our 
wheat  crop  in  the  same  year  had  fallen  from  459,479,505  bushels 
in  1880,  according  to  the  census,  to  380,280,000  bushels  in  1881, 
according  to  Bradstreefs.  Here  was  a  decline  in  production  of 
79,199,505  bushels  in  wheat,  while  our  export  of  wheat  in  1880 
had  been  159,264,214  bushels.  The  market  was  maintained  in 
its  equilibrium  by  sending  abroad  only  118,000,000  bushels  in 
1881,  for  which  the  Ameiican  farmers  received  at  the  place  of 
production  $1.19  per  bushel,  whereas  for  the  larger  crop  of  1880 
the  farmei's  got*  only  95  cents,  and  for  that  of  1882  only  $1.03. 
The  amount  saved,  to  the  farmers,  by  the  superior  sagacity  of  the 
Board  of  Trade  over  that  of  their  critics,  was  in  this  instance 
$28,320,000,  or  twice  the  sum  involved  in  the  so-called  Alabama 
claims,  the  peaceful  adjustment  of  which  through  the  Geneva 
arbitration  and  award  is  justly  regarded  as  one  of  the  triumphs 
of  national  economy  as  well  as  of  international  diplomacy. 

A    temptation     is    afforded,   by    the    system    of    dealing    in 
futures  in  the  grain  market,   to  those  wlio  have  no  means  of 

*  According  to  Mr.  Nimmo,  statistician  of  the  Department  of  Agriculture,  Washing- 
ington,  D.  C. 


MAKING  PRICES.  107 

basing  their  ventures  on  any  calculations  or  reasons  connected 
with  supply  and  demand,  and  whose  purchases  and  sales  are 
made  upon  no  principle,  and  with  no  insight  into  the  condition 
of  the  market  or  the  facts  which  should  influence  prices.  To 
such  persons  the  buying  and  selling  of  futures  becomes  a 
mode  of  gambling  as  blind  and  reckless  as  betting  on  cards  would 
be.  The  mistake  has  been  made,  however,  of  making  the 
gravamen  of  the  evil  to  consist  in  dealing  in  futures,  whereas  the 
real  fact  wdiicli  marks  their  dealing  as  gambling  is  not  that  tliey 
do  not  get  a  physical  delivery  of  the  grain  they  buy,  but  that 
they  do  not  get  an  intellectual  conception  of  any  reasons  or 
motives  which  should  justify  buying.  To  bet  in  the  dark  on  the 
prospective  changes  of  prices,  in  an  article  of  whose  supply  and 
demand  they  know  nothing,  is  mere  gambling,  while  to  buy  in 
anticipation  and  intelligent  forethought  of  causes  which  make 
the  thing  purchased  worth  more  than  the  money  paid  for  it  is 
mere  i)rudence. 

43.  How  Prices  Are  Made.  —Economists  have  used  the 
term  natural  value  to  express  the  value  which  they  think  a  com- 
modity possesses  by  reason  of  the  labor  spent  in  producing  it  ; 
intrinsic  value,  to  express  the  permanent  value  a  commodity  has 
when  measured  in  the  average  of  other  commodities,  or  in  com- 
parison with  a  sufficiently  large  number  of  commodities  to  com- 
prise a  standard  more  trustworthy  than  gold  or  silver  coin  or 
other  money ;  and  money  value,  or  price,  to  express  the  value  a 
commodity  has  in  money.  So  far  as  money  rises  and  falls,  in  its 
purchasing  power,  by  reason  of  causes  relating  to  its  own  volume, 
the  price,  or  money  value,  ceases  to  accurately  measure  intrinsic 
value.  But  the  disturbances  in  the  value  of  money*  being  slow., 
and  often  concealed  far  below  the  surface  of  things,  do  not  appear 
in  the  ordinary  markets  of  merchandise.  In  them  price  passes 
for  value,  as  if  the  two  were  identical.  What  all  men  assume 
without  thinking  has,  in  certain  ways,  the  potency  of  truth,  even 
if  they  all  think  wrong.  Hence  prices,  rather  than  values,  be- 
come the  immediate  force  that  impels  trade.  Buyers  seek  the 
largest  markets  they  can  reach  to  get  the  lowest  prices,  and  sellers 
seek  the  largest  markets  they  can  to  get  the  highest  prices. 
Markets  thus  become  the  manufactory  of  a  price,  on  eacli  commod- 
ity in  which  they  deal,  which  rules  all  transactions  in  that  connnod- 
ity.  The  price  is  the  index  of  demand,  and  the  magnet  of  supply. 
The  price,  by  pointing  out  each  new  direction  of  the  demand,  rules 
production.  If  the  price  of  })eas  is  higher,  relatively  to  oats,  farm- 


108  ECONOMIC  nULOSOPHY. 

ers  drop  oats  and  raise  peas.  If  women  wear  Jerseys  and  Jerseys 
ai'e  made  of  worsted,  wool-dealers  express  the  change  by  a  rise  in 
worsted  wools,  and  farmers  meet  the  change  by  changing  their 
short,  fine-wooled  merinoes  for  sheep  that  produce  a  longer  wool. 
Thus  price  regulates  production,  and  jjoints  out  the  changes 
which  different  articles  undergo,  in  their  relative  utility,  accord- 
ingly as  they  begin,  or  cease,  to  please  the  human  taste.  The 
phrase,  "  There  can  be  but  one  price  in  one  market,"  depends  for 
its  truth,  on  our  defining  the  term  market  to  mean  that  area  over 
which  but  one  price  rules,  at  one  time,  or  over  which  all  minds 
are  in  direct  communication.  Hence  wide  markets  imply  wide 
equality  of  terms,  i.  e. ,  that  great  numbers  of  persons  shall  be 
enabled  to  buy  and  sell  at  one  price.  Tliis  equality  is  sought 
by  all  dealers  and  insures  promptness  in  trading,  thus  saving 
time  and  chaffering.  For,  as  soon  as  one  who  desires  to  buy 
knows  he  is  getting  his  article  at  the  lowest  price  obtainable,  he 
buys.  Till  then  he  waits.  Tlie  lack  of  a  known  price  is  a  paral- 
ysis upon  commerce,  and  through  that  upon  production.  Hence 
the  prompt  fixation  of  prices,  the  wide  acceptance  of  their 
authority  by  producers  and  consumers,  and  prompt  ti'ading  by 
many  millions  of  people,  is  as  itnportant  a  time-saving,  and  labor- 
saving  service,  as  is  that  performed  by  steam  engines  and  railway 
trains.  In  the  more  remote  African  fairs,  according  to  Stanley, 
the  buyers  meet  to  inspect  and  chaffer,  and  perhaps  continue  this 
for  days  before  beginning  to  buy  and  sell.  The  most  advanced 
and  useful  markets  are  those  whose  prices  are  most  widely 
authoritative.  In  grain  these  ai'e  the  Chicago,  Liverpool  and 
New  York  Boards  of  Trade  or  Produce  Exchanges.  In  stocks 
and  shares  it  is  the  London  and  New  York  Stock  Exchanges  and 
the  Paris  Bourse.  The  instant  a  price  is  made  at  either  of  these, 
buyers  and  sellers,  all  over  the  world,  deal  in  accordance  with  it. 
If  each  dealer  had  to  wait  until  he  himself  could  learn  the  causes 
which  influence  demand  and  supply  commerce  would  be  paral- 
yzed. Every  manufactory  must  use  power.  A  manufactory  of 
prices  involves  a  use  of  two  powers :  intelligence  combined  with 
courage,and  money  or  credit.  There  are  in  every  such  price-mill 
two  parties,  one  of  which,  the  "bears,"  have  made  such  contracts 
that  they  will  gain  if  prices  fall  and  lose  if  they  rise.  Another, 
the  "bulls,"  is  intex'ested  in  having  the  market  price  go  up.  All  the 
capital  in  the  business  divides  itself  between  these  two  parties.  The 
battle  between  the  two  contending  forces  is  like  a  fight  between 
two  armies.    Some  are  wounded  in  it  ;  some  are  slain.    But  it 


EQUIVALE^X'E  IN   VALUE.  109 

decides  the  price  not  merely  for  that  spot  but  for  luillions  deal- 
Lug  elsewhere. 

In  the  sale  of  carriages,  pianos,  jewelry,  clothing,  and  other 
things  which  do  not  admit  of  such  an  authoritative  contest  over 
the  price,  there  is  great  inequality  in  the  prices  at  which  two 
persons,  in  the  same  city,  on  the  same  day,  may  buy  two  things  of 
the  same  kind,  and  of  equal  value.  Hence  there  is  great  cheat- 
ing in  such  trading.  One  may  pay  $200  for  a  watch  which 
another  buys  for  $100.  There  is  no  standard.  In  all  these 
gi'ades  of  goods  long  credits  must  be  given,  as  the  dealers  must 
hold  the  goods  until  they  reach  consumers.  But  in  articles  dealt 
in  by  produce  exchanges  the  price  is  advanced  to  the  producer, 
and  his  crop  can  always  be  sold  if  he  desires,  even  before  it  is  har- 
vested. Hence  the  authoritative  manufacture  of  prices  confers 
somewhat  the  same  benefit  on  a  community  as  is  conferred  by  an 
authoritative  system  of  law,  religion,  manners,  and  ethics.  It  en- 
ables every  man  to  know,  each  moment,  how  he  stands  relatively 
to  the  results  of  his  past  exertions,  what  they  have  cost,  and 
how  much  he  can  get  for  them. 

It  is  easy  to  exaggerate  the  notion  that  exchanges  of  commodi- 
ties indicate  equivalent  values  in  the  things  exchanged.  When 
Esau  sold  his  birthright  to  Jacob  for  a  mess  of  pottage,  when 
Judas  sold  his  Saviour  to  his  enemies  for  30  pieces  of  silver,  and 
when  Benedict  Arnold  sold  his  honor  and  his  patriotism  as  an 
American  for  a  commission  in  the  British  army,  when  Bacon  sold 
his  integrity  as  a  judge — in  all  these  cases  there  was  an  exchange, 
but  not  an  equivalence  of  value.  Men  may  sell  what  it  is  un- 
profitable for  them  to  sell  at  any  price,  buy  what  would  be  dear 
if  they  got  it  gratis,  and  so  make  unprofitable  exchanges  as  easily 
as  unprofitable  investments,  employments,  or  experiments.  The 
naked  fact,  that  an  exchange  occurs,  determines  no  more  whether 
it  is  profitable,  than  the  naked  fact,  that  production  occurs,  deter- 
mines whether  the  ijroduct  is  worth  more  than  the  cost.  Yet  a 
presumption  arises  in  favor  of  a  continuing  stream  of  exchanges, 
or  productions,  that  both  are  profitable,  as  a  jjresumption  arises 
that  the  point  to  which  water  flows  is  lower  than  its  fountain. 
In  this  sense,  price  becomes  a  presumption  of  equity  and  eco- 
nomic fair  dealing,  as  between  all  who  sell  and  all  who  buy. 

In  our  chapters  on  labor  we  shall  endeavor  to  show  that  this 
principle  of  equitable  exchange  underlies  the  ordinary  sales  of 
labor  to  an  employer  for  wages,  of  the  use  of  money  to  a  bor- 
rower for  interest,  of  the  use  of  land  to  a  tenant  for  rent,  and  of 


110  ECONOMIC  PHILOSOPHY. 

the  use  of  capital  to  those  who  labor.  In  all  these  cases  it  will  be 
found  that  there  is  an  essentially  equitable  division,  between  the 
several  concurring  agents  in  production,  of  the  entire  earnings 
derived  from  their  joint  concui'rence  in  proportion  to  their  share 
in  producing.  In  this  sense  every  service,  that  is  paid  for,  becomes 
a  commodity  to  him  who  buys  it.  The  pi'ice  at  which  he  buys  it  is 
the  mean  between  two  competitions,  viz. ,  the  competition  between 
all  the  producers  of  the  commodity  desiring  to  sell,  and  all  de- 
sirers  of  the  commodity  seeking  to  buy.  The  competition 
between  the  sellers  fLxes  the  lowest  price  at  which  he  may  have 
to  buy.  The  competition  between  the  buyers  fixes  the  highest 
l^rice  at  which  he  can  possibly  sell.  Where  these  meet  is  price. 
Price  is  the  sum  at  which  those  holding  commodities  can  better 
afford  to  forego  the  commodity,  and  take  the  money  that  is  of- 
fered, and  at  which  those  who  hold  the  money  can  better  forego 
the  money  and  take  the  commodity.  The  former  compares  the 
other  uses  he  can  make  of  both  commodity  and  money,  and  be- 
lieves he  can  make  a  profit  by  taking  the  money.  The  latter 
makes  the  same  comparison,  and  believes  the  commodity  is  worth 
more  to  him.  If  all  men  were  absolutely  wise,  all  exchanges 
would  be  absolutely  profitable.  As  it  is,  the  best  thing  that  is 
ti'ue  of  prices  is  that  they  are  the  highest  expression  at  once  of 
human  liberty  and  social  order.  In  no  act  of  life  does  choice  so 
largely  enter,  and  yet  in  none  are  we  so  peremptorily  compelled  to 
choose.  On  this  chain,  of  freely  chosen  acts  of  will,  is  hung  the 
commerce  of  the  world. 

44.  Errors  Concerning  Causes  of  Prices. — A  common  er- 
ror concerning  prices  is  that  they  are  fixed  by  looking  backward 
at  cost  of  production ;  that  each  successive  participant  or  purchaser 
has  only  to  add  his  ordinary  profit  to  what  he  buys  to  get  it  ;  and 
hence  the  prices  of  exchanged  goods  are  enhanced  according  to 
the  number  of  the  middle  men  through  whose  hands  they  pass. 
In  fact,  however,  prices  are  always  determined  by  looking  for- 
ward at  the  possibilities  of  sale,  not  backward  at  the  cost  of 
productio)!.  From  the  consumer  back  to  the  producer,  each 
dealer  sees  only  the  ' '  inch  before  his  nose  "  to  the  price  he  can 
get.  He  buys  with  reference  to  that  price.  In  this  way  the 
sense  of  value  is  educated  backwai'd  along  the  line,  and  the 
quantity  unsold  rises  or  falls,  not  according  to  its  cost  of  produc- 
tion, but  according  to  what  the  last  purchaser  paid.  Profits  can 
not  be  obtained  by  adding  to  price,  but  must  be  carved  out  of 
price  in  advance  by  economic  bargains  concerning  wages,  rent, 


SPLITTING  DIFFERENCES  MAKES  PRICES.         1 1 1 

interest,  cost  of  X'aw  matei'ials,  and  other  elements  of  production. 
The  effort  thus  to  carve  out  profits  in  advance  from  these  several 
sources,  as  well  as  to  obtain  them  through  cheaper  processes  and 
wider  markets,  has  caused  many  em])loyers  to  feel,  with  Ricardo, 
that,  in  practice,  profits  are  the  leavings  of  wages,  though  in 
theory  profits  are  the  cause  of  wages.  The  former  is  the  superficial 
and  practical,  the  latter  the  ultimate  and  philosophic  view. 

To  get  a  nearer  view  of  the  mode  in  which  price  is  adjusted, 
suppose  a  man  is  fishing  from  the  shore  with  a  hook  and  line, 
without  either  boat  or  net;  and,  thus  equipped,  he  can  catch  20  lbs. 
of  fish  a  day.  If  he  is  fishing  for  amusement  and  not  for  profit, 
he  does  not  covet  boat  or  net.  But  if  he  desires  to  sell  his 
fish,  and  boat  or  net  is  offered  to  him,  he  asks  by  how  much  will 
the  boat  increase  his  catch.  He  finds  that  thereby  he  can  take 
200  lbs.  with  the  boat  ;  with  the  net  1,000  lbs.  Now  if  there  is 
only  a  present  and  near  market  for  the  20  lbs.  which  he  can  catch 
with  his  hook  and  line,  neither  boat  nor  net  has  any  value  to 
him  whatever,  because  of  the  absence  of  demand,  which  is  the 
ultimate  and  first  cause  of  all  value.  If  there  is  a  market  for  200 
lbs.  and  no  more,  then  boat  and  net  are  of  equal  value  to  him. 
But  if  there  is  a  present  demand  for  1,000  lbs.,  then  the  net  is 
worth  five  times  as  much  to  him  as  the  boat,  and  the  boat  ten 
times  as  much  as  the  hook  and  line.  Should  he  pay  all  his 
increased  catch,  however,  both  boat  and  net  would  still  be  of  no 
value  to  him.  How  much  Avill  he  pay  ?  If  there  are  plenty  of 
other  boats  and  nets,  and  he  alone  wants  them,  he  represents  the 
sole  demand  against  an  ample  supply.  This  would  make  his 
rent  of  the  boat  or  net  nearly  gratuitous.  Each  owner  would 
offer  his  net  or  boat  at  the  highest  rate  he  thought  would  be  low 
enough  to  prevent  his  going  elsewhere.  If  there  were  no  other 
net  or  boats,  and  many  other  seekers,  the  boat  would  be  offered 
to  him  only  at  a  rate  higher  than  any  other  seeker  would  pay  for 
it.  If  the  next  seeker  would  pay  800  lbs.  of  fish,  out  of  the  1,000 
caught,  then  he  must  pay  somewhere  between  800  lbs.  and  the 
whole.  If  the  motive,  and  the  necessity,  to  both  parties,  to  enter 
into  the  trade,  were  equal,  the  price  would  be  900  lbs.  Thus  in 
each  stage  of  the  bargaining  there  is  an  equal  division,  not  of  the 
entire  catch,  but  of  the  difference  between  the  share  of  the  catch 
which  each  can  obtain  by  dealing  with  the  other,  and  the  lesser 
share  he  can  get  by  dealing  with  the  next  best  outside  pei-son. 
The  competitive  price,  therefore,  is  the  final  mean  arrived  at  by 
splitting  the  difference    between  the  highest  sum  any  known 


1 1 2  ECONOMIC  PHILOSOPHY. 

purchaser  will  pay  and  the  lowest  sum  for  which  any  known 
seller  will  sell,  the  seller  having  in  view  the  relative  advantage 
to  him  of  the  price  rather  than  the  commodity,  and  the  buj^er 
having  in  view  the  relative  advantage  to  him  of  the  commodity 
rather  than  the  price.  In  this  sense  the  term  price  covers  the 
consideration  for  which  every  exchange  is  made,  whether  of 
money  for  goods,  money  for  service,  for  use  of  land,  or  for  use 
of  money. 

In  attempting  to  arrive  at  the  influence  of  causes  of  any  kind 
upon  prices,  no  soui-ce  of  fallacious  reasoning  leads  to  so  many 
prominent  errors  as  the  mistaking  of  a  partial,  secondary  or  ut- 
terly imiDotent  factor,  for  the  one  decisive  and  controlling  factor. 
Thus,  in  many  English  discussions  of  the  influence  of  protection 
upon  prices,  we  find  free  use  made  of  the  inequalities  in  the 
prices,  of  grain  in  Great  Britain  in  the  period  from  1810  to  1825, 
accompanied  by  the  assumption  that  these  great  inequalities  are 
obviously  due  to  the  British  duties  on  the  importation  of  foreign 
grain,  and  without  stopping  to  inquire  whether  as  great  and  like 
fluctuations  did  not  occur  at  precisely  the  same  periods  in  France, 
Germany,  the  United  States,  and  all  other  countries  from  which 
England  could  have  obtained  her  supply.* 

It  will  be  seen  by  the  chart  of  average  prices,tduring  the  sev- 
eral years,  that  the  average  of  1817  was  96s.,  and  that  the  average 
price  in  1813  had  been  109s.,  while  \\\  1812  the  average  price  had 
been  126s.,  and  in  1801  it  had  been  120s.,  and  the  fluctuations  in 
these  pi'ices  in  France  and  in  the  United  States  in  the  same  years 
were  identical  with  those  in  England. 

In  these  discussions  no  mention  is  made  of  the  war  between  the 
allied  powers  and  France,  under  Napoleon,  the  latter  aided  in 


*  Thus  Mongredien  in  hia  "  History  of  the  Free  Trade  Movement  in  England,"  p.  5, 
says:  "This  Corn  Law,  which  was  enacted  iu  18-33,  under  Lord  Liverpool's  adminis- 
tration, was  bad  enough,  since  it  gave  the  landlords  a  monopoly  of  the  wheat  trade  up 
to  70  shillings  per  quarter,  and  afforded  no  effectual  relief  till  the  price  reached  85  shil- 
lings. It  was,  however,  rather  less  stringent  than  that  which  preceded  it,  for  that 
totally  prohibited  the  importation  of  foreign  wheat  until  the  cu-reiit  price  in  England 
had  reached  80  shillings  per  quarter.  That  price  for  wheat  meant  something  like  \s.  4d 
per  quartern  loaf. 

"  This  earlier  Corn  Law  had  been  passed  in  1815,  and  no  wonder  that  at  the  time  of  its 
being  enacted  popular  indignation  was  excited  to  its  utmost.  Kiotous  assemblages  had 
to  be  dispersed  by  armed  force,  and  the  House  of  Commons  itself  had  to  be  protected 
by  the  soldiery,  when  the  third  reading  of  the  bill  was  voted  by  a  large  majority.  This 
harsh  measure,  which  took  from  the  nation  to  give  to  a  class,  soon  produced  its  inevit- 
able results.  Two  or  three  deficieit  harvests  successively  occurred;  and  the  price  of 
wheat  rose  to  103s.  per  quarter  in  December,  1816,  to  Wis.  in  January,  and  to  112s.  8d. 
in  June,  1817.  +  For  chart  see  p.  124. 


WAR  AND  PBICES.  113 

1813-15  by  the  United  States,  of  the  vast  quantities  of  debts  and 
issues  of  credit  money  incident  to  these  wars,  or  of  the  many 
circumstances  which  were  potential  in  sending  prices  of  bread- 
stuffs  as  high  in  the  United  States,  France,  and  Germany  as  they 
were  in  England.  The  accompanying  cliart  of  fluctuations  in 
price  in  England,  America  and  France  shows  that  they  were  as 
great  in  the  latter  as  in  the  former  and  occurred  at  the  same 
periods. 

A  like  tendency  is  manifest,  among  writers  on  free  trade  and 
protection,  wlien  dwelling  on  the  period  from  1860  to  1870  in  the 
United  States,  to  attribute  solely  to  protective  duties,  a  range  of 
prices  whicli  were  more  largely  due  to  the  deprivation  of  tlie  cot- 
ton supply,  the  increased  demand  for  woolen  clothing,  the  in- 
crease of  railway  building,  the  expansion  in  the  volume  of  the 
currency  and  the  debt,  and  the  variations  in  price  inseparable 
from  such  causes,  than  to  the  immediate  operation  of  tariff  duties 
on  imports. 

45.  Tooke  on  Prices. — The  wars  between  Fi-ance  and  the 
allied  powers  (1795  to  1815),  and  the  twenty  years  following, 
were  marked  by  such  remarkable  variations  in  prices,  as  to  cause 
a  wide  and  voluminous  discussion  of  the  causes  of  prices  in 
pamphlets  and  books.  The  results  of  this  discussion  are  embodied 
in  Tooke's  "History  of  Prices,"  which,  more  than  any  other 
English  economic  woi'k,  is  marked  by  the  inductive  method,  and 
proceeds  from  observation  to  theory. 

The  alleged  causes  of  fluctuation  in  price,  to  which  Tooke's  in- 
vestigations were  chieliy  directed,  were  (1)  the  wai's,  (2)  good  and 
bad  farming  seasons,  as  affected  chiefly  by  the  weather,  and  (3)the 
currency,  as  affected  by  increased  or  diminished  volume  of  coin 
or  paper. 

Tooke  concludes,  after  comparing  prices  during  a  long  series  of 
successive  intervals  of  war  and  peace,  that  mere  war,  unaccom- 
panied by  any  changes  in  the  volume  of  money,  does  not  tend  to 
raise  pi'ices,  except  in  the  line  of  military  supplies  and  naval 
stores,  for  which  in  peace  thei'e  is  hardly  any  demand.  He  con- 
cludes that  as  war  does  not  increase  the  consumption  of  food  or 
clothing,  since  the  soldiers  consume  no  more  of  either  in  the  field 
than  they  would  at  home,  it  can  only  enhance  prices  by  lessen- 
ing the  supply,  by  withdrawing  the  workers  who  produce  them, 
and  expending  their  force  in  fighting,  fortifications,  and  other 
unproductive  labor.  He  says:*  "  As  to  the  supposed  extra  de- 
"Tooke  on  Prices,"  Part  ii.,  p.  46. 


1 1 4  ECONOMIC  PHIL  0 SOPHY. 

mand  arising  out  of  the  war,  the  effective  demand  must  be  lim- 
ited by  the  means  of  payment,  and  the  stimukis  or  excitement 
arising  out  of  a  state  of  war  cannot  supply  any  extra  means  of 
payment  except  by  previous  course  of  production."  We  do  not 
concur  in  this  statement,  but  hold  that,  instead  of  effective  de- 
mand being  limited  by  means  of  payment,  the  means  of  payment 
will  be  multiplied,  and  especially  will  be  made  to  circulate  more 
rapidly,  to  adapt  them  to  the  effective  demand.  When  Secretary 
Chase,  in  1861,  tried  to  get  a  loan  of  $50,000,000  from  the  New 
York  bankers,  and  they  declined  to  lend  it,  and  so  the  govern- 
ment was  without  means  of  payment,  this,  so  long  as  it  lasted, 
limited  the  effective  demand  for  guns  and  uniforms.  But  when 
he  told  them  he  would  issue  government  notes,  until,  instead  of 
borrowing  money  from  them,  they  would  have  to  run  their  banks 
on  his  money,  this  shows  how  the  effective  demand  for  means  of 
payment  calls  them  into  existence  as  it  does  all  other  commodi- 
ties. All  modern  wars  cause  a  large  manufacture  of  "means  of 
payment,"  and  hence  supply  the  cause  of  rising  prices.  But,  in  a 
war  in  which  no  increase  in  the  quantity  of  money  of  any  sort 
occurs,  the  diminished  production  might  be  the  chief  cause  tend- 
ing to  enhance  prices.  Yet  it  would  be  difficult  to  imagine  a  war 
in  which  there  would  be  no  greater  rapidity  in  the  movements  of 
money  than  in  peace ;  and,  of  course,  if  a  given  volume  of  money 
circulated  so  rapidly  as  to  be  the  means  of  making  more  pay- 
ments than  before,  this  increase  in  rapidity  of  circulation  would 
have  the  same  effect  on  prices  as  an  increase  in  its  volume  or 
quantity. 

Tooke  repudiates,  so  explicitly,  the  notion  that  cost  of  produc- 
tion regulates  price  ;  that  it  is  remarkable  that  economists  should 
have  disregarded  his  position.  He  says,*  "that  the  cost  of  pro- 
duction can  not  be  considered  in  the  case  of  coi-n,  and  indeed  of 
most  other  kinds  of  raw  ^jroduce,  as  a  cause  determining  actual 
or  immediate  market  prices  ;  that  the  cost  of  production  in 
nearly  all  cases  relating  to  the  grain  produce  of  this  country,  and 
still  more  as  regards  the  produce  of  other  countries,  is  an  un- 
known or  unascertained  quantity  ;  and  the  only  mode  in  which 
it  can  be  considered  operative  on  prices  is  when,  as  a  result  of 
a  course  of  years,  market  prices  are  found  to  be  unremunerative 
to  those  growers,  at  home  and  abroad,  who,  in  point  of  soil, 
climate,  and  situation,  are  least  favorably  situated  ;  under  such 

*  "  History  of  Prices,"  vol.  v.,  p.  827, 


SCARCITY  CREATING    WEALTH.  Ho 

circumstances,  the  cultivation,  so  far  as  those  are  concerned,  will 
be  discontinued.  So,  on  the  other  hand,  if  prices  for  some  length 
of  time  be  more  than  ordinarily  remunerative,  there  will  be  an 
extension  of  the  area  of  cultivation,  and,  according  to  the  degree 
or  proportion  in  which  these  causes  of  dimiuished  or  extended 
cultivation  may  be  supposed  to  operate  on  the  total  of  the  sources 
of  supply,  will  be  the  greater  or  less  influence  on  the  ultimate 
range  of  prices." 

In  short,  cost  of  production  only  affects  prices  when  it  becomes 
so  high,  relatively  to  the  price  which  demand  creates,  as  tocause 
those  soui'ces  of  production,  which  can  not  afford  to  produce  at 
that  price,  to  stop  producing  altogether,  thus  diminishing  the 
supply.  But  in  this  case  it  is  not  the  cessation  of  pi'oduction  that 
affects  the  price,  but  it  is  the  price  that  causes  the  cessation  of 
production. 

46.  Prices  Rise  in  Disproportion  to  Scarcity. — Tooke 
confirmed  by  actual  facts  the  theory  of  Gregory  King  that  a 
decided  deficiency  of  supply,  especially  in  the  case  of  breadstuffs 
(corn),  is  attended  with  an  advance  in  price  very  much  greater 
than  the  degree  of  the  deficiency.  The  effect  of  this  is  to  make 
the  years  in  which  the  smallest  agricultural  crops  are  produced 
the  most  profitable  to  the  agriculturist,  and  they  bring  him  the 
largest  returns,  thereby  supplying  him  with  a  profit  on  his 
capital  which  stimulates  him  to  the  largest  jjossible  production 
the  next  year,  and  so  tends  to  bring  on  those  years  of  abund- 
ance which  bi'ing  relief  to  the  food  consumers,  but  debt  and 
distress  to  the  fai'mers.  '  King  had  stated  the  ratio  of  increase  of 
price  to  scarcity  of  crop  as  follows  : 

Above  the  common  rate 

3  tenths 
8       " 
1-  1.6       " 

I  2.8       " 

J  4.5   " 

So  that  a  deficit  of  one-third  would  treble  the  common  price, 
and  a  deficit  of  one-half  would  raise  it  five-fold. 

The  very  singular  result  which  this  rule,  if  true,  would  involve, 
is  thus  stated  by  Mr.  Tooke*  :  "If  the  advance  in  price,  from 
deficiency,  increase  the  aggregate  value  of  the  smaller  quantity, 
in  some  instances,  to  double  or  more  than  double  the  amount  in 

♦  "  Thoughts  on  Prices,"  p.  99. 


A  defect  of  1  tentb, 

• 

2  tenths 

3       "                  -j 

raises  the 

4  " 

5  " 

price 

116  ECONOMIC  PHILOSOPHY. 

money  whicli  the  larger  or  average  quantity  would  have  pro- 
duced, the  fall  in  price  from  abundance  may  reduce  the  value 
in  money  of  the  larger,  or  more  than  average  quantity,  to  a  sum 
considerably  less  than  the  smaller  would  have  produced.  Thus, 
suppose  that,  with  bad  or  scanty  crops,  the  produce  of  all  sorts  of 
corn  were  28,000,000  of  quarters,  which,  one  kind  with  another, 
fetched  60s.  per  quarter,  or  £84,000,000  ;  and  that,  upon  the  full 
restoration  of  the  ordinary  produce,  or  32,000,000  quarters,  the 
price  fell  to  the  average  rate  of  40s.,  the  32,000,000  of  quarters 
would  be  worth  only  £64,000,000,  or  less  by  £20.000,000  than  the 
smaller  quantity  had  been  worth.  In  the  same  case,  by  the  same 
sort  of  interior  arithmetic  by  which  the  £20,000,000  additional, 
paid  by  the  consumers  to  the  producers  of  corn,  had  been  con- 
sidered as  the  creation  of  so  much  wealth,  the  mere  cessation  of 
that  payment,  by  the  restoration  of  an  average  quantity  of  prod- 
uce, would  be  considered  as  the  destruction  of  so  much  national 
capital. " 

This  notion  that  scarcity  of  production  might  be  an  increase  of 
capital,  and  abundance  of  production  might  work  a  diminution 
of  wealth,  would  seem  frightful  to  Bastiat,  and  to  all  who  hold 
that  glut  can  not  be  poverty,  and  scarcity  can  not  profit  the 
consumer. 

But  Mr.  Tooke  applied  the  test  to  several  periods.  He  found 
that  in  1799,  the  deficiency  as  stated  from  the  best  data,  in  a 
Report  of  Committee  to  the  House  of  Commons,  was  less  than  one- 
fourth  as  to  wheat,  and  still  less  as  to  other  grains,  the  average 
crop  being  8,000,000  quarters.  Yet  the  actual  rise  in  price  of  prod- 
uce by  the  deficiency  was  from  50s.  3d.  to  104s.  4d.  average  for 
the  whole  crop. 

8,000,000  of  quarters  at    50s.  3d.         -        -        -      £20,100,000 
6,000,000         "        "        104s.  4d.     -        -        -  31,300,000 

Here  was  a  gross  profit  to  the  farmers  of  £11,000,000,  by  reason 
of  being  deficient  2,000,000  quarters  on  their  wheat  crop  alone. 
But  as  the  other  food  crops  are  double  the  value  usually  of  the 
wheat  crop,  but  were  affected  by  a  like  rise  in  price,  Mr.  Tooke  esti- 
mated the  gross  profit  to  the  farmers  on  all  at  £33,000,000.  One 
mark  of  an  extension  of  cultivation,  at  this  period,  was  an  increase 
in  the  number  of  inclosure  bills  or  acts  of  Parliament  for  inclos- 
ing land  previously  common.  These  bills  rose  from  63  in  1799 
to  122  in  1801. 

In  1617,  with  an  average  crop,  the  price  had  been  43s.  3rZ.  (aver- 


PERMANENT  AND  TEMPORARY  CHEAPNESS.        117 

age).  But  ill  1620-"21  abundant  crops  caused  the  price  to  fall  to 
27s.  As  the  result,  Mr.  Tooke  shows,  the  whole  crop  went  off  at 
such  a  sacrifice  that  the  farmers  were  generally  unable  to  pay 
any  rents  at  all,  and  the  greatest  suffering  and  distress  prevailed 
throughout  tbe  farming  populations. 

Mr.  Tooke  finds  that  the  enormous  prices  which  attended  En- 
gland's contest  witli  Napoleon,  and  made  the  farmers  rich,  were 
not  due  so  much  to  the  wars,  or  even  to  the  infiation  which 
attended  them,  as  to  the  bad  seasons.  "In  20  years,  from  1793 
to  1812,  included,  there  were  11  years  of  greater  or  less  deficiency 
of  produce,  with  long  and  severe  winters." 

Similar  facts  were  shown  by  Henry  C.  Carey  concerning  our 
cotton  crop,  and  Henry  Carey  Baird  has  pointed  out  that  the 
short  gi-ain  crop  of  1881  brought  to  the  farmers  of  the  United 
States  $25,000,000  moi'e  .than  it  could  have  brought  had  it  not 
been  700,000,000  bushels  less  than  the  average  crop. 

47.  Periiiaiieiit  and  Temporary  Clieapiiess.  —  Cheap- 
ness in  the  sources  of  supply  is  more  important,  to  every  pur- 
chaser or  purchasing  country,  than  clieaiJness  in  the  actual  supply 
at  any  moment.  Tlie  tendency  of  agricultural  j^i'ices,  in  bad 
years,  to  rise  to  a  x^oiiit  whicli  would  make  the  short  crop  more 
profitable  than  the  average  crop,  and  so  furnish  the  farmers  with 
a  larger  capital,  and  better  inducement  to  plant  largely  the  next 
year,  acted  as  a  stimulus  to  English,  Irish,  and  Scotch  farming, 
until  the  repeal  of  the  corn  laws  withdrew  protection  against 
foreign  competition  from  the  British  farmers  in  1846  to  1819. 
Short  crops  would  be  followed  by  such  increased  planting,  and 
dear  meats  by  such  increased  cattle  rearing,  that,  though  the 
population  never  increased  in  so  rai>id  a  ratio,  in  the  three  king- 
doms, as  from  1780  to  181C,  the  farmers  kept  even  pace  with  the 
consumers.  There  was  no  impairment  of  the  permanent  sources 
of  supply.  It  was  expressly  to  prevent  this  remuneration  of  the 
farmers  in  bad  seasons,  through  a  rise  in  the  price  of  corn,  that 
the  duties  on  corn  were  repealed.  They  so  attained  the  desired 
result  that,  after  1846,  bad  seasons  to  the  farmers  have  not  been 
attended  by  compensating  prices.* 

*  Tims  Broderick  ("  English  Land  and  Engli:<h  Landlords,"  p.  273)  Bays  :  "The 
agricultural  distress  of  the  year  18T0-"8O  will  long  bo  memorable  in  t>  e  economical 
records  of  the  country,  and  may  probably  be  remembered  as  marking  a  crisis  in  the 
history  of  the  English  land  system,  lis  most  obvious  and  principal  cause  wan  the  oc- 
currence of  several  Ijad  seasons  in  succission,  culminating  in  the  colilei^t,  wettest  and 
least  genial  spring  and  summer  that  hart  been  known  within  living  memory.    But  Ihia 


1 1 8  ECONOMIC  PHILOSOPHY. 

On  the  contrary,  each  succession  of  bad  seasons  has  effected  a 
permanent  displacement  of  Britisli  in  favor  of  foreign  farmers,  as 
the  ordinary  sources  of  supply  to  the  British  people.  The  aggre- 
gate value  of  farm  products,  not  including  groceries,  liquors  and 
luxuries  for  the  table,  imported  in  Great  Britain,  quadrupled  in 
20 years,  rising  from  £24,359,598  in  1859,  to  £95,996,249  in  1878, 
while  the  value  per  head  of  population  had  more  than  trebled, 
rising  from  17s.  to  £2  16s.  lOd.  This,[of  course,  implies  that 
British  cultivators  are  not  only  receding  from  furnishing  a  part 
of  the  supplies  which  they  formerly  furnished,  but  that  they  are 
furnishing  a  smaller  aggregate  value.  The  experiment  of  free 
importation  of  breadstulfs  in  Great  Britain,  therefore,  is  that  of 
getting  an  immediately  cheaper  sujjply  of  corn,  by  demolishing 
their  domestic  sources  of  supply. 

The  actual  cheapening  in  the  price  of  breadstuffs  in  conse. 
quence  of  the  repeal  was  both  so  transient  in  duration  and  so 
small  in  amount  as  utterly  to  falsify  the  predictions  on  which  the 
measure  was  passed.*  It  is  possible,  indeed,  by  selecting  peculiar 
periods,  before  and  after  the  repeal,  to  seem  to  show  that  the  repeal 
lowered  the  price  by  a  thu'd,  or  did  not  lower  it  at  all,  but  raised 

calamity  was  greatly  aggravated  as  regards  the  interest  of  farmers,  though  mitigated 
aa  regards  those  of  the  public,  by  a  singularly  low  range  of  agricultural  prices,  as  well 
as  by  a  general  sense  of  insecurity  due  to  a  vast  expansion  of  foreign  competition. 

*5?'0timcA',  in  "  English  Land  and  English  Landlords,"  p.  293,  says:  "When  the 
Corn  Laws  were  repealfd,  it  was  never  anticipated  that  agricultural  prices  could  rise  to 
their  present  level,  and  many  rents  were  fixed  upon  the  assumption  that  wheat  in  fu- 
ture would  command  an  average  price  of  405.  per  quarter;  barley,  30^.;  oats,  20s.;  wool, 
Is.  per  pound;  and  butter,  \Qd.  or  Is.  per  pound,  no  account  being  taken  of  milk,  for 
which  the  demand  was  then  infinitely  less  than  it  now  is." 

Shad  well,  in  "  System  of  Pol.  Econ.,"  p.  499,  says  :  "  When  the  Corn  Laws  were  re- 
pealed, the  farnters  did  not  cease  to  obtain  remunerative  prices  for  their  produce, 
though  they  did  to  some  extent  abandon  corn-growing  in  favor  of  pasture.  This  change 
was  carried  out  to  so  large  an  extent  in  Ireland  as  to  produce  most  serious  conse- 
quences, and  free  trade  may  be  justly  charged  with  the  great  depopulation  of  that  is- 
land which  has  taken  place  during  the  last  thirty  years.  The  Corn  Laws  placed  so 
great  an  impediment  in  the  way  of  the  importation  of  foreign  corn  that  they  held  out  a 
g'-eat  inducement  to  grow  it  in  every  parr,  of  the  United  Kingdom;  and  Ireland,  which 
is  better  fitted  for  a  pastoral  country,  was  by  their  operation  converted  into  an  agricul- 
tural one.  Agriculture  requires  that  a  much  larger  number  of  laborers  should  reside 
upon  the  land  than  is  necessary  in  pastoral  industry,  and  thus  the  effect  of  the  Corn 
Laws  was  to  cause  that  remarkable  increase  in  the  population  of  Ireland  which  con- 
tinued as  long  as  they  were  in  force.  When  they  were  repealed,  agriculture  in  its  turn 
gave  way  to  pasture,  and  the  population  of  Ireland  rapidly  diminished.  The  potato 
blieht  and  its  consequent  famine  were  the  occasion  of  the  commencement  of  the  de- 
population, but  such  a  temporary  disaster  can  not  have  been  the  cause  of  what  con- 
tinued long  after  the  occasion  had  passed  away.  If,  then,  depopulation  is  to  be  con- 
sidered an  evil,  free  trade  has  certainly  inflicted  an  evil  on  Ireland  ;  but  it  must  be  re- 


AVERAGE  PRICES   OF  WHEAT   IN    ENGLAND.    IN    SHILLINGS.   PER  QUARTER  <OF  fl  BUSHELS),    BEFORE  AND  AFTER  THE   REPEAL  OF  PRO- 
TECTIVE  DUTIES    ON  CORN   IN   1&JK-9. 


1       i            ]  I       1  1     1                     I                     1  1  I       1  1 

1  1  j   1   '   I      1  ^      n' 1  .■![  1  i     ■     .■— -nTT II:      ,   ,   ,   ' '   ■ ' 

'                1   1   1   1      ,'  I        j            If             '   '   '      1  w         1   ■ 

— -^  -p-,.  -^^ k^  +^^"~^— ^  -■-  --                 '                   '     ^^       ■■-Rv!, 

1       i        i 

i           i 

c 


The  doited  line  morks  the  decline  of  acrease  In  cnltivalinn  of  wheat  in  Orat  Itriain,  oB  celimuted  by  McCiilloth  and  Calrd,  between  1853  and  1B08,  at  100.000 
acn'9  I'ler  ecclion  lino   viz    from  3.750.000  acres  in  1852,  to  S,463.0IX»  acrea  in  18li8.  being  l.STT.OOO  ncrcB  of  net  decline  in  lU  jean,  or  81.063  acrcM  ]kt  yvar. 
Tho  area  from  winch  the  cnlliviition  of  breadstuffe  receded  In  each  of  the  16  years,  from  1S53  to  1868,  exceeded  Id  acrengo  the  eatatee  of  cither  of  the  laudliotdera  of  Great 
Britain  rxceivt  four,  and  about  equalled  Ihn  i-ntirc  acreaRe  owned  by  the  Dake  of  Bedford. 


INFL  UENCE  OF  FREE  CORN  ON  PRICE.  1 1 0 

it  slightly.  Thus  if  one  average  be  struck  for  the  48  years  from 
1800  to  1848,  the  ante-repeal  pi*ice  is  inflated  by  the  high  prices 
incident  to  the  wars  with  Napoleon  from  1800  to  1815,  the  ave- 
rage being  70s.  3cZ.  per  quarter,  as  against  51s.  lOd.  for  the  30 
years  from  1849  to  1879.  Yet  there  was  but  one  year  between 
1819  and  1846,  viz.,  1839,  when  corn  rose  to  this  suj^posed  average, 
whereas  after  1846  its  average  rose  above  70s.  in  1854  and  1855, 
and  stood  at  69s.  2d.  in  1856,  thus  presenting  three  successive 
years,  in  the  first  decade  of  free  importation,  in  which  the  average 
price  rose  above  the  price  it  had  maintained  in  any  year  (but  one) 
of  the  seventeen  years  preceding  repeal.  The  average  price,  how- 
ever, for  the  eleven  years  1837  to  1847,  both  inclusive,  was  51s. 
5d.,  while  that  for  the  seven  years  1847  to  1853,  inclusive,  was 
48s.  Od.  But  if  the  fiv^e  years  preceding  the  repeal  be  compared 
with  the  eleven  years  following,  the  result  will  indicate  an  actual 
rise  in  prices.  The  average  for  the  five  years  preceding  1846  was 
54s.  11  2-od.  In  1846  it  was  54s.  8d.,  and  for  the  eleven  years 
following  1846  it  was  55s.  5  l-4(i.,  or  8cZ.  higher  for  the  eleven 
years  after  the  repeal  than  for  the  live  years  before  it.  In  1847 
the  average  price  was  69s.  9d.,  in  1848  it  was  50s.  6d.,  in  1849  it 
was  44s.  3d.,  in  1850  it  was  40s.  3d.,  and  in  1851,  at  38s.  4d.,  five 
years  after  the  repeal,  it  touched  for  the  first  time  a  lower  point 
than  it  had  readied  in  1835  (39s.  4d.),  eleven  years  before  the  re- 
peal. These  facts  clearly  show  that  the  repeal  was  an  extremely 
secondary  influence  in  reducing  the  price,  if  it  can  be  conceded 
to  have  reduced  it  at  all.  It  does  not  compare  as  an  influence  with 
a  good  season  or  an  increased  acreage. 

Owing  to  the  fact  that  statistics  of  acreage  planted  were  not 
kept  by  the  government  until  1862,  the  decline  in  acreage  of  cul- 
tivation must  be  partly  matter  of  estimate.  If  it  should  appear 
that  the  land  from  which  cultivation  of  breadstuffs  receded,  or  to 
which  it  failed  to  extend  with  growth  of  population,  would,  if  it 
had  continued  to  be  cultivated  to  those  crops,  have  produced  a 
quantity  equal  to  the  increased  quantity  of  breadstuffs  imported,* 

mcmbered  that  but  for  protection  the  population  of  the  country  would  never  have  in- 
creased to  such  a  height  as  it  did,  and  that  if  free  trade  had  always  been  in  operation 
no  diminution  would  have  taken  place.  The  iucrcase  in  the  numbers  of  the  people  was 
no  great  benefit  to  them,  for,  as  is  well  known,  the  'greater  part  of  them  were  in  a 
state  of  chronic  and  abject  poverty.  The  diminution  of  the  population  of  Ireland  has 
been  accompanied  by  a  larger  increase  in  that  of  England  and  Scotland,  so  that  the  ef- 
fect of  free  trade  has  been  to  attract  people  to  the  districts  where  they  could  live  in 
greatest  comfort. 

*  The  article  on  Corn  Trade  in  the  lilli  edition  of  "Encyclopedia  Britannica,"  quoting 
from  Mr.  McCuUoch's  article  in  its  8th  edition,  presents  the  facts  in  a  manner  which, 


1 2  0  ECONOMKJ  PHIL  0 SOPHY. 

and  in  addition  that  tlie  average  price  since  the  repeal  has  not 
really  been  lower  than  it  would  have  been  had  cultivation  con- 
tinued on  these  lands  by  reason  of  continued  protection  to  the 
farmer,  it  would  follow  that  the  British  people  had  transferred 
their  source  of  supply  to  foreign  countries  without  cheapening 
their  supply.  It  may  be  fairly  contended  to  be  a  principle  con- 
cerning prices  that  when  cheapness,  in  the  supply  of  the  product, 
is  temporarily  obtained  by  means  which  extinguish,  or  make  very 
much  dearer  or  more  precarious,  the  permanent  means  of  produc- 
ing that  same  j)roduct  the  temporary  cheapness  will  prove  to  be 
an  iiltimate  dearness. 


though  not  intended  to  concede  that  the  repeal  was  a  failure,  does  s'.ill  show  that 
enough  land  was  withdrawn  from  cultivation  to  have  produced  the  quantity  of  wheat 
imported,  Rearranging  the  statements  in  our  own  form  they  contain  the  following 
facts:  III  the  twenty  years  following  the  repeal  of  the  corn  laws,  the  production  of 
wheat  in  Ireland  and  Scotland  fell  ofiE  one-half.  As  the  acreage  in  Ireland  in  1853, 
seven  years  after  the  repeal,  was  still,  as  stated  by  McCuUoch,  400,000  acres,  the 
falling  oil  of  one-half  in  Ireland  was  of  at  least  500,000  acres.  And  as  Scotland  is  set 
down  by  McCulloch  as  having  fallen  off  one-half,  but  as  having  still  350,000  acres  in 
wheat  in  1853-3,  the  Scotch  falling  off  was  350,000  acres.  England,  says  McCulloch, 
diminished  in  wheat  280,000  acres,  in  oats  450,000,  in  beans  and  peas  320,000.  Ireland 
diminished  also  in  barley  and  oats  one-sixth.  Without  countmg  the  decline  in  produc- 
tion in  oats,  b?ans,  and  peas,  except  in  England,  though  such  a  decline  occurred  in 
both  Scotland  and  Ireland,  here  is  a  total  decline  in  the  acreage  planted  to  wheat  and 
its  equivalents  of  1,900,000  acres.  This  is  one-half  as  much  as  the  total  area  planted  to 
wheat  alone  in  Great  Britain  in  1874,  and  is  one-sixth  the  total  area  planted  to  grain  of 
all  kinds  in  Great  Britain  in  1881.  Thirty  bushels  per  acre  is  a  low  average  estimate 
on  cereals  for  Great  Britain.  Hence  thisdecline  in  acreage  represents  a  diminution  in 
annual  food  supply  of  at  least  57,000,000  bushels,  whereas  the  average  annual  importa- 
tion from  the  years  1849  to  1859  was  80,000,000  bushels.  Now,  if  we  add  to  the  diminu- 
tion in  the  food  supply  by  decline  of  cultivation,  namely,  57,000,000  bushels,  the  aver- 
age importation  of  wheat,  barley,  oats,  and  flour  anterior  to  1846,  which  is  given  by 
the  "Encyclopedia  Britannica  "  at  28,000,000  bushels,  the  total  is  81,000,000  bushels, 
thus  showing  that  the  consumers  of  breadstufEs  got  essentially  the  same  supply  af- 
ter as  before  the  repeal  of  the  duty  on  corn,  the  increase  in  the  importation  being 
exactly  equal  to  the  decline  in  the  domestic  production. 

Hyndman,  "Historical  Basis  of  Socialism,"  p.  388,  quotes  "Sir  James  Caird,  Sir 
John  Lawes,  Lord  Leicester,  Mr.  Boyd  Kinnear,  and  other  skilled  agriculturists  as 
estimating  that  at  least  twice  the  quantity  of  food  could  be  profitably  grown  in  En- 
gland to-day  that  is  now  grown."  On  p.  328  he  says  :  "Moreover,  during  the  last 
few  years,  the  farmers  themselves  have  been,  in  many  cases,  paying  away  their  capital 
in  rent,  taxes,  tithe,  interest,  and  insurances,  whilst  the  soil  has  deteriorated,  and  the 
amount  of  live-stock  has  decreased.  The  actual  diminution  of  wealth  has  been  most 
serious.  Between  1872  and  1882  the  acreage  sown  with  wheat,  barley,  oats,  and  pota- 
toes in  England,  Wales,  and  Scotland,  fell  from  9,183,600  to  8,402,000  acres;  between 
1874  and  1882  the  number  of  cattle  decreased  by  320,000  head,  and  the  number  of  sheep 
dwindled  from  30,300,000  to  24,300,000,  a  reduction  of  one-fifth,  or  6,000,000.  This 
means  unmistakeable  impoverishment  of  the  agricultural  interest.  At  the  very  time, 
in  fact,  when  more  and  more  labor  should  be  employed  to  make  up  for  the  injury 
caused  by  bad  seasons,  the  farmers  are  nearly  bankrupt." 


RELATION  OF  PRICES  TO  FREEDOM  121 

48.  Relation  of  Prices  to  Freedom. — One  of  Mr.  Carey's 
"  general  truths  "  is  that  prices  of  raw  raateinals  and  of  finished 
products  approach  each  other  in  proportion  to  the  diversification 
of  industries,  the  abundance  with  wliicli  money  circulates,  the 
activity  of  the  societary  movement,  and  the  growth  of  human 
freedom.  They  certainly  meet  at  the  factory  where  the  raw  ma- 
terials are  converted  into  the  manufactured  goods,  and  where  the 
only  difference  between  them  is  the  cost  and  profits  of  manufac- 
ture. The  measure  of  man's  growtli  in  freedom,  however,  can  be 
arrived  at  more  nearly  by  inquiring  the  price  of  his  time  per 
day  or  per  year  than  the  condition  of  prices  as  to  the  commodity 
he  produces.  A  fai*mer  in  Dakota  may  be  producing  the  raw  ma- 
terial, wheat,  at  a  cost  of  13  cents  per  bushel  and  selling  it  at  the 
low  rate  of  60  cents.  But  if  he  is  j)roduciug  it  in  such  quantity 
that  the  difference  of  48  cents  per  bushel,  between  his  cost  of  pro- 
duction and  his  selling  pi'ice,  applies  to  1,000,000  bushels  a  year, 
then  his  time  for  the  year  is  worth  to  him  $480,000,  notwithstand- 
ing he  is  producing  a  "  raw  material,"  and  at  a  very  great  dis- 
tance from  the  j)oint  of  its  consumption.  His  growth  in  freedom 
seems  to  be  solely  proportionate  to  the  value  of  his  time,  or  his 
rate  of  earnings  for  the  year,  and  not  at  all  proportionate  to 
whether  he  is  near  or  distant  from  the  point  where  prices  of  raw 
materials  and  of  finished  products  approximate. 

Nor  can  it  be  truly  said  that  society  attains  to  a  higher  average 
condition  of  freedom,  at  the  point  where  wool  is  converted  into 
cloth,  than  it  does  at  the  point  where  grass  is  converted  into 
wool.  If  human  freedom  can  be  said  to  stand  connected  with 
any  condition  of  j)rices,  it  must  be  solely  with  the  price  of  the 
time  of  the  person  whose  freedom  is  to  be  estimated.  To  those 
localities  where  the  diversity  of  industries  is  greatest,  will  often 
flock  the  greater  number  of  those  who  are  so  badly  equipped  for 
the  race  of  life  that  they  would  soon  perish  absolutely  in  Pata- 
gonia or  on  Selkirk's  Island,  but  who  get  on  after  their  fashion  in 
a  great  city,  because  industries  are  there  so  diversified  that  occu- 
pation adapted  to  the  least  competent  is  everywhere  within  reach. 
It  is  difTicult  to  conceive  an  intellect  so  deficient  that  it  could  not 
sweep  a  sidewalk,  or  strength  so  feeble  that  it  could  not  keep  an 
apple  stand,  a  child  so  dull  that  it  could  not  sell  a  newsjiaper, 
or  a  pauper  so  old,  or  blind,  or  feeble,  that  he  could  not  beg.  Peo- 
ple, therefore,  who  could  not  support  themselves  a  week  in  the 
rural  districts,  flock  to  the  cities  as  ])resenting  the  freest  field  of 
struggle  for  the  feeble.     In  this  way  cities  are  often  charged  with 


122  ECONOMIC  PHILOSOPHY. 

producing  the  misery  they  only  shelter;  the  vast  inequalities  of 
fortune,  which  prevail  in  cities,  are  set  down  as  due  to  the  fact 
that  those,  who  have  never  had  any  productive  power  adequate  to 
their  maintenance,  have  been  in  some  way  despoiled  of  the  good 
living  they  are  assumed  to  be  entitled  to,  by  those  whose  fortunes 
are  in  excess  of  their  means  of  consumption,  or  even  of  adequate 
consideration.  It  is,  however,  because  of  this  very  overflow  of 
surplus  wealth,  that  the  incompetent  and  unproductive  find  iX 
easier  to  survive  in  the  vicinity  of  the  very  rich,  than  to  endure 
anywhere  else.* 

Hence  the  scene  of  greatest  diversity  of  industries,  and  most 
rapid  circulation  of  money,  is  at  once  that  in  which  industrial 
freedom  rises  highest,  and  yet  in  which  the  pecuniarily  helpless 
swarm  in  greatest  numbei'S,  not  because  they  are  here  reduced  by 
competition  to  poverty,  but  because  they  are  here  enabled  to  sur- 
vive longest  on  the  smallest  endowment  of  productive  energy. 

49.  Countries  of  Low  and  Higli  Prices. — Prices  of  com- 
modities generally,  and  especially  of  labor,  seem  to  descend  at 
each  stage  as  we  pass  from  the  silver  and  gold  producing  centers, 
viz..  North  and  South  America,  and  Australia,  through  the  coun- 
tries which  have  usually  made  most  use  of  specie,  viz.,  England, 
France,  and  Germany,  towards  those  oriental  countries,  China 
and  India,  where  labor  is  very  largely  in  surjilus,  and  silver,  es- 
pecially, is  hardly  produced  at  all,  but  is  finally  absorbed.  It 
would  seem  as  though  the  precious  metals  gain  in  purchasing 
power  as  they  recede  from  the  point  of  their  production,  until, 
amidst  the  reputed  six  hundred  millions  of  people  dwelling  in 
India,  China,  Siam,  and  Japan,  their  average  purchasing  power 
as  applied  to  land,  labor,  and  commodities  which  do  not  admit  of 
export,  reaches  its  maximum.  This  apparent  difference  of  prices 
is  aided  by  two  otiier  causes.  The  lower  relative  use  of  machine 
power  in  Asiatic  countries  renders  the  actual  product  of  labor  less 
there  than  in  "Western  peoples  when  the  same  degree  of  effort  is 
put  forth;  and  the  simpler,  less  animal,  and  Jess  nerve-stimulating 
diet  of  Eastern  races,  together  with  their  inert  and  supine  charac- 
ters, renders  them  indisposed  to  put  forth  an  equivalent  effort  in 
industry  for  purposes  of  accumulation  after  the  present  wants  of 
the  body  are  satisfle'J 

*  In  Yorkshire  it  is  said  that  woolen  rags  to  the  amount  of  $'260,000,000  a  year  are 
manufactured  into  useful  articles.  (Tooke,  "Wool  Production,"  196.)  In  Paris  4,000  per- 
sons maue  a  living  from  what  they  pick  up  in  the  streets.  Koscher,  "Pol.  Econ.,"  vol. 
ii,  p.  220. 


DESTRUCrn^  'PRICES.  123 

Of  these  coucuiTing  reasons,  the  Western  superiority  in  ma- 
chinery lias  only  existed  for  a  century,  in  any  mai*ked  degree, 
while  the  drain  of  silver  to  the  East  is  an  aflFair  of  many  cen- 
turies. It  must  be  admitted  also  that  both  Chinese  and  Hindoos 
display  every  required  degree  of  industry,  thrift,  and  endurance, 
when  subjected  to  the  inducements  of  high  wages  and  better 
modes  of  living,  in  the  United  States  and  Europe. 

It  may  be  doubted,  therefore,  whether  there  is  any  other  per- 
manent cause  for  difference  in  prices  in  the  Western  and  Eastern 
woi'ld,  than  the  fact  that  the  point  of  chief  production  of  the 
money  metals  is  in  the  two  Americas,  the  point  of  their  chief 
utilization  is  in  the  banks  and  exchanges  of  Europe,  and  from 
these  they  percolate  but  slowly  and  feebly  into  the  avenues  of 
Asiatic  commerce,  owing  to  the  slowness  of  Oriental  peoples  in 
adopting  the  machinery  and  productive  methods  of  Western 
civilization. 

Whatever  may  be  the  reasons,  the  descending  value  of  a  day 
of  average  labor  time,  as  we  recede  from  the  points  of  gold  and 
silver  production  to  those  of  their  final  absorption,  may  be  stated 
with  sufficient  accuracy,  as  follows  : 

United  States  :  California,  $3  ;  Colorado,  %2  ;  Illinois,  $1.75  ; 
New  York,  $1.50  ;  Massachusetts,  $1.25.  England,  $1;  Belgium, 
90  cents  ;  France,  80  cents  ;  Germany,  70  cents  ;  Austria,  60 
cents  ;  Spain,  GO  cents  ;  Italy,  50  cents  ;  Scandinavia,  40  to  30 
cents  ;  Russia,  20  cents  ;  Turkey,  20  cents  ;  Egypt,  15  cents  ; 
Arabia,  12  cents  ;  India,  10  to  5  cents  ;  Japan,  Scents;  China, 
5  cents. 

A  scale  of  descent,  in  the  value  of  labor-time,  of  this  i>atjare, 
indicates  that,  as  to  labor,  every  geographical  area  from  which, 
for  any  reason  of  immobility,  whether  it  be  povei'ty,  patriotism, 
or  sluggishness,  laborers  refuse  to  migrate,  in  order  to  seek  a 
higher  px'ice  elsewhere,  becomes  to  that  extent  an  independent 
market  for  labor,  with  a  tendency  to  impart  its  own  scale  of 
prices  to  the  products  of  labor,  or  rather  to  cease  producing  all 
those  products  whose  prices  cease  to  be  remunerative. 

In  so  far,  therefore,  as  any  other  country,  through  its  greater 
command  of  capital  or  machinery,  or  low-priced  human  labor,  or 
enslaved  human  labor,  can  produce  a  particular  commodity  at  a 
money  cost  lower  than  it  can  be  produced  for  in  a  country  whose 
l^eople  can  neither  migrate  nor  adopt  the  cheaper  methods  of 
production,  it  is  plain  that  the  latter  must  exclude  the  cheaper 
product  or  see  their  own  capacity  to  produce  it  destroyed  by  the 


124 


ECONOMIC  PIIILOSOPIIY. 


foreign  competition.  Whenever  low  prices,  obtained  by  importa- 
tion, involve  the  destruction  of  a  domestic  production,  which 
both  countries  have  equal  natural  facilities  for  producing,  the 
first  interest  of  the  importing  country  is  to  encourage  the  appli- 
cation, by  its  own  people,  of  the  artificial  facilities  to  which  the 
rival  country  owes  its  temporary  superiority,  and  consequent  lower 
prices. 

These  may  consist  of  inventions,  machinery,  discoveries,  cap- 
ital, skill,  low  rates  of  interest,  low  rates  of  wages  or  the  like. 
All  of  these  any  country  can  more  wisely  adopt  than  the  low 
rates  of  wages,  since  a  descent  in  rates  of  wages  involves  a  degra- 
dation in  the  standard  of  living,  which  may  react  on  the  productiv- 
ity of  the  labor  itself,  by  making  it  less  eliicient,  and  may  involve 
an  inhumanity  from  which  the  conscience  of  society  would  revolt. 


Chart  op  Prices  of  Wheat.    (Seep.  112  and  note.) 

Upper  black  line— Price  of  Wheat  in  England  from  1780  to  1880,  in  shillings,  per 
qnarter. 

Lower  blnck  line— Price  of  Wheat  in  France  from  IVRO  to  1880,  in  frarcs,  per  hec- 
tolitre. 

Black  dotted  line-Price  of  Flour  in  United  States  from  irOB  to  1860,  in  dimes,  per 
barrel . 


CHAPTER    IV. 

TITLE   AND  USE. 

50.  Title  and  Labor. —Title  to  property  is  vaguely  associ- 
ated, iu  many  economic  and  in  all  socialistic  arguments,  with 
labor  expended  in  producing  it.  It  is  contended  that  land  can 
not  justly  be  the  subject  of  private  ownership  because  it  is  not 
created  by  labor,  or  because  its  value  is  not  due  to  the  person 
possessing  or  occupying*  it.  The  value  of  land  is  due  to  the 
aggregate  societary  movement  which  brings  it  into  demand.  It 
is  shown  by  that  competition  among  purchasers  for  its  title,  and 
among  tenants  for  its  occupancy,  which  causes  it  to  command  a 
purchase  pz'ice  at  the  hands  of  the  former  or  a  rental  at  those  of 


*Renry  George  ("  Progress  and  Poverty,"  Lovell's  Edition,  p.  240)  says  :  "Asa  man 
belongs  to  himself,  so  his  labor  when  put  in  concrete  form  belongs  to  him. 

"  And  for  tliis  reason,  that  which  a  man  makes  or  produces  is  his  own,  as  against  all 
the  world— to  enjoy  or  to  use,  to  destroy,  to  exchange,  or  to  give.  No  one  else  can  right- 
fully claim  it,  and  his  exclusive  right  to  it  involves  no  wrong  to  any  one  else.  Thus 
there  is  to  every  thing  produced  by  human  exertion  a  clear  and  indisputable  title  to  ex- 
clusive possession  and  enjoyment, which  is  perfectly  consistent  with  justice,  as  it  de- 
scends from  the  origital  producer,  in  whom  it  vested  by  natural  law.  The  pen  with 
which  I  am  wriiing  is  justly  mine.  No  other  human  being  can  rightfully  lay 
claim  to  it,  for  in  me  is  the  title  of  the  man  who  produced  it.  It  has  become 
mme,  because  transferred  to  me  by  the  stationer,  to  whom  it  was  transferred 
by  the  importer,  who  obtained  the  exclusive  right  to  it  by  transfer  from  the  manu- 
facturer, in  whom,  by  the  same  process  of  purchase,  vested  the  right  of  those  who 
dug  the  material  from  the  ground  and  shaped  it  into  a  pen.  Thus,  my  exclusive  right 
of  ownership  in  the  pen  springs  from  the  natural  right  of  the  individual  to  the  use  of 
his  own  faculties. 

"Now,  this  is  not  only  the  original  source  from  which  all  ideas  of  exclusive  ownership 
arise — as  is  evident  from  the  natural  tendency  of  the  mind  to  revert  to  it  when  the  idea 
of  exclusive  ownership  is  questioned,  aud  the  manner  iu  which  social  relations  develop 
— but  it  is  necessarily  the  only  source." 

Mr.  George  here  traces  back  his  title  to  the  steel  pen  with  which  he  writes  to  "  those 
who  dug  the  material  (iron  ore)  from  tlie  ground  and  shaped  it  into  a  pen,"  as  if  this 
were  evidence  that  labor  originated  title.  But  it  proves  nothing  of  the  kind.  Those 
who  dug  the  ore  from  the  ground  and  shaped  it  into  a  pen  may  never  have  owned  the 
ground,  the  ore,  or  the  pen.  They  may  have  been  hired  servants  who  sold  the  mus- 
cular effort  with  which  they  dug  the  material  from  the  ground  and  shaped  it  into  the 
pen,  in  which  case  all  they  ever  owned  was  their  muscular  effort,  labor-time,  and  the 
wages  they  received  iu  exchange  for  them .  Their  labor,  as  first  performed, became  a  part 


126  ECONOMIC  PUILOSOPIIY. 

the  latter.  Causes  of  the  values  of  land  are  thus  reduced  to  the  one 
cause,  viz. ;  Demand,  which  is  also  the  cause  of  the  value  of  labor 
itself,  of  skill,  of  time,   and  of  all  forms  of  personal  property. 

of  the  materials  and  of  the  pen,  and  belonged  in  that  form  to  their  employer.  But  if  the 
first  diggers  of  the  ore  owned  the  ore  when  dug,  they  did  not  own  it  by  virtue  of  the  act 
of  digging  it,  for  they  would  not  have  been  allowed  to  dig  it  unless  they  had  first  owned 
it.  As  well  might  a  horse-thief  claim  that  the  act  of  carrying  ofE  the  horse  of  another 
gave  title  to  the  horse,  as  an  ore-digger  could  assert  that  digging  ore  made  it  his.  The 
title  to  the  ore  like  the  title  to  any  crop,  depended  on  title  to  the  land.  Thus  Mr. 
George's  title  to  his  pen  becomes,  when  traced  back,  the  identical  title  to  the  land 
which  he  uses  his  pen  to  attack.    Again  he  says,  ibid.  (p.  257) : 

"The  truth  is,  and  from  this  truth  there  can  be  no  escape,  that  there  is  andean  be  no 
just  title  to  an  exclusive  possession  of  the  soil,  and  that  private  property  in  land  is  a 
bold,  bare,  enormous  wrong,  like  that  of  chattel  slavery. 

"The  majority  of  men  in  civilized  communities  do  not  recognize  this,  simply  because 
the  majority  of  men  do  not  think.  With  them  whatever  is  is  right,  until  its  wrongful- 
ness has  been  frequently  pointed  out;  and  in  general  they  are  ready  to  crucify  whoever 
first  attempts  this. 

"But  it  is  impossible  for  any  one  to  study  political  economy,  even  as  at  present  taught, 
or  to  think  at  all  upon  the  production  and  distribution  of  wealth,  without  seeing  that 
property  in  land  differs  essentially  from  property  in  things  of  human  production,  and 
that  it  has  no  warrant  in  abstract  justice." 

Mr.  George's  uncourteous,  and  in  the  most  exact  sense,  uncivilized  remark,  that  the 
reason  that  the  majority  of  men  think  private  title  to  land  to  be  just  is  that  they  do 
not  think  at  all,  seeius  to  be  an  evidence,  so  far  as  it  goes,  that  one  can  not  become  an 
admirer  of  the  methods  of  savages  without  unconsciously  adopting  their  manners. 
The  study  of  political  economy  has,  we  think,  never  produced  the  impression  upon  any 
mind  that  Mr.  George  says  it  must  produce  upon  all.  We  doubt  if  Mr.  George  himself 
did  not  first  embrace  this  theory  and  then  study  political  economy,  after  his  fashion  of 
studying  it,  in  order  to  find  matter  in  proof.    On  p.  227  (Love'.l's  Edition)  he  says  : 

"  So  true  it  is  that,  to  whomsoever  the  soil  at  any  time  belongs,  to  him  belongs  the 
fruits  of  'it.'" 

As  all  other  things  are  immediately  or  ultimately  "  fruits  of  the  soil,"  and  as,  accord- 
ing to  Mr,  George,  the  title  to  the  fruits,  i.  e.,  to  all  other  things,  follows  and  is  deter- 
mined by  title  to  the  soil,  necessarily,  if  no  one  can  justly  have  title  to  the  soil,  he  can 
not  justly  have  private  title  to  any  thing.  All  things  must  be  owned  in  common.  But 
where  all  things  are  held  in  common  there  can  be  (1)  no  commerce  or  exchange,  as 
these  consist  in  giving  that  which  is  one's  own  for  that  which  is  another's;  (2)  no  gener- 
osity, for  all  generosity  consists  in  giving  that  which  is  one's  own  to  another  ;  (3)  no 
rewards,  for  all  rewards  consist  in  obtaining  from  another  for  merit  that  which  was 
his  ;  (4)  no  ambition,  for  all  ambition  consists  in  the  desire  to  increase  the  stock  of 
one's  own  ;  (5)  no  production  of  wealth,  for  all  production  of  wealth  consists  in  bring- 
ing into  being  a  surplus  beyond  our  own  needs  for  exchange,  and  perfect  communism 
puts  an  end  to  exchange  ;  (G)  no  industry,  for  no  man  is  industrious  where  industry  can 
bring  no  increase  of  comfort ;  (7)  no  comfortable  living,  for  comfortable  living  can  not 
be  secured  for  the  great  mass  of  the  world's  population,  without  incessant  industry  on 
the  part  of  nearly  all  of  them,  and  hence  to  abolish  private  titles  to  land  involves  an 
intense  degree  of  want  and  suffering  such  as  would  render  life  an  unmitigated  calamity 
to  every  creature. 

Most  of  the  uses  of  property  can  not  be  had  or  known  at  all  except  as  they  are  private 
and  exclusive,  utterly  unshared  by  any  other.  To  till  land  is  a  use  of  this  kind.  The 
only  absolutely  communal  use  that  can  be  made  of  land  is  to  hunt  over  it  as  the  Indians 
did.    Even  tribal  ownership  of  land  is  inconsistent  with  Mr.  George's  theory  that 


^YIIERE  TITLES  BEGIN.  127 

Demand  being  the  cause  of  value,  all  things  are  produced, 
i.e.,  brought  forward,  because  they  are  foreseen  to  possess  value. 
Nothing  is  demanded  merely  because  it  has  been  produced.     But 

becaaee  man  did  not  create  or  produce  land  therefore  he  can  not  own  it.  For  the 
tribe  came  no  nearer  to  creating  land  than  the  individual.  Where,  then,  did  one  tribe 
get  a  greater  right  to  exclude  another  than  one  individual  has  to  exclude  another?  Nor, 
since  the  state  did  not  produce  the  land,  can  the  state  own  it.  It  Bimply  can  not  be 
owned  at  all.  And  since,  except  as  we  own  the  land  on  which  things  are  produced  we 
can  not  own  the  things  produced,  it  follows  that  neither  the  individual,  the  tribe,  nor 
the  state,  can  own  anything.  Mr.  George's  doctrine  therefore  lands  vls  in  that  of 
Pradhon,  that  "  all  property  is  robbery."  Mr.  George  doubtless  thinks  that  he  thinks, 
but  the  present  writer  can  only  acquit  Mr.  George  of  being  destitute  of  the  thinking 
faculty  in  the  degree  essential  to  a  rational  creature,  by  assuming  that  in  the  above 
extracts,  and  indeed  throughout  his  work,  he  has  been  impelled  by  an  impulse  of  in- 
tensely active  and  burning  thoughtlessness.    Mr.  George's  remedy  is  as  follows: 

"  What  I,  therefore,  propose,  as  the  simple  yet  sovereign  remedy,  which  will  raise 
wages,  (1)  increase  the  earnings  of  capital,  (2)  extirpate  pauperism,  (3)  abolish  poverty, 
(4i  give  rumunerative  (5)  employment  ^6)  to  whoever  wishes  it,  (7)  afford  free  (8)  scope 
(9)  to  human  powers,  lessen  crime,  (10)  elevate  morals,  (11)  and  taFte,  (12)  and  intelli- 
gence, (1.3)  purify  government,  (14)  and  carry  civilization  (15)  to  yet  nobler  (1(5)  heights, 
is— ^0  appropriate  rent  by  taxation. 

"  In  this  way,  the  state  may  become  (17)  the  universal  landlord  without  (18)  calling  her- 
self so,  and  without  (19)  assuming  a  single  new  function.  In  form,  the  own- 
ership of  land  would  remain  just  as  now  ^20).  No  owner  of  land  need  be  dispossessed, 
(21)  and  no  restriction  need  be  placed  (22)  upon  the  amount  of  land  any  one  could  hold. 
For,  rent  being  taken  by  the  state  in  taxes,  (23)  land,  no  matter  in  whose  name  it  stood, 
(24)  or  in  what  parcels  it  was  held,  (25)  would  be  reaily  (26)  common  properly,  and  every 
member  of  thecommunity(27)would  participate  in  the  advantages  of  its  owner8hip"(S8). 

Here  are  twenty-eight  distinct  prophecies  in  thirteen  lines,  to  entertain  any  one 
of  which  requires,  not  a  more  profound  faculty  of  thinking  than  that  possessed  by  a 
majority  of  mankind,  but  only  a  more  superb  egotism,  combined  with  the  eccentric 
retrogression  which  enables  a  man  brought  up  in  civilization  to  prefer  barbarism. 

Two  thousand  years  ago  Aristotle  (Politics,  Book  ii.,  ch.  v.)  said  concerni''.g  this  sys- 
tem: "  This  system  of  polity  does  indeed  recommend  itself  by  its  good  appearance  and 
specious  pretenses  to  humanity  ;  and  the  man  who  hears  it  proposed  will  receive  it 
gladly,  concluding  that  there  will  be  a  wonderful  bond  of  friendship  between  all  its 
members,  particularly  when  any  one  censures  the  evils  which  are  now  to  be  found 
in  fociety,  as  arising  from  property  not  being  in  common;  as  for  example  the  dis- 
putes which  now  happen  between  man  and  man,  upon  their  contracts  with  each  other, 
the  judgments  passed  to  punish  perjury,  and  the  flattering  of  the  rich  ;  none  of  which 
arise  from  properties  being  private,  but  from  the  corruption  of  mankind.  For  we  see 
those  who  live  in  one  community  and  have  all  things  in  common,  disputing  with  each 
other  oftener  than  those  who  have  property  separate  ;  but  we  observe  fewer  instances 
of  strife,  because  of  the  very  small  number  of  those  who  have  property  in  common, 
compared  with  those  where  it  is  appropriated.  It  is  also  but  right  to  mention  not  only 
the  evils  from  which  they  who  share  property  in  common  will  be  preserved,  but  also 
the  advantages  which  they  will  lose;  for,  viewed  as  a  whole,  this  manner  of  life  will  be 
found  impracticable." 

The  singular  fact  in  Henry  George's  mental  obliquity  is  that  he  admits  all  the  histori- 
cal facts  essential  to  justify  private  properly  in  land,  if  he  formed  his  opinion  on  a  basis 
of  historical  evidence,  and  then  denies  its  justice  on  the  high  metaphysical  basis  that 
its  injustice  has  been  directly  revialed  to  him  from  God.  For,  that  a  policy  promotes 
the  freedom  of  man  is  to  an  economist  its  most  complete  vindication.  Yet  on  p.  275  the 


128  ECONOMIC  PHILOSOPHY. 

before  a  thing  can  be  produced,  intlie  literal  and  economic  mean- 
ing of  that  word,  i.  e.,  brought  or  led  forward,  it  must  first  be 
owned,  and  only  one  who  owns  it  can  lawfully  produce  it  or 
lead  it  forward.  Instead  of  labor  being  the  source  of  title,  i.  e. , 
instead  of  its  being  true  that  a  man  only  comes  to  own  things  by 
having  fii'st  produced  them,  it  is  true  that  a  man  only  labors 
productively  with  and  upon  things  that  he  has  previously  appro- 
pi'iated  and  made  his  own,  either  by  seizure,  gift,  finding,  pur- 
chase, descent,  contract,  bequest,  or  some  other  mode  of  acquiring 
title. 

51.  Title  Dates  from  Seizure  or  Appropriation. — That 
the  act  of  appropriation,  by  which  a  thing  becomes  property, 
must  precede  any  productive  labor  upon  it,  becomes  evident  both 
by  a  priori  reflection  upon  the  motives  which  ordinarily  govern 
human  action,  and  by  an  observation  of  the  mode  in  which  legal 
rights  to  property  come  to  exist.  In  no  race  or  condition  of  soci- 
ety has  the  mind  of  man  entertained  the  idea  that  the  property  of 
B  could  become  the  property  of  A  merely  by  the  voluntary  act  of 
A  in  working  upon  it  knowing  it  to  belong  to  B.     Societies  have, 

only  revelator  who  has  yet  re-euforced  economic  science  by  super-mundane  wisdom, 
says  : 

"  The  reason,  T  take  it,  that  with  the  extension  of  the  idea  of  personal  freedom  has 
gone  on  an  extension  of  the  idea  of  private  property  in  land,  is  that,"  &c.,  &c.  His 
supposed  reason  is  immaterial.  The  fact,  as  he  admits,  is  that  private  property  in  land 
and  human  freedom  have  increased  together. 

Again,  on  the  same  page  he  says:  "  Thus  with  the  extension  of  personal  liberty,  went 
on  an  extension  of  individual  proprietorship  in  laud."  lie  might  have  added  that  one 
of  the  chief  forms  of  personal  liberty  consists  in  the  liberty  of  a  person  to  own  land,  to 
have  a  home,  which  he  can  call  his  own,  not  merely  as  a  fiction  by  paying  rent  to  the 
State,  but  which  he  can  transmit  to  his  children  free  of  rent.  Deprived  of  the  liberty 
to  own  land  no  man  could  be  said  to  have  any  personal  liberty.  lie  would  be  the  slave 
of  his  tribe,  without  a  home,  a  wanderer  and  a  nomad.  Having  admitted  that  personal 
liberty  grows  with  ownership  of  land,  which  is  all  the  warrant  one  uninspired  would 
want  to  justify  private  title,  Mr.  George  then  assumes  the  altitudinous  attitude  of  a 
revelator : 

"  The  laws  of  nature  are  the  decrees  of  the  Creator.  There  is  written  in  them  no 
recognition  of  any  right  save  that  of  labor  ;  and  in  them  is  written  broadly  and  clearly 
the  equal  right  of  all  men  to  the  use  and  enjoyment  of  nature  ;  to  api)ly  to  her  by  their 
exertions,  and  to  receive  and  possess  her  reward.  Hence,  as  nature  gives  only  to  la- 
bor, the  exertion  of  labor  in  production  is  the  only  title  to  exclusive  possession." 

To  so  much  of  this  utterance  as  purports  to  make  known  that  the  Creator  has  issued 
a  decree  to  the  effect  "  Thou  shalt  not  own  land,"  the  majority  of  mankind  will  listen 
with  profound  reverence  as  soon  as  they  shall  be  satisfied  that  Henry  George  has  heard 
from  the  Creator  since  they  have.  To  so  ranch  as  states  as  an  economic  doctrine  that 
labor  is  the  only,  or  is  any  source  of  tftle,  they  will  ask  what  he  means  by  labor.  If 
by  labor  he  means  labor  performed,  then,  since  all  labor  performed  is  capital,  and  cap- 
ital will  always  buy  land,  it  is  true  that  labor  in  th  s  sense  deserves  land  and  always 
gets  it.    But  labor  unperformed— to  buy  land  with  that  is  the  rub  indeed! 


TITLE  PRECEDES  LABOR.  129 

when  and  where  land  was  owned  communally,  provided  that  the 
neglect  of  the  occupant  to  till,  improve,  fence,  occupy,  irrigate,  or 
mine  it,  should  be  deemed  by  the  law  to  be  an  abandonment,  by  the 
occupant,  of  his  possessory  title.  In  that  case,  the  new  appropri- 
ator  would  be  justified  m  regarding  it  as  unappropriated  land, 
and  could  enter  in  and  work  tlie  land.  In  this  case,  as  in  that  of 
the  previous  possessor,  his  new  title  would  begin  in  the  act  of 
appropriation  or  seizure.  Even  his  title  to  the  crops  and  products, 
produced  by  him  on  the  land,  w^ould  either  depend  on  tlie  validity 
of  his  act  of  appropriation,  or  upon  some  rule  of  law  whereby 
his  good  faith  concerning  the  land,  /.  e.,  his  belief  that  he  had  the 
right  to  appropriate  it,  was  made  a  ground  for  giving  him  title  to 
the  crops  produced  by  him  while  in  possession.  In  no  case,  we 
repeat,*  was  an  intentional  and  confessed  trespasser  permitted  to 
acquire  title  by  his  trespass,  whatever  might  be  the  value  of  the 
labor  he  had  blended  with  the  article  during  its  intentionally 
wrongful  possession  by  him. 

Nor  is  it  in  the  nature  of  any  man,  in  any  race,  to  hope  to  gain 
title  to  a  thing  he  does  not  own,  by  working  upon  it,  unless  it 
lies  open  to  appropriation.  In  this  case  he  first  appropriates  it, 
■afterwards  works  upon  it,  and  then  bases  his  title  on  his  act  of 
appropriation  and  not  on  his  labor.  The  phrases  of  the  early 
Roman  law  show  definitely  that  title  in  all  cases  arose  in  appi'o- 
priation.  All  dominion  or  title,  whether  to  wife,  children,  slaves, 
cattle,  or  land,  was  called  mawMS— hand  power,  or  the  grip,  grasp, 
or  grapple  by  which  the  owner  held  them.  The  act  of  acquisition 
by  which  his  title  vested  was  niancipium  or  the  "giving  them  into 
his  hand,"  a  word  which  included  the  idea  of  capture.  The  common 
form  of  closing  hands  in  ratifying  a  trade  is  believed  to  be  a  survival 
of  the  old  grapple  or  wrestle  in  which  the  victor  carried  off  his 
booty  as  prize.  Our  modern  ijurchaser  thus  succeeds  the  ancient 
victor,  and  our  modern  vendor  takes  the  place  of  the  vanquished. 
The  early  English  word  seizin,  meaning  the  occupancy  of  land 
under  a  claim  of  title,  as  distinguished  from  mere  possession,  dis- 
closes and  incloses  the  fact  that  all  titles  began  in  an  ancient 
seizure,  or  act  of  appropriation  of  title,  which  a  modern  seizure 
could  not  aspire  to  be  or  undo.  The  title  havmg  once  been  appro- 
priated by  seizure  could  not  be  the  subject  of  a  second  appropri- 
ation, but  all  subsequent  acts  of  acquisition  must  be  by  transfer 
from  the  original  appropriator.  t 

*  Vide  Aute, 
tThe  chief  function  of  laws  and  courts  is  to  protect  titles.    It  is  natural  tliat  jurists 


130  ECONOMIC  PIITLOSOPHT. 

52.  Private  Title  Is  Monopoly. — In  the  infancy  of  society- 
titles  were  at  first  almost  wholly  in  the  tribe,  the  individual  owning- 
only  his  food,  clothing,  and  shelter ;  then  in  the  state,  and  finally, 
in  a  mixed  degree,  in  the  state  and  the  individual.  The  title 
attached  either  to  persons,  chattels,  or  land.*  Tlie  economic  prin- 
ciple underlying  society  is  that  no  person  will  devote  much  labor 
upon  that  which  he  does  not  own,  and  will  not  work  except  for 
his  personal  and  private  benefit,  but  will  work  assiduously  and 
industriously  whei'e  the  full  return  for  his  labor  is  to  come  to 
himself.  In  the  degree,  therefore,  that  private  titles  are  multi- 
plied and  perfected,  protected  by  law  and  vindicated  by  courts, 
differentiated  in  kind,  extent,  and  duration,  and  adapted  to  the 
wants  of  a  loeople  in  complexity  of  quality  and  and  simplicity 
of  transfer,  in  like  degree  is  the  production  of  wealth  and 
increase  of  values  promoted.  Moreover,  as  all  private  title  is 
carved  out  of  what  was  previously  a  possession  in  common  by  the 
tribe  or  state,  and  as  this  process  of  carving  out  private  titles  is 
entered  upon  in  order  to  stimulate  activity  in  production  by 
substituting  the  strong  motive  of  private  interest  for  the  weak 
one  of  public  interest,  it  may  be  said  that  the  pi'ogress  of  industrial 
civilization  is  attended  by  a  continual  increase  in  the  number  and 
extent  of  the  private  monopolies  through  which  society  distrib- 
utes at  the  most  economic  rate  the  services  of  its  members  to 
each  other.  The  growth  of  productive  energy  is  proportionate 
to  the  growth  of  pi'ivate  property.  Private  property  is  in  all 
cases  the  conversion  into  a  personal  monopoly  of  something  pre- 
viously enjoyed  in  common.  As  private  proj^erty  advances,  in 
the  volume  and  quantity  lield  by  one  owner,  and  in  the  number 
of  owners,  society,  including  the  non-owners,  gets  constantly  a 
larger  measure  of  its  use  at  a  lower  cost.      Thus,   at  least  in 


should  have  the  clearest  views  of  the  origin  of  Title.  Blackstone  ("  Commentaries  on 
the  Laws  of  England,"  Book  ii.)  first  divides  Title,  as  to  its  vulnerability,  into  title  by 
possession,  by  right  of  possession,  and  by  right  of  property.  The  two  last  are  intensi" 
fications  of  the  first,  due  to  the  continuance  of  possession  in  a  maimer  indicating  a 
greater  or  less  acquiescence  by  others.  He  then  divides  it,  as  to  its  mode  of  acquisi- 
tion, into  title  by  descent  and  by  purchase,  both  of  which  point  back  to  possession  as 
their  origin.  Under  title  by  purchase  he  includes  the  several  modes  of  acquiring  by 
Escheat,  Occupancy,  Prescription,  Forfeiture,  and  Alienation,  which  latter  included 
alienation  by  will,  by  marriage,  by  gift,  or  by  deed.  Neither  in  English,  Roman,  Jew- 
ish, nor  any  other  law  was  it  recognized  that  title  to  property  could  be  acquired  by 
labor.  As  law  is  but  the  generalization  of  facts,  it  follows  from  this  unity  in  the  law 
that  in  fact  labor  never  gave  rise  to  a  title,  even  in  a  single  instance. 

*  "Outlinesof  Roman  Law,"  by  Morey,  p.  23. 


THE  STAT^J  AS  A   FORM  OF  MONOPOLY.  13 1 

certain  marked  instances,  an  increase  of  monopoly  in  title  works 
out  a  great  diffusion  of  socialism  in  use,  or  the  greater  the 
number  of  exclusive  ownerships  of  property  the  fewer  are 
they  who  are  excluded  from  its  enjoyment,  since  it  is  only  by 
having  an  exclusive  title  to  many  things  we  do  not  want,  that 
we  ai'e  furnished  with  the  means  wherewith  to  exchange  for 
the  many  other  things  we  do  want. 

In  the  communal  life  no  man's  time  and  labor  can  be  his  own 
or  subject  to  his  own  direction.  They  must  belong  to  the  com- 
mune. In  the  comijletely  communistic  life,  i.  e.,  where  the 
relation  extends  to  the  sexes,  even  his  wife  and  children  could 
not  be  his  own,  and  no  one  would  own  any  relatives,  since  he 
could  not  distinguish  his  father  from  his  uncle  or  his  sister  from 
his  most  distant  cousin.  Aristotle*  pointed  to  these  vagaries  in 
Plato's  Republic,  twenty  centuries  ago,  in  much  the  same  terms  as 
they  ai'e  exposed  to-day,  remarking,  ' '  For  there  are  two  thi:igs 
which  principally  inspire  mankind  with  care  and  affection,  viz., 
the  sense  of  what  is  one's  own,  and  exclusive  possession  ;  neither 
of  which  can  find  place  in  this  sort  of  community."  *  *  "  Pros- 
perity will  increase  as  each  person  labors  to  improve  his  own 
private  property." 

53.  The  State  as  a  Form  of  Monopoly. — A  monopoly  of 
the  privilege  or  power  to  allot  land,  decide  controversies,  punish 
crime,  levy  taxes,  and  make  laws  is  called  the  state  or  govern- 
ment. 

It  consists  of  a  mechanism  for  vesting  in  a  few  persons  certain 
general  rights  which  may  be  supposed  to  have  been  previously 
diffused  throughout  the  mass.  The  State  begins  therefore  as  a 
monopoly  (compared  with  anarchy)  of  the  privileges  of  com- 
pelling service,  holding  and  exchanging  property  and  making 
war,  which  is  the  primal  form  of  making  law.  Later  on  it 
extends  its  supervision  to  worship,  commerce,  education,  art  and 
industry.  In  theory,  in  a  republic  the  whole  voting  class  take 
part  in  the  creation  of  this  mechanism  for  making  laws.  Still  the 
mechanism  when  created  becomes,  for  the  time  being,  a  monop- 
oly of  the  law-making  and  law-e.xecuting  power,  to  the  direct 
exclusion  of  its  creators.  Tlie  title  by  which  each  officer  performs 
his  functions  is  a  monopoly  power,  created  by  law,  though  he 
may  be  said  morally  to  hold  the  power  in  trust,  that  he  will 
exercise  it  for  the  public  weal. 

*  "Politics  and  Economics,"  Bohn's  Edition,  p.  41. 


132  ECONOMIC  PHILOSOPnT. 

The  means  of  enforcing  this  moral  obligation  are,  however,  the 
very  imperfect  ones  of  withdrawing  the  monopoly  and  transfer- 
ring it  to  another,  and  still  anotlier.  But  obviously  mere  rotation, 
in  those  who  are  to  exercise  a  monopoly  of  power,  does  not  lessen 
the  exclusiveness  of  monopoly,  at  any  one  moment,  but  only  its 
duration  as  to  one  person. 

The  philosopher  Hobbes  was  among  the  first  to  advocate  the 
theory  that  states  originate  in  compact.  This  theory  became  very 
popular  among  advanced  thinkers  during  the  eighteenth  century 
and  finds  vigorous  expression  in  those  sentences  of  the  American 
Declaration  of  Independence  which  assert  that  ' '  all  men  are 
created  equal  and  are  endowed  by  their  Creator  with  certain 
inalienable  rights,  among  which  are  the  right  to  life,  liberty, 
and  the  pursuit  of  happiness  ;  that  to  secure  these  rights,  govern- 
ments are  instituted  among  men  ;  which  derive  their  just  powers 
from  the  consent  of  the  governed." 

In  practice,  governments  derive  their  actual  power  from  the 
ability  of  an  aggregated  constituency  to  suppi*ess  all  opposition. 
This  is  the  only  test  known  to  history  or  international  law.  Tlie 
consent  of  the  governed,  to  the  current  conduct  of  a  government, 
through  the  election  of  its  officers,  has  been  asked  only  in  Greece, 
Rome,  England,  America,  and  a  few  other  states  in  a  modified 
and  partial  degree.  Hence,  under  the  definition  prescribed  by 
the  Declaration  above  referred  to  most  actual  governments  would 
be  held  to  have  had  no  just  powers. 

The  political  scientist,  searching  for  the  origin  of  government, 
can  not  be  bound  by  the  language  of  a  document  designed  rather 
to  promote  a  revolution  than  to  preserve  a  calm  and  exact  equiv- 
alence between  the  figures  of  rhetoric  and  the  facts  of  history. 
Most  governments  have  originated,  historically,  in  usurpation  and 
seizure  of  powei'S,  by  men  who  had  the  sti-ength  and  will  to 
goveini,  who  had  in  view  the  profits,  plunder,  and  wealth  they 
could  amass  to  themselves  in  the  exercise  of  their  power,  and  who, 
in  all  tlie  earlier  history  of  mankind,  would  have  laughed  at  tlie 
notion  that  equity,  justice,  or  the  common  welfare  formed  any 
leading  featui'e  in  their  thoughts. 

As  property  begins  in  appropriation  of  men,  lands,  and  goods, 
so  do  governments  begin  in  the  appropriation  and  assumption  of 
power  over  men,  lands,  and  goods.  Hence,  title  to  property'  and 
to  government  are  in  their  origin  one  ;  both  are  involuntary, 
since  man  can  not  help  owning  and  governing,  or  being  owned 
and  governed.    Before  it  existed  among  men  it  had  begun  to 


HOW  LAWS  GROW.  \^^ 

exist  among  animals,  and  in  the  co-operative  class  of  animals  and 
insects,  the  ant,  bee,  beaver,  etc. ,  it  was  carried  to  great  perfec- 
tion by  instinct. 

Not  only  is  government  due  to  an  exercise  of  power  which 
compels  consent  on  the  part  of  the  governed,  but  each  advance  in 
government  is  due  to  the  innovations  introduced  by  those  who 
for  the  first  time  usurp  unwonted  i^owers.  In  this  way  particu- 
lar portions  of  government  grow  by  usurpation,  under  strong 
men,  and  are  eliminated  by  timidity,  while  filled  by  weak  men. 

Because  Chief  Justice  Marshall  was  a  strong  man,  individually, 
the  Supreme  Court  of  the  United  States  obtained  the  unforeseen 
power  to  adjudge  an  Act  of  Congress  unconstitutional.  Because 
President  Jackson  was  a  strong  Executive,  Congress  lost,  through 
his  veto,  the  power  to  incorporate  a  bank  of  the  United  States. 
Because  George  III.  was  obstinate,  without  being  strong,  and  so 
lost  the  American  colonies  to  Great  Britain,  the  ministry  in  En- 
gland ceased  to  be  the  servants  of  the  Crown,  and  became  the  ser- 
vants of  the  House  of  Commons  and  masters  of  the  Crown. 
As  governments  ai'e  daily  molded  into  new  forms  by  the 
power  and  genius  of  the  men  who  administer  them,  so  in  all 
times  title  to  property  has  been  in  a  degree  the  plastic  expression 
of  the  dominant  will  of  the  class  who  succeeded  in  appropi-iating, 
developing,  and  creating  the  property.  Before  all  statutes  come 
the  judicial  decisions  in  similar  cases,  of  which  the  statutes  are 
but  the  condensed  result.  Before  the  judicial  decision,  there 
must  have  been  a  case  to  decide.  Before  there  could  be  a  case  to 
decide,  some  one  man  must  have  usurped  a  right  with  which  an- 
other was  unfamiliar,  pursuant  to  an  interest,  or  appropriation  of 
values,  which  the  other  opposed.  Hence,  law  carries  us  back  to 
usurpation  and  contest,  rather  than  to  compact,  as  its  origin.  And 
when  the  individual  title  has  been  vindicated,  by  contest  in  court, 
each  ramification  of  its  development  into  many  estates,  modes  of 
transmission,  capacities  for  concealment  and  means  of  subdivided 
enjoyment  becomes  also  the^subject  of  enactment  into  statutes 
only  after  their  nature  has  frequently  been  passed  upon  by  courts, 
in  consequence  of  a  judicial  question  arising  between  an  aggres- 
sive innovator,  or  usurper,  or  appropriator,  on  the  one  hand,  and 
a  conservative  defender  on  the  other. 

The  law  of  titles  to  property,  thei'efore,  has  risen  into  compact 
systems  of  jurisprudence  as  slowly  and  involuntarily  as  coral 
reefs  have  risen  in  the  ocean.  As  each  atom  of  lime  in  the  reef 
is  the  skeleton  of  a  dead  in.sect,  the  residuum  of  his  effort  to  sur- 


184  ECONOMIC  PHILOSOPHY. 

Vive  as  permanently  as  possible  by  making  his  nutrition  exceed 
liis  waste,  so  in  the  law  of  titles,  every  principle  evolved  has 
been  the  contribution  of  a  successful  litigant,  grappling  with  a 
defeated  one,  each  animated  by  the  desire  to  maintain  an  old 
right  or  create  a  new  one,  because  behind  the  supposed  right  in 
either  case  lay  a  profit,  or  at  least  an  excess  of  income  over  ex- 
penditure, which  could  only  be  obtained  either  by  an  act  of  ap- 
propriation or  of  resistance. 

In  this  way  the  sons  and  servants  of  the  household  first  ex- 
pelled sti'angers  from  the  inheritance  and  enjoj^ed  it  in  common. 
Then  the  sons  and  daughters  drove  out  the  servants,  and  then  in 
some  instances  the  sons  drove  out  the  daughters,  and  the  eldest 
son  drove  out  the  younger. 

Thus  the  power  to  devise  by  will,  and  to  convey  by  deed,  grew 
into  law.  The  power  to  mortgage,  and  to  sell  under  mortgage, 
and  to  restrain  from  sale,  are  later  powers,  which  were  supposed 
to  have  been  evolved  within  the  period  of  the  Roman  law,  until 
cuneiform  inscriptions  bring  then  to  light  in  the  ruins  of  primeval 
Asia.  In  every  stage  of  this  evolution  the  real  goal  and  motive 
in  the  mind  of  each  litigant  was  one  of  private  profit.  In  the 
earliest  stages  of  society  the  same  motive  animated  the  judge.  To 
this  day  in  Asiatic  and  African  countries  the  client  expects  to  in- 
fluence the  court  by  presents.  At  length  as  the  judge  came  to 
achieve  a  greater  unity  of  interest  with  society,  he  came  to  see 
his  private  interest  in  deciding  questions  in  the  manner  most 
profitable  to  the  general  public,  which  is  the  ultimate  definition  of 
impartiality  and  equity.  Thus,  out  of  the  motive  i^rofit,  have 
been  evolved  law,  justice,  and  equity. 

Each  advance,  toward  a  refined  system  of  jurisprudence,  consists 
in  a  clearer  vindication  of  private  title  in  that  which  had  an- 
ciently been  common  right,  accompanied  by  a  larger  power  of  use 
in  exchange  on  the  part  of  the  owner,  attended  by  a  more  equal 
ditfusion  of  the  utilities  resulting  from  the  use  among  mankind. 

Thus  land,  held  communally  by  the  tribe,  can  only  be  used  for 
limiting  oi'  fishing,  and  can  not  be  tilled  until  iirivate  title  is 
acknowledged.  The  first  to  fence  and  till  it  is  a  usurper  and  an 
encroacher ;  so  is  the  first  to  defend  it  as  an  inheritance,  or  as  a 
grant,  or  to  hold  it  in  partnership  or  for  a  debt.  But,  in  the  sum 
of  these  usurpations  and  encroachments,  lies  the  evolution  of  title 
to  land  into  that  stage  wherein  the  secure  possession  of  it  and  its 
fruits  can  be  transferred  in  fee,  for  life,  for  years,  at  will  or  for 
an  hour,  by  deed  or  by  devise,  to  one  or  to  many,  or  to  a  corpo- 


HOW  RIGHTS  ARISE.  135 

rate  one  composed  of  many,  in  absolute  right  of  enjoyment  or  in 
trust  or  to  secure  a  debt,  in  j)erpetuity  to  a  charity,  or  in  expec- 
tancy to  some  person  now  unborn. 

With  each  increase  in  this  security  of  title,  there  is  an  increased 
power  of  deriving  profit  from  its  use,  which  is  itself  the  measure  of 
the  increased  degree  in  which  it  serves  the  wants  of  society  at  large. 

Titles  alone  render  industry  possible  by  rendering  the  future 
foi'eseeable.  When  they  who  fought  in  the  wars  of  the  Roses  on 
either  side  could  convey  their  lands  securely  to  others,  in  trust, 
and  thereby  exempt  them  from  confiscation  for  their  treason,  a 
crime  equally  chargeable  on  whichever  side  they  fought,  or  if 
they  refused  to  fight  on  either,  the  tenant  holding  a  lease  from 
their  grantee  could  till  the  lands  of  a  traitor  in  perfect  security  as 
to  his  crops,  while  the  soldier  of  fortune  went  on  fighting  in 
equal  security  as  to  his  title.  Thus  a  secure  division  of  labor  was 
effected,  whereby  the  one  aided  in  perfecting  the  stability  of  the 
state,  while  the  other  aided  in  maintaining  the  supply  of  food. 

The  first  salvor,  who  tied  the  vessel  he  had  saved  from  wreck  to 
his  own  and  towed  her  into  port,  and  then  demanded  half  her 
value  for  his  services,  convei'ted  into  private  right  a  service 
which,  if  rendered  at  all,  must  have  been  previously  I'endered  for 
the  public  weal.  But  when  the  courts  gave  the  suitor  his  claim 
the  public  weal  was  far  better  served  than  by  denying  it,  since 
twenty  vessels  would  now  be  saved  for  private  profit  where  one 
might  have  been  saved  from  generous  motives. 

The  first  carrier  who  exacted  a  fare  for  carrying  a  passenger 
over  a  public  highway,  where,  so  far  as  travelers  had  previously 
been  carried  at  all,  they  had  been  carried  gratuitously,  was  as 
truly  a  usurper  and  monopolist  as  the  fii'st  man  who  fenced  land 
previously  held  in  common.  But  when  his  demand  was  sus- 
tained, the  transportation  of  passengers  and  freiglit  made  its  first 
step  toward  the  modern  railway  system.  The  first  man  who  took 
his  neighbor  by  the  collar  and  led  him  before  a  magistx'ate,  be- 
cause he  did  not  fulfill  a  promise,  was  doubtless  denounced  by 
the  promiser  as  a  usurper.  But  when  the  court  assumed  jurisdic- 
tion and  sanctioned  the  act  there  was  a  beginning  of  commercial 
law  and  of  commercial  honor. 

54.  Title,  the  Source  of  Exchange,  and  of  Division  ot' 
Labor. —The  principle  in  human  nature,  which  compels  the 
creation  of  tlie  monoijoly  known  as  The  State,  is  the  .same  as  that 
which  compels  private  title  to  land  and  to  all  other  forms  of  proj)- 
erty ,  viz. ,  that  whatever,  to  use  a  homely  phrase,  is  every  body's 


136  ECOyOMW  PHlLO^iOPHY. 

business  is  nobody's  business.  To  have  the  work  in  any  depart- 
ment of  effort  well  done,  those  who  do  it  must  have  a  reward 
proportionate  to  the  value  of  their  work  to  society,  and  a  training 
and  capacity  adapted  to  the  particular  kind  of  work.  Govern- 
ment is  one  of  the  first  steps  toward,  what  Herbert  Spencer  and 
the  sociologists  have  called  the  specialization  of  functions,  and 
what  Adam  Smith  and  the  economists  have  styled  the  Division 
of  Labor.  As  men  can  only  make  good  watches  who  are  i)rofi- 
cient  in  the  "art  and  mystery"  of  watchmaking,  so  skill  in 
framing  and  administering  the  laws  and  economies  of  a  nation 
can  only  be  attained  by  men  skilled  in  the  knowledge  of  those 
laws  and  economies.  It  would  \)%  as  great  a  waste  of  time  and 
diversion  of  effort,  on  the  part  of  most  farmers,  miners  or  fisher- 
men, for  them  to  devote  the  degree  of  study  and  investigation  to 
laws  and  economics  which  would  be  essential  to  make  them  veiy 
poor  judges,  lawyers,  or  legislators,  as  it  would  be  on  the  part  of 
a  legislator  to  attempt  to  become  an  expert  fisherman.  But  the 
power  to  administer  government,  wisely  and  well,  is  not  wholly 
an  affair  of  accomplishments,  or  which  can  be  learned  in  schools. 
Even  if  it  were,  the  jjower  and  address  essential  to  get  office  under 
any  system  of  government,  are  qualities  without  which  the  ability 
to  govern,  when  in  office,  would  be  of  no  value.  These  powers  to 
get  office  often  arise  in  the  most  fortuitous  and  accidental  way, 
out  of  qualities  of  character  which  are  by  no  means  identical 
with  those  which  would  insure  a  proper  performance  of  the 
duties  of  office.  Hence,  while  the  state  theoretically  assumes  that 
its  oificers  are  selected  foi'  their  higher  skill  in  administering  offi- 
cial duties,  they  are  in  fact  often  selected  through  their  higher 
skill  in  manipulating  the  machinery  of  selection,  a  species  of  skill 
which,  ill  cei'tain  instances,  may  even  unfit  them  for  a  wise  iier- 
formance  of  the  duties  of  office,  as  where  the  niachineiy  of  selec- 
tion may  be  influenced  by  bribery  and  the  duties  of  the  office 
may  be  to  punish  bribery  and  the  like ;  still,  in  a  crude  way,  the 
state  is  a  mechanism  for  vesting  in  a  few  specialized  and  skilled 
persons,  the  business  of  making  and  administering  tlie  laws,  and 
it  works  by  jnaking  the  emoluments  and  honors  of  office  so  profit- 
able that  it  becomes  a  matter  of  private  interest  to  make  a  profes- 
sion and  business  of  attending  to  matters  of  public  interest.  In 
so  far,  therefore,  as  the  state  is  useful,  it  becomes  so  by  the  fact 
tliat  it  usurps,  appropriates,  and  seizes,  or  society  tacitly  grants  to 
it  a  monopoly,  of  judg'ing  concerning  jural,  economic  and  social 
questions,  or  of  the  functions  of  making,  executing,  and  construing 


FREEDOM  GliOWS  WITH  PRIVATE  RIGHT.  137 

the  laws.  Government  is  a  monopoly  of  the  power  of  decreeing 
and  executing-  justice.  Historically,  the  monopoly  of  power  comes 
first,  and  the  desire  to  do  justice,  later.  Government,  in  its  bar- 
bai'ous  beginnings  combines  the  maximum  of  force  with  the 
minimum  of  equity.  Theoretically,  but  for  government,  all  men 
would  have  an  equal  say  as  to  what  is  right.  Practically,  very 
few  men  would  think  of  right,  as  power  would  be  the  only  thing 
desu'ed.  So,  before  private  property  in  land  is  established,  all 
men  have  nominally  an  equal  right  to  the  use  and  product  of  all 
land.  But  the  right  of  all,  to  use  for  hunting,  precludes  the  right 
of  any,  to  use  for  farming  and  gardening,  and  so  pre- 
vents each  man  from  producing  as  much  as  he  immediately 
w^ants,  thus  chaining  all  down  to  the  severest  penury.  Private 
pi'operty  in  land  steps  in,  to  make  it  the  interest  of  each  to  pro- 
duce what  others  want,  by  enabling  him  through  his  i^rivate 
title  to  that  which  he  produces,  and  through  the  better  mode 
of  tillage  which  comes  only  with  exclusive  title  to  the  soil,  to  buy 
what  another  has  produced.  Thus  private  property  in  land  is 
essentia]  to  exchange,  because  that  which  all  own  no  one  can 
sell,  and  land  owned  by  all  does  not  admit  of  those  permanent 
crops,  orchards,  improvements,  etc.,  which  extend  over  years. 
Under  a  state  ownership,  or  tribal  ownership  of  land,  there  must 
necessarily  be  /  a  state,  or  tribal  title,  to  all  its  products,  and  to 
the  labor  itself  which  produces  the  products,  and  hence  a  right 
in  each  to  enjoy  them,  bvit  in  none  to  exchange  them.  What- 
ever each  gets  he  must  get  by  allotment.  Hence  the  monopoly 
of  the  land,  by  giving  to  individuals  a  private  title,  is  essential 
to  each  individual  having  a  title  to  his  own  labor,  and  to  that 
wide  diffusion  of  a  great  divei'sity  of  products  which  is  brought 
about  through  excliange,  commerce,  trade,  buying  and  selling. 
While  the  monopoly  seems  to  build  up  the  individual  at  the  ex- 
pense of  the  public,  it  really  is  the  first  step  in  freeing  the  indi- 
vidual to  serve  himself  and  inciting  him  to  serve  the  public,  by 
making  it  a  source  of  profit  and  power  to  liiin,  to  produce  on 
his  land  a  vast  excess  of  commodities  of  which  he  has  no  need, 
because  he  knows  that  those  commodities,  being  his  own,  can 
be  freely  exchanged  for  those  he  needs,  thus  in  the  end  se- 
curing to  him  a  far  greater  variety  and  diversity  of  connuodi- 
ties  for  consumption,  than  he  could  in  person  jn-oduce.  Whatever 
advantages  to  society  grow  out  of  commerce  in  commodities  and 
division  of  labor  are  indii'ectly  due  to  that  private  title  in  com- 
modities, without  which  no  such  facts  as  commerce,  or  division 
of  labor  exist. 


138  ECONOMIC  PHILOSOPHY. 

Private  title  in  commodities  is  inseparable  from  private  title  in 
the  instruments  by  which  commodities  are  produced,  i.  e.,  the 
land,  labor,  and  other  means  of  their  production.  If  the  latter  are 
o^vned  in  common  by  all,  the  former  must  be  allotted  so  that  each 
shall  get  a  share  proportionate  either  to  his  needs,  his  desert,  or 
his  importunity  and  troublesomeness.  This,  as  we  have  seen,  is 
done  in  all  socialistic  and  tribal  stages  of  growth.  But  in  this 
condition  of  thmgs  the  collective  state,  or  its  chief,  is  the  only  ex- 
changer, and  it  can  only  exchange  with  somebody  outside  its 
frontiers.  Members  of  a  state,  which  provides  for  all  its  members 
out  of  a  public  crib,  have  no  motive  to  exchange  and  no  private 
title  to  commodities.  A  social,  tribal,  or  communal  ownership  in 
land,  by  involving  logically  a  like  ownership  of  labor,  goods,  and 
products,  perpetuates  poverty,  slavery,  and  indolence,  by  paralyz- 
ing commerce. 

55.  Titles  Becoming?  Private. — The  first  essential  con- 
dition to  commerce  and  division  of  labor  being  private  ownership 
of  land  and  goods,  it  follows  that  the  growth  of  a  country  in 
wealth,  production,  and  civilization  will  depend  largely  on  the 
degree  in  which  it  asserts  this  principle  of  private  ownership,  i.  e., 
the  promptness  with  which  it  converts  its  lands  from  tribal,  com- 
munal, or  national  to  individual  ownership.* 


*  It  seems  to  have  been  a  notion  generally  entertained  in  the  ancient  world  that 
every  citizen  of  a  country  should  be  a  landholder  ;  and  that  the  territory  of  a  state,  so 
far  as  it  was  not  left  uuinclosed  or  reserved  for  public  purposes,  should  be  divided  in 
equal  portions  among  the  citizens.  Such  a  distribution  of  public  land  seems  to  have 
been  acted  upon  as  a  recognized  principle  from  the  earliest  period  to  which  existing 
historical  records  extend.  (Encyclop.  Brit. — Art.  Agrarian  Laws.)  Hence  the  diAision 
of  Canaan  into  private  allotments  to  every  Hebrew  (Numb,  xxxiii.  54),  naming  every 
allottee  (Numb,  xsxiv.  18).  The  year  of  jubilee  did  not  return  these  lands  thus  privately 
allotted  into  hodge  jjodge  or  communal  ownership,  but  only  restored  them  from 
grantees  and  mortgagees  to  their  origiDal  owners  or  their  heirs  (Numb.  xxv.  10).  In  the 
republics  of  ancient  Greece  and  in  the  Grecian  colonies  a  simil  ir  system  of  division 
prevailed  (Thucyd.,  v.  4  ;  Herod.,  iv.  159).  Lycurgus  is  represented  by  Plutarch 
(Lycur.)  as  redividing  the  whole  territory  of  Laconia  into  39,000  parcels,  of  which  9,000 
were  assigned  in  equal  lots  to  as  many  Spartan  families,  and  30,000  also  in  equal  lots  to 
their  free  subjects  (ib.).  But  this  equal  division  of  land  between  private  owners  did  not 
imply  among  the  Greeks  that  the  equality  of  ownership  should  be  forcibly  maintained. 

The  enactments  among  the  Romans  for  dividing  the  public  domain  (ager  publicus) 
among  private  holders  were  called  Agrarian  laws.  For  a  long  time  they  were  misun- 
derstood to  mean  enactments  for  prohibiting  Roman  citizens  from  owning  lands  above 
a  fixed  amount,  and  as  authorizing  the  division  among  the  poorer  classes  of  the  estates 
of  private  individuals  when  these  exceeded  the  prescribed  limit,  thus  legalizing  a  sys- 
tem of  plunder  which  would  have  been  subversive  of  all  social  order.  No  such  laws 
were  enacted  in  Rome  or  any  other  state.  The  Agrarian  laws  merely  provided  that 
where  citizens  had  appropriated  more  of  the  public  domain  than  they  were  by  law  al. 
lowed  to  do  they  should  be  req,uired  to  restore,  but  had  no  relation  to  lands  acquired  by 


NBW  MODES  OF  PRIVATE  TITLE.  139 

The  distribution  of  the  land  of  the  United  States,  from  the  form 
of  communal  ownership  in  which  it  was  held  by  the  Indian 
tribes,  and  in  which  it  was  first  feebly  attempted  to  be  held  by 
the  settlers  at  New  Haven,  Jamestown,  and  Plymouth,  into  pi-i- 
vate  ownership,  was  a  substitution  of  self-interest  in  lieu  of  social 
interest  as  the  motive  to  industry.  The  intrusting  to  private 
railway  corporations,  of  the  business  of  giving  cheap  transporta- 
tion to  markets,  came  to  be  a  means  of  effecting  a  most  important 
public  function  entirely  at  private  risk  as  to  loss,  and  at  private 
cost  as  to  capital.  The  evolution  of  the  land  system  and  the  rail- 
way system  of  the  United  States  were  thus  the  concurrent  work- 
ing of  the  principle  that  private  title,  or  the  profits  of  monopoly, 
form  a  far  stronger  inducement  than  public  spirit,  to  the  expendi- 
ture of  inventive  force,  and  of  capital,  in  ways  that  are  socialistic 
in  their  results.  Nothing  serves  society  at  large  more  usefully 
than  steamers,  railways,  printing  presses,  telegraph  facilities, 
power  looms,  spinning  jennies,  the  manufacture  of  India  rubber, 
photography  and  the  like.  But  to  perfect  each  of  these  in  the 
breadth  of  its  social  use,  i.  e.,  in  the  number  of  persons  who 
might  enjoy  its  use,  some  new  form  of  aggression  on  private 
right  was  invented  and  sanctioned  by  law  and  some  new  mode 
of  private  title  was  created.  For  railways,  their  projectors  w^ere 
allowed  to  tafce  lands  for  a  way  over  which  they  alone  could 
draw  their  carriages.  Previous  ways  had  been  open  to  the  car- 
riages of  all.  For  the  highest  utility  of  printing  presses  men 
were  denied  the  right  to  manufacture  copies,  indefinitely,  of  any 
book  they  might  possess.    For,  when  all  books  were  written,  every 


purchase,  or  otherwise  than  by  fencing  in,  unlawfully,  portions  of  the  public  domain. 
(Encyclop ,  Brit.— Art.  Agrarian  Laws.)  This  was  demonstrati^d  by  Prof.  Heyne  of  Got- 
tingen  in  1793,  by  Heereu  and  Hegewisch  and  by  Niebuhr  (ib.). 

In  its  article  on  commons  the  Encyclopedia  Brittannica  says  :  "  It  is  a  well-known 
result  of  the  application  of  the  historical  method  to  laws  and  institutions  that  it  has 
reversed  many  of  our  leading  conceptions  of  the  natural  or  original  forms  of  property. 
That  the  primitive  form  of  property  in  land  was  not  severalty  but  commonalty,  that 
land  was  held  not  by  individuals  but  hy  communities,  and  that  individual  ownership 
was  slowly  evolved  out  of  communal  ownership,  are  propositions  as  nearly  as  possible 
the  opposite  of  our  a  priori  ideas  on  the  subject.  The  existence  of  rights  of  common 
is  one  of  the  traces  of  tlie  ancient  system  still  remaining  in  our  law,  but  its  real  signifi- 
cance was  for  a  long  time  obscured  by  the  feudal  theories  on  which  the  luw  of  real 
property  is  based.  Among  the  English,  as  among  other  Teutonic  nations,  the  system  of 
landholding  by  village  communities  prevailed.  .  .  The  increase  of  the  population  and 
the  growing  need  for  food-producing  land  made  it  the  interest  of  both  the  lord  and  of 
the  public  also  that  much  of  the  common  ground  snould  be  brought  under  cultivation. 
Down  to  the  year  1800  this  was  effected  by  private  inclosure  acts,  of  which  th  re  were 
as  many  as  1000  or  1700. 


140  ECONOMIC  PHILOSOPHY. 

scribe  was  free  to  copy  any  book.  With  printing  came  the  new 
form  of  monopoly  known  as  copyright.  And  this  monopoly,  in 
the  profit  of  multiplying  copies  of  a  book,  effects  a  far  greater 
mult; plication  of  copies  than  would  be  effected  without  it. 

Land  being  the  primary  implement,  agent,  and  condition  of  all 
production  of  commodities,  the  fii'st  economic  requisite  to  the 
rapid  and  cheap  production  of  them  all,  is  that  title  to  land  shall 
be  easily  obtai:iable,  and  when  obtained,  shall  be  easily  defended. 
When,  to  these,  are  added  ready  access  to  the  consumers  of  land 
products,  and  a  free  influx  of  all  the  industries  which  can  use  the 
land  most  productively  for  mankind,  all  the  conditions  of  growth 
in  wealth  are  assured.  The  monopoly  of  land  by  great  families 
in  England  causes  the  government  there  to  be  aristocratic.  The 
early  diffusion  of  land  in  America  caused  the  republic. 

50.  The  American  Land  System. — A  few  colonists  came 
to  America  for  opinion's  sake,  and  a  few  for  crime.  The  great 
mass  came  hither  for  profit,  to  ]>etter  their  pecuniary  condition. 
Had  the  governments,  which  first  obtained  footing  in  America, 
limited  the  land  system  by  making  large  grants  to  a  few  propri- 
etaries, and  exacting  that  these  should  grant  only  leases  to  ten- 
ants; and  had  they,  without  jealousy,  created  the  large  proprietors 
into  a  peerage,  with  like  powers  to  that  of  England,  including 
seats  in  the  British  House  of  Lords,  while  the  colonial  delegates 
should  have  like  seats  in  the  Commons,  it  is  difficult  to  prove  that' 
the  Anglo-Saxon  race  might  not  have  continued  to  this  day  to 
be  one  empire.  A  difference  in  the  allotment  of  land  left  the 
colonies  without  the  materials  for  representation  in  the  House  of 
Lords.  The  creation  of  colonial  legislatures  pi'ovided  them  with 
a  satisfactory  substitute  for  the  Commons.  Hence  the  colonies 
fell  away  from  Great  Britain,  because  not  allowed  a  represen- 
tation they  had  never  desired.  During  the  colonial  period  the 
increase  in  population  in  the  territory  of  what  are  now  the 
United  States  was  slow.  The  entire  population  in  1680,  sixty 
years  after  the  landing  at  Plymouth  and  seventy-ttn-ee  years 
after  the  settlement  of  Virginia,  was  only  80,000  ;  in  1701  it  had 
grown  to  260,000  ;  in  1753  to  1,051,000  ;  in  1775  an  official  esti- 
mate made  it  2,383,000;  and  in  the  first  census  of  1790  it  was  as 
follows  : 

Virginia  .  .  . 747,610  Connecticut 237,916 

Massachusetts 475,327  New  Jer.sey 184,139 

Pennsylvania 434,373  New  Hampshire 141,885 

North  Carolina 393,951  Georgia 83,548 


ALLOTTING  THE  LAND.  141 

New  York 340,120  Rhode  Island 68,825 

Maryland 319,728  Delaware 59,094 

South  Carolina  ....  249,073 

During  the  first  ten  yeai'S  of  independence  immigrants  came  to 
the  number  of  only  4,000  yearly,  and  in  1794,  the  year  of  the 
French  Revolution,  to  6,000. 

The  cession  of  large  portions  of  land  to  private  aristocratic  pro- 
prietors, and  the  restrictions  forbidding  the  colonists  to  manufac- 
ture machinery,  cloths,  iron,  steel,  etc.,  conti'ibuted,  with  the 
insecurity  attending  pioneer  life  among  savages,  to  check  immi- 
gration. Some  of  the  private  proprietors,  including  at  least  those 
in  New  York,  intended  to  follow  the  English  or  feudal  precedent 
of  renting  their  lands  to  tenants,  retaining  forever  the  fee.  Such 
a  system,  logically  carried  out,  would  have  resulted  in  a  landed 
nobility  and  House  of  Lords  like  those  of  Great  Britain. 

With  the  establishment  of  national  independence  in  1783,*  the 
legal  theory  became,  in  the  United  States,  that  all  titles  to  land 
ai'e  derived  from  the  government  of  the  United  States,  as  in  En- 
gland it  had  been  that  all  lands  are  held  immediately  or  ulti- 
mately of  the  king.  Within  the  original  States,  only  the  lands 
remaining  unappropriated,  and  those  belonging  to  Tory  owners, 
and  passing  by  forfeiture  to  the  government,  ever  actually  vested 
in  the  United  States.  By  the  acquisition  of  the  Northwest  Terri- 
tory and  Louisiana  it  devolved  on  the  government  to  become  the 
distributor,  to  private  owners,  of  an  area  east  of  the  Rocky  Moun- 
tains, as  large  as  China,  and  half  as  large  as  Europe.  The  present 
total  area  of  the  United  States,  including  Alaska,  is  3,603,884  En- 
glish square  miles,  exclusive  of  the  lakes  and  other  waters,  while 
that  of  Europe  is  3,828,328  square  miles. 

The  policy  adopted  by  the  United  States  was  that  of  giving  the 
lands  to  actual  settlers,  at  a  price  per  acre  barely  sufficient  to  pay 
the  cost  of  survey  and  of  the  land  department,  surveying  the 
lands  on  lines  corresponding  to  the  four  cardinal  points  of  the 
compass,  so  that  the  exact  location  of  all  lands  for  transfer,  occu- 
pancy, or  search  of  title  could  be  expressed  by  a  brief  formula. 
This  was  done  by  running  a  meridian  line  north  and  south 
through  some  arbitrary  point  selected  for  convenience,  then  a 
base  line  east  and  west  through  the  .same  point.  One  point  of  this 
kind  exists  in  Ohio,  and  the  meridian  line  which  runs  through  it 
is  called  the  first  principal  meridian,  or  in  the  language  of  con- 

•  Supreme  Ct,  Johnson  vs.  Mclntish,  8  Wheat,  543  1 3  Op.  Alt.  Gen.  333. 


142 


ECONOMIC  PHILOSOPHY 


veyancing  1st  P.  M.  The  second  principal  meridian  line  is  in  In- 
diana ;  the  third  makes  its  point  of  intersection  with  the  base  line 
at  Vandalia,  Illinois,  the  fourth  in  Western  Iowa,  etc.  Lines 
drawn  parallel  to  the  meridian  line  at  intervals  of  six  miles, 
whether  eastward  or  westward,  are  called  ranges,  those  to  the 
eastward  being  range  1,  2,  3,  etc.,  east,  and  those  to  the  Avest- 
ward,  range  1,  2,  3,  etc.,  west  of  the  meridian.  Lines  drawn  par- 
allel with  the  base  line,  whether  to  the  northward  or  southward 
of  it,  become  township  lines,  since  the  intersection  of  each  with 
the  meridian  lines  marks  a  plot  six  miles  square,  which  is  the 
township  of  the  land  surveyors.  In  fact,  also,  the  organization  of 
the  peo])le  into  townships  usually  follows  these  lines.  The 
location  of  the  township,  east  or  west  of  the  meridian,  is  desig- 
nated by  the  range  number,  and  its  location  north  or  south  of  the 
base  line  by  the  township  number.  Thus  T.  38,  N.  R.  14  E.  of  3 
P.  M.  in  Cook  County,  111.,  designates  a  township,  being  the 
38th  to  the  northward  of  the  base  line,  in  the  range  (of  town- 
ships) which  are  on  the  meridian  line  the  14tli  eastward  from  the 
3d  principal  meridian.  Each  township  is  divided  by  similar 
parallel  lines  into  36  sections. 
The  sections  are  numbered  as  follows  : 


6 

7 
18 

5 
8 
17 

4 
9 
16 

3 

2 

1 

10 

11 

12 

15 

14 

13 

19 

20 

21 

22 

23 

24 

30 

29 

28 

27 

2Q 

25 

31 

32 

33 

34 

35 

36 

The  sections  proceed  by  halving  and  quartering,  or  otherwise, 
until  the  definite  lot,  however  small,  is  reached.  Property  worth 
millions  may  be  thus  described  as  lot  44  and  Ni  of  lot  43,  in 
block  2,  Lockwood's  subdivision  of  south  half  of  W.  i  of  N.  E.  i 
of  N.  W.  i  of  section  3.  T.  38  N.  R.  14  E.  of  3  P.  M.  The  start- 
ing point  of  this  description  is  at  Vandalia,  yet  the  land  which 
it  accurately  describes  is  near  Chicago. 

The  simplicity  and  celerity  with  which  conveyances  can  be 
executed  and  recorded,  and  titles  searched,  and  certified,  is  also  an 
element  in  bringing  about  the  easy  transferability  of  land.     The 


ENSUm^^G  TITLES.  143 

several  States,  at  an  early  date,  adopted  the  system  of  recording  in- 
struments affecting  real  property,  and  provided  tliat  subsequently 
executed  instruments,  conveying  intei'ests  in  lands  to  i)urchasers 
for  value,  in  good  faith,  and  without  notice,  to  them,  of  the  exis- 
tence of  any  prior,  unrecorded,  conveyance,  will  have  precedence 
of  the  prior,  unrecorded,  conveyance.  This  enables  a  purchaser  of 
land,  generally,  to  learn  by  a  search  in  one  or  two  offices  whether 
his  title  is  valid.  Judgments  of  the  federal  courts  become  liens, 
within  the  district  of  their  jurisdiction,  without  record  in  any  State 
office.  The  facts  of  heirship,  deaths,  and  marriages  must  also  be 
traced  outside  the  record.  These  provisions  were  a  vast  im- 
provement on  the  English  system,  which  lacked  the  jirovision 
making  conveyances,  in  good  faith,  valid  in  the  order  of  prioi-ity 
of  record.  Hence,  in  England,  search  was  necessary  in  every 
place  where  an  instrument  affecting  title  might  happen  to  be.  In 
some  cases,  of  property  of  considerable  value,  the  legal  charges, 
for  making  the  transfer  and  becoming  satisfied  of  the  validity  of 
the  title,  exceeded  the  whole  purchase  money  paid  for  tlie  land. 

Since  the  system  of  registration  of  deeds  was  perfected  in  America 
a  still  more  perfect  system,  known  as  the  Registration  of  Titles, 
has  grown  up  and  is  practiced  in  all  the  colonies  of  Australasia, 
and,  it  is  said,  in  several  smaller  states  of  Europe.  This  consists 
in  vesting  the  recording  officer  with  power  to  make  the  title  per- 
fect in  the  grantee  by  simply  recording  the  conveyance  to  him, 
as  the  title  to  a  note  is  good,  in  the  hands  of  a  bona  fide  endorsee 
for  value,  even  though  there  may  have  been  a  fraud  or  theft  in 
the  previous  course  of  transfer.  Such  a  system  makes  land  as 
negotiable  as  commercial  paj^er. 

The  Register  is  required  to  use  cai'e  in  recording  the  instru- 
ment, both  in  searching  the  previovis  conveyances  to  accertain  in 
whom  the  present  title  is,  and  in  properly  identifying  any  new 
grantor  as  being  the  same  person  as  the  last  grantee.  An  insur- 
ance fund  is  also  provided,  by  requiring  that  a  small  fraction 
of  one  per  cent,  on  the  value  of  the  land,  should  be  paid  as  a 
transfer  and  recording  fee,  and  out  of  the  fees  thus  received 
a  reserve  is  held  for  the  purpose  of  indemnifying  any  owner  who 
may  lose  his  title  by  this  system.  Very  few  losses,  in  all  not 
exceeding  £8,000,  have  been  paid  out  of  this  fund,  whicli  now 
amounts  to  about  £158,000,  and  in  three  of  the  oldest  colonies, 
viz.,  New  South  Wales,  Victoria,  and  Tasmania,  the  fund  is  still 
intact. 

The  United   States   have  not   thus  far  limited  the  quantity  of 


U4  ECONOMIC  PHILOSOPHY. 

land  a  single  purchaser  could  monopolize,  nor  prohibited  the  free 
purchase  of  lands  by  citizens  of  foreign  countries.  Such,  how- 
ever, is  the  objection  felt  in  many  quarters  to  the  extensive 
purchase  of  lands  by  foreign  capitalists,  which  have,  in  a 
few  instances,  been  made,  that  legislation  to  prevent  it  in  future 
is  probable. 

During  the  reign  of  George  II.,  the  British  Parliament  provided 
that  the  writ  of  execution  for  debt,  to  be  issued  in  the  Colo- 
nial Courts  of  America,  should  call  for  the  sale  of  the  lands  and 
tenements  of  the  debtor  as  well  as  his  goods.  In  Great  Britain, 
a  land-holding  debtor  might  be  dissolute,  insolvent,  and  bank- 
rupt, but  no  creditor  could,  or  can  to-day,  obtain  any  writ  of 
execution  which  will  sell  the  debtor's  land.  Hence,  there,  "once 
a  landlord  always  a  landlord. "  If  he  bets  away  his  fortune  at  the 
races,  the  return  of  his  quarterly  rent  days  will  soon  restore  the 
means  to  bet  again.  In  America,  however,  the  largest  lauded 
estate  is  dissipated  by  the  first  spendthrift  who  comes  into 
its  possession,  provided  he  become  a  bankrupt. 

In  England,  also,  the  law  of  primogeniture  (preference  for  the 
oldest  son)  required  the  estate  to  descend  to  the  eldest  son  only, 
unless  it  was  otherwise  disposed  of  by  will.  The  law  of  entail 
also  permitted  the  land  to  be  so  given  by  deed  or  will  that  only 
a  life  estate  should  at  any  time  inhere  in  its  x^resent  owner,  the 
inheritable  fee  beingtat  all  times  in  the  heirs  in  perpetuity.  These 
two  laws  tended  still  further  to  tie  up  the  trade  in  land  in 
England.  In  America,  in  all  the  colonies,  or  as  soon  as  they 
became  States,  it  was  pi'ovided  that  all  land  should  descend  at 
death  equally  to  all  children,  and  wills  or  deeds  which  tied  up  the 
title  by  entail,  so  as  to  render  them  untransferable  for  more  than 
the  liv^es  of  one,  two,  or  three  persons  were  made  void. 

Throughout  America,  also,  State,  county,  town,  and  school 
taxes  rest  directly  on  land,  as  a  rule.  If  not  paid,  the  title  to  the 
land  is  sold  for  tlie  tax.  In  this  respect  the  so-called  land  tax  in 
England,  which  is  only  in  law  a  tax  on  the  occupant,  though 
called  a  land  tax,  does  not  re.semble  the  American  taxes  on  land. 
In  default  of  payment  of  the  English  land  tax  the  writ  for  their 
collection  is  powerless  to  sell  the  land.  It  authorizes  only  a 
distraint  on  the  goods  and  chattels  of  the  occupant.  It  is  a  tax 
on  occupation,  not  on  ownership. 

In  America,  land  is  every  whei-e  saleable  for  both  taxes  and 
debts. 

Bounty  laws  were,  from  time  to  time,  passed,  donating  certain 


FREE  LAND  ATTRACTS.  145 

quantities  of  land,  usually  160  acres  or  80  acres,  to  persons  who 
had  served  as  soldiers  or  sailors  in  either  of  the  wax*s  of  1776-'S3, 
of  1812-'15,  of  1847  to  1848  with  Mexico,  or  of  1861-'5  with  the 
seceding  States.  Public  lauds  were  also  donated  to  aid  in  the 
construction  of  canals,  and  section  No.  16  in  every  township  was 
donated  to  the  support  of  schools. 

By  an  Act  of  Congress,  also,  lands  proportionate  in  quantity  to 
the  I'epreseatation  each  State  had  in  Congress  were  donated  to  it 
for  the  endowment  of  an  agricultural  college. 

By  all  these  causes,  land  was  forced  upon  the  market  in  quan- 
tities so  that  each  man  could  get  his  40,  80,  160  acres,  half  section 
or  section  of  land  at  near  the  government  price,  $1.25  an  acre, 
until  the  influx  of  "  settlers  "  gave  it  a  higher  value.  The  first 
settlers,  so  far  from  fearing  "monopolists,"  were  glad  to  have 
either  resident  or  non-resident  capitalists  buy  in  their  neighbor- 
hood, as  it  tended  to  raise  the  value  of  the  land,  and  gave  them 
a  class  of  taxpayers  on  whom  they  could  freely  levy  for  cost  of 
schools,  court-houses,  bridges,  roads,  and  local  improvements. 
In  some  of  the  Western  and  newer  States,  local  taxation,  in  the 
hands  of  resident  votex'S,  tended  to  throw  as  much  of  the  burden 
of  taxes  as  possible  on  non-resident  owners  of  lands.  The  profits 
of  land-owning  wei'e  thus  kept  down  to  the  minimum,  and  the 
inducement  to  monopolize  land  was  small.  It  hai'dly  became 
matter  of  complaint  until  about  the  year  1870. 

57.  Effect  of  Free  Land  on  Inimigration. — Freedom 
of  individual  conduct  and  belief,  equality  in  political  rights,  and 
abundant  supplies  of  cheap  land,  supplied  the  chief  inducements 
to  immigration  from  Europe  down  to  1851.  Since  then  the  gold 
and  silver  mines,  the  rapid  progress  of  railroad  building,  and  the 
growth  of  manufactures,  under  the  stimulus  supplied  by  an 
abundant  currency  and  a  partial  protection  of  American 
producers  against  the  importation  of  competing  goods,  have 
largely  increased  the  inducements  to  immigration  previously 
existing.*  The  rate  of  increase  has  been  so  evenly  from  33  to  35 
per  cent,  in  each  decade  that,  as  early  as  1830  statisticians  began 
to  compute  accurately  the  future  rate  of  increase  of  the 
Republic.  Dr.  Carey,  in  1835,  placed  the  population  in  1880  at 
60,000,000,  which  has  been  verified.  Similar  estimates  show  a 
population  in  1930   of  191,000,000.     This  future  rate  of  increase 


*  Since  1790,  when  Mie  first  census  was  tafeen,  the  following  table  shows  the  increase 
in  every  ten  years  : 


146 


ECONOMIC  PHILOSOPHY. 


of  American  population,  if  no  great  wars  intervene,  is  one  of  the 
most  demonstrable  theorems  in  social  science. 

Since  1819  a  careful  register  of  immigration  has  been  kept,  the 
result  of  which  appears  in  the  table  contained  in  the  note. 

By  comparison  of  this  table  of  immigration  with  the  facts  set 
forth  in  the  chapter  on  "  Commercial  Crises,"  it  will  be  seen  that 
the  movement  of  xjopiilation  into  the  country,  while  somewhat 
affected  by  the  Irish  famine  in  1816-9,  was  most  rapid  in  the  years 


Year. 

Population. 

1790 

3,929,827 

1800 

5,305,925 

1810 

7,239,814 

1820 

9,638,131 

1830 

12,866,020 

1840 

17,069,453 

1850 

23,191,876 

1860 

31,443,321 

1870 

38,925,598* 

1880 

48,141,800 

Tear. 


Increase. 

1,376,098 
1,933,889 
2,398,317 
3,227,889 
4,203,433 
6,122,423 
8,251,455 
7,482,277 
9,216,222 

Immigrants.  Year. 


Per  Cent. 

35.02 
36.45 
33.13 
33.49 
32.67 
35.87 
35., 53 
23.79 


Extent  of  Territory. 
Year.  Engl.  Sq.  Miles. 
1793  805,461 


1830 
1840 
1850 

1870 


2,150,000 

2,308,362 
2,743,300 


3,603,884 


1820 8,353  1854 

1821  9,130  1855 

1822  6,911  1856 

1823 : 6,350  1857 

1824 7,612  18,58 

1825 10,199  1859 

1826  10,837  1860 

1827  18,815  1861 

1828  27,382  1862 

1829 22,.520  1863 

1830  23,322  1864 

1831  32,633  1865 

1832 60,482  1866 

1833 58,640  1867 

18.34 65,365  1868 

1835  45,374  1869 

1836 76,242  1870 

1837  79,330  1871 

18.38  38,914  1872 

1839  ...  - 68,072  1873 

1840 84,006  1874 

1841  ....  80,289  1875 

1842  104,565  1876 

1843 52,196  1877 

1844  78,615  1878 

1845  114,371  1879 


1846 154,416  1880 

1847  2.34,968  18S1 

1848  226,507  1882 

1849 297,011   1883 

1850  .301.863  1884 

1851     .379,466  1^85  

1852  371,603  1886 

1853  368,564  1887 

Total  since  1819,  14,411,640. 

Of  the  total  population  in  17;)0,  17.8  per  cent,  were  slaves.    In  1860,  13.6  per  cent, 
were  slaves. 
*  IncliKliiii?  hulhius  ami  Alaska. 


Immigrants. 

..   ..  427,833 

200,877 

..    ..  200,436 

251,306 

123,126 

121,282 

153,640 

91,920 

91,987 

176,222 

...    .     193,418 

248  020 

348,554 

298,358 

297  205 

385,287 

361,238 

..    ..  367,789 

449,040 

437,004 

277.511 

209,036 

224,860 

130,503 

153.207 

177,826 

.  ..  457,2.57 
....  669,431 
....  738,902 
. .  603,323 
....  518,592 
....  395,346 
....  334,203 
....     490,109 


PERIODS  OF  INFLUX. 


Y\\ 


of  money  inflation,  and  of  great  activity  of  the  societary  move- 
ment, whether  induced  by  protection,  war,  or  increased  production 
of  gold  and  silver.  While  the  magnitude  of  the  immigration 
maintains  a  general  increase  in  subsequent  years  over  earlier,  it 
more  than  doubles  between  1826  and  1828,  a  period  of  protection; 
doubles  again  in  1833 — over  1831 — drops  slightly  in  1833  on  the 
passage  of  the  Compromise  Tariff;  rises  slightly  in  1834,  but  drops 
sharply  in  1835 ;  attains  a  great  height  in  1836  and  '37,  and  again 
in  1842,  but  drops  one-half  in  1843;  resumes  its  upward  course  in 
1846 ;  is  heaviest  in  the  periods  of  the  Irish  famine  (1846-9),  the 
revolutions  in  Europe,  1848,  and  the  California  gold  supply,  1849 
to  1854 ;  but  in  1854,  in  the  midst  of  this  gold  supply,  it  drops 
one-half,  thereby  showing  that  the  condition  of  industries  in  the 
United  States  was  then  very  bad.  In  fact,  from  the  winter  of 
1853-4  to  ihe  bank  crisis  of  1857  the  manufacturing  industries  in 
the  United  States  had  been  in  a  low,  typhoid  condition,  owing  to 
the  causes  named  in  our  chapter  on  "Crises."  From  the  high- 
water  mark  of  1854  the  immigration  declined,  under  the  policy  of 
the  almost  free  importation  of  foreign  goods,  from  427,833  in 
1854  to  little  more  than  a  fourtli  that  number  in  1858-9. 
It  sank  still  lower  in  the  first  two  years  of  the  war,  but 
in  the  second  two  years  it  nearly  resumed  its  former  rate,  but  did 
not  pass  the  rate  of  1854  again  until  1872  and  1873,  which  were 
years  of  marked  activity  in  railroad  building.  The  following 
static  chart  shows  the  rate  for  each  year  on  a  scale  of  40,000 
population  to  the  section  line : — 


800 

60 

7.20 

80 

40 

600 

560 

S20 

80 

40 

400 

360 

320 

eo 

40 
200 
60 
120 
SO 
40 


r— 

- 

n 

n 

XL 

"" 

, 

nik  > 

71? 

11 

/ 

/ 

' 

5 

3 

0 

3d 

d' 

7? 

0 

l-S 

40V 

.8 

-il 

r\ 

A 

1 

1 

J 

/ 

/ 

J 

, 

f 

/ 

\ 

0 

f>p-' 

!8 

1- 

- 

f 

'>' 

f 

\ 

\ 

/ 

1 

/ 

i 

/ 

15 

7, 

77 

> 

79 

,340 

^ 

V 

-< 

/ 

_ 

z 

=■ 

- 

/^ 

H 

\^ 

V 

E 

,9 

14 

1 

— 

-- 

^r^22 

- 

- 

- 

— 

- 

— 

- 

,g  g  s  a  g  te  s 

Immioration  into  United  States  pkom  18^0  to  iy87. 


148  ECONOMIC  PHI LO SOPHY. 

It  is  estimated  that  between  the  years  1820  and  187(5  the  immi- 
grants arriving  were,  as  to  nationality  and  race,  as  follows: — 

English  and  Irish 4,527,892 

Germans 2,889,235 

Swiss       77,299 

Austrians 49,793 

Swedes  and  Norwegians 263,994 

Danes  and  Icelanders 41,417 

French 300,259 

Italians 56,874 

Spaniards  and  Portuguese 34,717 

Belgians 21,498 

Dutch 42,401 

From  Canada  and  British  America    ....        469,450 

West  Indies 59,569 

Chinese 196,891 

Japanese 337 

Officers  in  charge  of  the  immigrants  estimate  the  money  brought 
into  the  United  States  by  the  immigrants  for  the  ten  years,  1850- 
1860,  at  £83,333,333.  Prior  to  1860  the  sentiment  of  the  country 
was  in  favor  of  immigration,  and  every  immigrant  was  valued, 
though  he  brought  only  his  muscular  strength,  as  an  accession. 
Since  1865  a  sentiment  has  arisen  in  favor  of  an  assorted  immi- 
gration, to  the  exclusion  of  Chinese,  paupers,  bound  laborers, 
gypsies,  persons  bringing  disease,  and  criminals. 

58. — Wasting  the  Land. — The  opening  up  of  new  lands  in 
America,  and  the  denudation  of  timber,  has  been  done  in  a  way 
to  sacrifice  the  largest  future  interests  to  the  smallest  present  in- 
terests, which  is  the  essence  of  waste.  Dr.  Franklin  B.  Hough, 
Chief  of  Foi'estry  at  Washington,  estimates  that  in  1870  our  entire 
area  of  remaining  wood  lands  of  every  kind  was  380, 000, 000  acres, 
that  we  were  stripping  the  wood  from  15,000,000  acres  yearly, 
and  were  planting  less  than  10,000  acres.  If  these  dates  were  cor- 
rect there  has  been  a  subsequent  reduction  of  160,000,000  acres, 
leaving  220,000,000  acres  standing,  or  enough  to  last  twenty- 
two  years  longer.  It  is  also  estimated  officially  that  the 
mills  of  the  Northern  States,  if  they  could  be  planted  in 
the  South,  would  saw  up  every  standing  pine  in  Florida  or 
Alabama  in  twelve  months,  and  would  require  but  six  months 
more  for  that  of  Georgia  or  either  of  the  Carolinas.  Three 
hundi'ed  million  dollars  worth  per  year  are  being  cut,  of  a 
crop   which   nobody   is  planting,    not  because  it  is  not  one  of 


LOSS  OF  FORESTS.  Un 

the  most  profitable  of  crops,  but  because  no  private  individual  can 
afford  to  plant  an  agricultural  croi^  wliich  he  must  wait  twenty- 
five  years  to  reai).  •  It  is  estimated  that  our  white  pine  and 
spruce  supply  may  not  last  a  decade.  Yet  it  is  matter  of  easy 
computation  that  in  thirty  or  forty  years  land  in  most  parts  of  the 
United  States,  if  left  to  grow  up  to  timber,  would,  without  labor, 
produce  a  crop  the  value  of  which  on  the  stump,  if  spread  over 
the  period,  would  divide  to  each  year  about  as  large  a  return  as 
can  ordinarily  be  got  out  of  the  land  by  labor. 

All  this  points  to  substitution  of  brick,  iron,  straw  pulp,  and 
similar  materials  at  an  early  date,  for  wood.  Forestry  asso- 
ciations for  planting  ti'ees  have  been  formed  in  Ohio  and  elsewhere, 
but  no  effective  check  on  the  timber  waste  has  yet  been  devised. 

The  rapid  destruction  of  the  forests,  of  the  Appallachian  chain 
and  Adirondacks,  has  also  lessened  the  beauty  and  value  of  many 
American  streams,  by  causing  the  entire  waterfiow  occasioned  by 
the  meltnig  of  the  winter  snows  to  pass  off  in  destructive  freshets 
or  floods  in  the  spring,  after  which  the  streams  are  nearly  dry. 
In  the  Ohio  and  Mississippi  these  spring  floods  are  becoming  each 
year  moi'e  destructive  of  life  and  i^roperty ;  and  are  suggesting  as 
remedies  either  extended  plans  of  irrigation  by  canal,  which  will 
draw  off  these  extra  supplies  of  water,  or  systems  of  dams  along 
the  rivers  to  retain  it,  or  a  comi^ulsory  restoration  of  the  forests. 

It  is  worthy  of  note  that  in  China  all  these  plans  have  been 
adopted.  The  fact  that  their  river  system  is  more  nearly  like 
ours,  than  that  of  any  other  country,  may  in  time  compel  our 
legislation  concerning  rivers  to  more  nearly  approach  theirs. 

The  wasteful  destruction  of  buffalo,  deer,  prairie  pheasants, 
and  other  game  on  our  Western  plains,  and  of  birds  of  every  kind, 
and  especially  singing  birds  in  the  Western  States,  in  response  to 
the  demand  for  birds  for  ladies'  hats,  are  forms  of  waste  for 
whose  avoidance  legal  penalties  have  been  invoked. 

In  our  streams  and  lakes  the  artificial  propagation  of  fish  has 
had  the  effect  to  partially  restore  the  original  supply. 

Marked  economic  effects  have  attended  the  building,  or  failing 
to  build,  important  highways  in  the  United  States,  of  whatever 
kind,  where  opportunity  and  need  existed.  The  early  topo- 
graphical engineers  of  the  country,  including  especially  George 
Washington,  who  was  an  engineer  by  profession,  foresaw  that  at 
whatever  point  on  the  Atlantic  coast  an  outlet  should  be  made  for 
the  products  of  the  Mississippi  and  Ohio  valleys,  a  great,  probably 
the  greatest,  Atlantic  seaport  would  arise.     Virginia  was  at  this 


loO  ECONOMIC  PHILOSOPHY. 

time  far  in  advance  of  the  other  States,  and  especially  of  New- 
York,  as  is  shown  by  a  call  made  by  the  General  Government 
upon  the  States  in  1781  for  money.  The  sum  to  be  raised  was 
£1,666,660,  and  it  was  divided  among  the  original  thirteen  States 
according  to  the  supposed  value  of  their  cultivated  lands,  since  it 
was  to  be  collected,  by  each  State,  by  direct  tax  on  land.  The 
division  was  as  follows : — 

Virginia,        .        .        £372,415    South  Carolina,     .        £177,834 


Massachusetts, 

272,395 

New  York, 

77,832 

Pennsylvania, 

233,498 

Rhode  Island, 

45,142 

Maryland, 

194,582 

New  HamiDshire,   . 

36,124 

Connecticut,  . 

151,499 

Delaware, 

23,351 

New  Jersey,  . 

147,078 

Georgia, 

5,130 

North  Carolina,     .  129,724 

Even  in  1810  the  city  of  New  York  had  a  population  of  96,377, 
w^iile  Philadelphia  had  96,691,  Baltimore  having  46,555,  Boston 
32,250,  New  Orleans  17,212,  Cincinnati  2,540,  and  Brooklyn 
4,462.  It  is  difficult  even  at  this  day  to  perceive  that  Washing- 
ton's calculation,  that  the  metropolis  of  the  Atlantic  coast  would 
be  at  Norfolk,  might  not  have  been  verified  by  sufficient  enter- 
prise on  the  part  of  the  ])eople  of  Virginia.  Washington  ui-ged 
the  legislature  of  Virginia  to  build  a  canal  connecting  the  Ohio 
River  and  the  James  or  Potomac,  so  as  to  place  the  outlet  at  Nor- 
folk. His  advice  was  not  heeded.  Subsequently  New  York, 
under  the  leadership  of  DeWitt  Clinton,  constructed  the  Erie 
Canal,  connecting  Lake  Erie  at  Buffalo  with  the  Hudson  at  Al- 
bany, then  a  stupendous  feat  of  State  enterprise  in  finance  and 
civil  engineering.  Until  that  canal  was  built  New  York  city  had 
little  more  than  the  trade  of  the  Hudson  River  Valley.  The  build- 
ing of  the  canal  made  New  York  the  Empire  State,  and  the  city 
the  commercial  metroj)olis  of  the  Union. 

59.  The  Ainericau  Railway  System  in  Its  Unproductive 
Infancy. — American  railways  have  passed  through  the  several 
periods  (1)  of  infancy  and  feebleness,  demanding  State  aid  at 
every  step ;  (2)  of  incipient  profits  and  precipitate  haste  on  the 
part  of  municipalities,  counties,  and  adjoining  owners  to  embark 
in  them  for  the  value  they  would  give  to  the  lands  adjoining;  (3) 
of  consolidation  of  continuous  lines  and  pooling  of  competing 
lines,  ending  finally  in  a  condition  of  stability,  profit,  and  secur- 
ity; (4j  of  severe  ci'iticism  and  assault  on  the  part  of  shippers  of 
freight  as  to  the  discriminations  in  freights  and  fares  deemed 


INFANT  RAILWAYS.  151 

necessary  by  the  railways;  (5)  of  enormous  railway  grants  in  aid 
of  transcontinental  routes  of  vast  future  importance ;  and,  finally, 
(6)  of  the  appointment  of  State  Boards  of  Eaihvay  Commissioners 
and  the  recent  adoption  of  national  legislation  whose  effects  are 
not  yet  matured. 

At  the  outset,  in  the  Eastern  States,  railroads  crept  feebly  into 
being  by  scattered  efforts,  involving  much  individual  sacrifice. 

Some  town  and  county  aid  was  given,  or  loaned,  by  subscrip- 
tions to  stock  and  bonds.  Frequently  English  loans  w^ere  ob- 
tained of  money  enough  to  buy  the  rails,  or  sales  of  the  iron  rails 
were  made  by  English  rolling  mills  taking  stock  or  bonds  in  re- 
turn. In  a  rough  way  it  might  be  said  that  individual  enterprise 
bought  the  cars,  town  and  county  aid  furnished  the  right  of  way 
and  graded  the  roads,  and  English  mills  turned  out  rails  in  ex- 
change for  the  bonds. 

The  first  railroad  projectors  had  no  concei^tion  of  the  length  of 
road  required,  and  concentration  of  traffic  essential,  to  make 
steam  railways  pay  a  profit.  Many  of  them  began  with  small 
capitals.  The  New  York  and  Harlem  Railway  began  (in  1831) 
with  a  capital  of  $350,000,  authorized  to  construct  a  road  from 
23d  Street  to  Harlem  River,  about  five  miles. 

In  1826  the  merchants  of  Baltimore,  perceiving  that  the  public 
works  of  Pennsylvania,  and  the  Erie  Canal,  were  attracting  to 
Philadelphia  and  New  York  much  of  the  traffic  from  the  West,  in 
which  Baltimore  had  formerly  participated,  began  to  project  a 
railroad  which  should  connect  that  city  with  the  Ohio,  in  lieu  of 
the  Chesapeake  and  Ohio  Canal,  which  liad  been  found  to  be  a 
work  of  much  difficulty,  in  consequence  of  the  high  elevations 
over  which  it  had  to  be  carried.  At  this  date  no  railroad,  either 
in  Europe  or  America,  liad  been  constructed  foi*  the  general  con- 
veyance of  freight  and  passengers.  In  England  an  iron  tramway, 
the  Stockton  and  Darlington  Railroad,  bad  been  constructed  for 
carrying  coal,  and  near  Bo.ston  the  Gi'anite  Branch  Raih'oad  for 
carrying  heavy  materials  to  tide- water.  It  was  much  mooted 
whether,  in  case  railways  should  be  adopted,  horses  or  steam 
would  be  the  better  power.  The  Liverpool  and  Manchester 
Railway  in  England  was,  however,  in  coui'se  of  construction,  and 
2,000  miles  of  railway  were  projected. 

The  fii*st  railroad  charter,  issued  'u\  the  United  States,  was  issued 
to  the  Baltimore  and  Ohio  Railroad  Company,  at  the  solicitation 
of  Philip  E.  Thomas,  president  of  the  Mechanics'  Bank  of  Balti- 
more, its  chief  projector.     The  State  of  Maryland  voted  aid  to  the 


ij:^  economic  rniLOsoniY. 

amount  of  8500,000  in  1828  ;  work  was  begun  amidst  imposing 
ceremonies.  Congress  was  prevented  from  voting  aid  only  by 
the  fact  that  the  chairman  of  the  Committee  of  Roads  and  Canals 
was  also  president  of  the  Chesapeake  and  Ohio  Canal  Company, 
whose  interests  conflicted  with  those  of  the  pro^josed  road.  On 
July  4th,  1829,  Charles  Carroll  of  Carrolton,  whose  remarkable 
signature  adorns  the  Declaration  of  Independence,  presided  over 
the  ceremony  at  the  age  of  ninety  years,  remarking  that  he  con- 
sidered the  act  second  in  importance,  in  his  life,  only  to  the  signing 
of  that  Declaration,  if,  indeed,  it  was  second  to  that.  In  the  en- 
suing October,  eleven  and  one-half  miles  were  being  graded,  and 
one  and  one-half  were  ready  for  rails.  Horses  and  mules  were 
relied  on  for  drawing  the  first  "bi-igade  of  cars,"  the  word  train 
having  not  then  been  applied  to  this  new  use.  Four  brigades  of 
cars  each  day  were  run  between  Baltimore  and  EUicott's  mills,  on 
July  5th,  1830.  Locomotive  engines  had  not  demonstrated  their 
capacity  to  attain  a  higher  rate  of  speed  than  six  miles  per  hour 
in  England,  until  their  use  on  the  Liverpool  and  Manchester  road 
in  the  same  year.  The  company  advertised  for  locomotives  in 
1831,  ofi^ering  rewards  of  il,000  and  $3,500  respectively  for  flrst 
and  second  best,  and  in  response  to  these  bounties  three  engines 
were  placed  upon  its  track,  one  of  which  made  a  speed  of  thirty 
miles  per  hour. 

In  1832  the  further  building  of  the  road  was  arrested  by  a 
decision  of  the  Maryland  Court  of  Ajipeals  that  the  Chesapeake 
and  Ohio  Canal  had  a  prior  and  exclusive  right  of  way  over  that 
portion  of  the  route  lying  between  Point  of  Rocks  and  Harper's 
Ferry.  In  1833  this  ditRculty  was  compromised,  by  the  company 
assuming  the  State's  obligation  for  2,500  shares  of  the  stock  of  the 
canal  company,  when  the  canal  reached  Harper's  Ferry.  The 
company  were  the  first  to  insert  steel  springs  under  the  locomo- 
tive tenders  and  burden  cars,  thereby  saving  one-third  in  cost  of 
carriage  and  wear  and  tear.  In  1835  the  Washington  branch 
was  opened  and  carried  200  passengers  daily.  In  1835-6  the 
legislature  of  Maryland  subscribed  $3,000,000  to  the  capital  stock 
of  the  road,  as  did  also  the  citj'- of  Baltimore.  In  1838  surveys 
had  been  completed  to  the  Ohio  River  at  Wheeling ;  the  cost  of 
the  road  v/as  estimated  for  the  whole  route  from  Baltimore  to 
Wheeling  at  $9,500,000,  and  the  legislature  of  Virginia  subscribed 
$1,058,420  toward  the  capital  stock,  being  two-fifths  of  the  esti- 
mated cost  of  so  much  of  the  route  as  lay  within  the  State.  In 
March,   1853,  the  road  was  opened  to  Wheeling  on  a  running 


STATE  AID.  153 

schedule  of  nineteen  hours,  and  had  cost  $15,000,000,  or  about 
$40,000  per  mile. 

The  Mohawk  and  Hudson  River  Railroad  Company,  forming  the 
first  link  in  the  present  New  York  Central  and  Hudson  Riv^er,  was 
constructed  to  run  from  Albany  to  Schenectady  only,  seventeen 
miles,  and  partly  by  stationary  engines.  It  was  authorized  in 
1826  and  opened  for  traffic  in  1831.  The  j)resent  New  York  Cen- 
tral, without  its  Hudson  River  or  Harlem  branches,  comprises 
what  were  built  as  twelve  independent  roads.  The  pi-esent  Boston 
and  Albany  Railroad  Company  originated  in  a  px'oject  formed  in 
1791  by  General  Henry  Knox,  who  with  his  associates  were  incor- 
porated in  1792,  with  power  to  make  a  canal  from  Boston  to  the 
Connecticut  River.  The  project  languished  until  1825,  when 
Governor  Lincoln  in  his  message  to  the  legislature  called  atten- 
tion to  the  importance,  to  the  agricultural  and  manufacturing 
interests  of  the  interior,  of  means  of  transportation  to  Boston. 
It  was  also  suggested  that  ' '  railways  "  might  be  substituted  for 
the  canal.  Dr.  Phelps,  a  member  of  the  select  committee,  had 
himself  worked  the  Quincy  railway  by  horse  power,  and  advo- 
cated the  new  railway  idea,  in  which  he  was  greatly  encouraged 
by  the  opinion  expressed  by  Mr.  Daniel  "Webster  in  favor  of  its 
feasibility.  The  Boston  and  Worcester  Road,  the  first  built  in 
Massachusetts,  was  chartered,  in  1831  and  completed  to  Westboro, 
thirty-four  and  oixe-half  miles,  in  1884,  with  a  capital  of 
$1,000,000. 

In  March,  1833,  persons  who  were  directors  in  the  Boston  and. 
Worcester  Road  formed  the  Western  Railroad  Corporation,  to 
construct  a  connecting  road  from  Worcester  to  Springfield.  The 
legislature  passed  almost  unanimously,  and  on  the  recommen- 
dation of  the  Governor,  an  act  allowing  the  State  to  subscribe  for 
stock  to  the  amount  of  $1,000,000. 

Rival  proposals,  to  build  a  direct  road  from  Woi'cester  to  Hart- 
ford, were  defeated  in  the  legislature,  as  interfering  with  this  road. 
In  1837  the  State  was  further  authorized  to  loan  its  credit  to  the 
extent  of  80  per  cent,  of  the  capital  stock  of  the  road,  or  $2,100,000. 
And  in  1839  the  State  credit  was  further  loaned  in  scrip  to  the 
amount  of  $6,200,000.  The  object  of  the  Boston  capitalists  was 
to  secure  a  direct  line  from  Boston  to  Albany  by  connecting  with 
the  Albany  and  West  Stockbridge  Road,  in  behalf  of  which  the  city 
of  Albany  had  agreed  to  subscribe  $650,000.  Tliis  was  seven  years 
in  advance  of  the  New  York  connection.  The  extension  of  the 
New  York  and  Harlem  road  to  Albany  was  not  projected  until 


15 1  ECOI^'OMIG  PHILOSOPHY. 

1845.  The  legal  limit  of  tlie  Harlem  had  beeu  in  Westchester 
County  at  the  Connecticut  State  line.  Opposition  to  the  Albany 
indoi'sement,  by  the  New  York  merchants,  ultimately  obliged  the 
Massachusetts  road  to  assume  the  financial  responsibility  of  com- 
pleting its  extension  to  Albany. 

In  New  Jersey  the  Delaware  and  Raritan  Canal  Company  was 
incorporated  in  1830,  also  with  a  capital  nominally  of  $1,000,000, 
but  was  authorized  when  $25,000  of  capital  had  been  paid  in  to 
build  a  canal  between  the  Delaware  and  Raritan  rivers.  In  the 
same  yeai'  the  Camden  and  Amboy  Railroad  and  Transportation 
Company  was  incorporated  with  the  like  capital  of  $1,000,000, 
divided  into  shares  of  $10,000  each,  to  build  a  railroad  from  the 
Delaware  River  to  Raritan  Bay,  with  a  lateral  line  to  Borden- 
town,  the  State  to  have  the  i^rivilegeof  subscribing  for  one-fourth 
of  the  capital,  and  in  that  case  was  to  have  two  directors,  or,  if  it 
subscribed  for  less  than  one-fourth,  its  number  of  directors  was  to 
be  in  the  same  proportion  as  the  number  of  shares  subscribed  for 
by  the  State  bore  to  the  whole  amount  of  stock.  The  State  was 
also  to  have  the  right  to  take  possession  of  the  road  as  its  own,  at 
the  expiration  of  thirty  years  from  its  completion,  by  paying  its 
value,  as  it  should  be  appraised  by  special  commissioners,  to  be 
appointed  equally  by  the  State  and  the  stockholders.  The  road, 
from  its  completion,  was  to  make  quarterly  returns  to  tlie  State, 
and  to  pay  to  the  State  in  lieu  of  all  other  taxes  ten  cents  on  each 
passenger  and  fifteen  cents  for  each  ton  of  merchandise  transported. 
But  if  the  State  should  authorize  the  construction  of  any  other 
road  across  the  State  from  New  York  to  Philadelphia,  to  com- 
mence or  terminate  within  three  miles  of  the  commencement  and 
termination  of  the  Camden  and  Amboy  Railroad,  then  the  payment 
of  ten  cents  for  each  passenger  and  fifteen  cents  per  ton  for  each  ton 
of  freight  should  cease.  In  1831  the  act  was  so  amended  that  the 
company  presented  to  the  State  1,000  shares  in  lieu  of  the  pro- 
posed subscription  by  the  State,  and  that  the  ten  cents  per  pas- 
senger was  to  be  paid  only  on  passengers  carried  across  the  state 
from  New  York  to  Pennsylvania,  and  not  on  passengers  starting 
or  stopping  in  New  Jersey.  Thus,  instead  of  the  State  aiding  the 
construction  of  the  road,  it  imposed  itself  as  an  incubus  on  the 
road,  and  made  it  the  medium  of  sustaining  in  part  its  own  State 
government,  by  imposing  a  tax  on  the  transit,  through  New  Jer- 
se}^,  of  the  citizens  of  other  States.  A  similar  "deal  "  or  partner- 
ship, in  which  the  State  put  in  only  its  skill  and  not  its  capital, 
was  made  by  the  State  with  the  New  Jersey  Railroad  and  Trans- 


LAND  GRANTS.  155 

portation  Company,  wliicli  in  1832  was  incorporated  (capital 
$750,000)  to  build  a  railroad  from  New  Brunswick  to  Jersey  City. 
The  State  reserved  also  the  privilege  of  becoming  proprietor  of 
the  road  at  an  appraised  value. 

In  Pennsylvania,  in  1831,  a  railroad  from  Philadelphia  to  Mor- 
ristown,  seventeen  miles,  with  a  branch  to  Germantown,  three 
miles,  was  authorized,  and  soon  after  was  built  without  State  aid. 
The  Cumberland  Valley  Railroad,  authorized  in  April,  1831,  to 
be  built  from  Carlisle  to  Harrisburg,  gave  the  State  the  right  to 
take  its  property  at  an  appraised  value,  and,  not  being  able  to 
build  itself,  in  1838  obtained  from  the  legislature  an  act  author- 
izing the  governor  to  subscribe  on  behalf  of  the  conmion- 
wealth  for  2,000  shares  at  $50  per  shai-e.  In  1845  the  road  lost  its 
bridge  over  the  Susquehanna,  and  the  State,  as  a  measure  of  relief, 
presented  the  stock  which  it  held  to  the  company,  the  proceeds 
of  its  sale  to  be  used  in  rebuilding  the  bridge.  In  Illinois,  in  1851, 
the  Illinois  Central  Railroad  was  begun,  by  a  national  and  State 
grant  of  land  in  aid,  conditioned  that  the  company  should  pay  into 
the  treasury  6  per  cent,  per  annum  on  its  gToss  earnings.  The 
land  formed  the  chief  source  of  credit  for  the  $22,000,000  which 
have  been  issued  towards  its  construction.  The  proceeds  of  sales 
of  the  lands  have  paid  off  nearlj^  all  the  bonds,  and  will  pay  off 
the  remainder  by  1890.  The  road  was  largely  built  with  English 
capital.  Richard  Cobden,  the  leader  of  the  English  movement 
for  the  withdrawal  of  j^rotection  from  the  English  and  Irish 
farmers,  and  who  was  himself  a  cotton  manufacturer,  is  reported 
to  have  sunk  in  the  Illinois  Central  Railroad  shares  upward  of 
$80,000.  Prior  to  1860-4  nearly  every  other  line  of  American 
securities  was  deemed  safer  than  railways.  To  invest  in  them  at 
all  was  not  "  legitimate  "  business,  and  tended  to  shake  the  credit 
of  the  investor.  Two  or  three  successive  sets  of  stockholders  fre- 
quently lost  the  value  of  their  stocks  before  any  stock  came  to 
have  a  sustainable  value.  The  profits  of  the  railway  business 
were  almost  confined  to  those  who  negotiated  foreign  loans  upon 
them,  and  then  foreclosed  in  behalf  of  these  loans,  on  the  mari- 
time principle  that  the  last  salvor  has  the  first  lien. 

00.  The  Era  of  Consolirtatioii. — In  1851,  partly  in  con- 
sequence of  the  inflow  of  gold  from  California,  began  a  series  of 
consolidations  of  continuous  lines  of  railway,  which  marked  the 
close  of  the  first  and  beginning  of  the  second  rail  way  epoch.  The 
consolidation  of  lines  between  Albany  and  Buffalo  into  the  New 
York  Central,  in  1853,  began  one  of  the  great  trunk  lines.      In 


156  ECONOMIC  PHILOSOPHY. 

1846  tlie  Pennsylvania  Railroad  Company  had  been  formed  to 
construct  a  line  from  Hari'isburg  to  Pittsbui'g.  In  1848  the  cities 
of  Pittsburg  and  Alleghany,  and  of  Philadelphia,  and  all  inter- 
mediate counties,  were  authorized  to  subscribe  for  stock  in  the 
road,  and  the  State  reserved  the  power  to  take  the  road  at  cost 
and  eight  per  cent,  interest  at  the  end  of  any  period  of  twenty  years. 
The  company  was  authorized  to  guarantee  the  bonds  of  roads  in 
other  States  which  might  become  feeders  to  it.  In  1857,  the  State 
sold  it  all  the  public  works  of  which  it  had  itself  become  owner, 
including  two  railroads  and  three  canals,  for  $9,000,000,  and 
exempted  its  property  in  future  from  all  taxes,  exce])t  those 
levied  for  school,  township,  and  borough  purposes. 

The  Erie  Railway,  incorporated  in  1832,  had  carried  its  track 
only  from  Piermont  o\\  the  Hudson  to  Goshen  in  the  adjoining 
county  in  1841,  being  at  the  rate  of  about  one  mile  per  year.  It 
reached  Middletown  in  June,  1843,  Port  Jervis  in  January,  1848, 
Binghampton  in  December,  1848,  Elmira  in  October,  1849,  Cor- 
ning in  January,  1850,  and  Dunkirk,  its  western  terminus,  in  May, 
1851.  In  1852-55  it  was  forming  a  direct  connection  with  Jersey 
City,  by  which  it  became  embarrassed,  and  from  1859  to  '61  was  in 
the  hands  of  a  receiver.  This,  however,  was  the  third  of  the 
great  trunk  lines,  to  which  the  Baltimore  and  Ohio,  completed  in 
1853,  added  the  fourth  route.  The  Great  Western  of  Canada,  pro- 
jected in  1845,  from  Niagara  River  to  Lake  Huron,  and  completed 
at  a  cost  of  $25,000,000,  formed,  with  the  Michigan  Central  and 
New  York  Central,  the  first  complete  through  route  from  New 
York  to  Chicago.  The  Grand  Trunk,  projected  in  1852  and  com- 
pleted at  a  cost  of  $29,000,000  from  Portland  through  Montreal 
and  Toronto  to  Chicago,  now  forms  the  fifth  trunk  route.  With 
the  creation  of  these  five  trunk  lines  closed  the  second  period  of 
railway  development.  The  period  from  1859-64  was  that  of  the 
transition,  of  the  older  and  more  eastern  and  central  rail- 
way enterprises,  from  a  condition  of  failuz'e  and  insol- 
vency to  one  of  success  and  fortune-making.  In  the  dis- 
tricts and  counties  not  yet  supplied,  there  was  an  ardent  de- 
mand, impelled  often  to  I'ashness,  by  the  feeling  that 
they  were  losing  population,  wealth,  and  progress,  and  being  left 
behind  in  the  march  of  x)i'Osperity  by  their  more  fortunate  neigh- 
bors. To  be  near  a  railway  was  to  get  larger  prices  for  all  crops 
and  cheaper  supplies — therefore  to  grow  rich.  To  be  distant  from 
railways  meant  burning  one's  corn  as  fuel  and  paying  dear  for 
supplies — hence  to  grow  poor.    Hence  the  desire  for  railways  led 


NATIONAL  AID.  157 

towns  and  counties  to  apply  to  legislatures  everywhere,  but 
especially  in  the  Western  States,  for  acts  giviug  them  leave  to  is- 
sue town  and  county  bonds  in  aid  of  railways,  to  subscribe  to 
shares  of  stock  or  to  assess  themselves  for  the  cost  of  grading 
roads  through  their  own  limits.  These  acts  being  liberally  passed, 
many  cities,  towns,  and  counties  ran  into  debt.  In  some  cases 
the  railways  desired  were  built.  In  others  tliere  was  disappoint- 
ment, failure,  aud  a  struggle  to  avoid  paying  the  loans.  This 
ended  in  many  of  the  Western  States  passing  constitutional  pro- 
visions, prohibiting  towns  and  counties  issuing  bonds  or  sub- 
scribing to  shares  of  railways,  just  as  they  had  previously 
prohibited  the  creation  of  State  banks,  and  for  like  reasons.  In 
some  cases  the  prohibition  was  absolute.  In  others  it  permitted 
the  aid  to  be  extended  where  it  had  first  been  voted  on  at  the 
polls. 

01.  Great  Land  Grants  to  Railways. — Simultaneously 
with  this  epoch  of  transition  from  failure  to  prosperity  from  1859 
to  1862,  Congress  had  been  called  on  to  make  numerous  grants  of 
lands  to  the  States  in  order  that  the  States  might  grant  them  to 
railways.  The  first  of  these  grants  by  Congress  was  to  the  State 
of  Illinois,  in  1S50,  for  the  Illinois  Central.  Twenty-nine  Acts  of 
Congress  had,  in  1874,*  been  passed,  whereby  lands  had  been 
granted  to  sixty ^eight  railway  enterprises. 

It  is  estimatedf  that  255,000,000  acres  had  been  granted  in  1883 
by  the  General  Government  and  the  State  of  Texas,  and  that  re- 
ductions by  forfeitures,  etc.,  will  still  leave  185,000,000  actually 
conveyed.  About  one-half  has  gone  into  the  hands  of  the  five 
great  corporations,  as  follows: — To  the  Central  Pacific  15,260,000 
acres;  the  Union  Pacific  16,115,000  acres;  the  Northern  Pacific 
42,000,000  acres;  the  Atchison,  Topeka,  and  Santa  Fe  25,667,200 
acres;  the  Texas  Pacific  13,000,000  acres.  Total,  112,042,000  acres. 
A  belt  eighty  miles  wide,  extending  from  near  Lake  Superior  to 
the  Pacific  Ocean,  covering  the  very  best  agricultural,  pasture,  aud 
timber  lands,  was  granted  to  the  Northern  Pacific  Railroad 
Company,  which,  notwithstanding  tlie  grant,  failed  under  Jay 
Cooke,  and  continued  little  better  than  in  a  mendicant  condition, 
until  its  second  organization  under  Villard,  or  from  about  1870  to 
1878.  A  belt  forty  miles  wide,  from  the  Missouri  River  to  near 
the  Bay  of  San  Francisco,   is  held   by  the   Union  and   Central 


♦Poor's  "Manual  of  Railroads,"  p.  003-004. 
t  Moody's   "Land  and  Labor,"  101. 


158  ECONOMIC  PHILOSOPHY. 

Pacific  Companies.  The  Western  and  Southern  Pacific 
Companies  control  a  line  extending  longtitudinally  through 
California.  The  Atchison,  Topeka,  and  Santa  Fe  liave  a  belt  forty 
miles  wide,  stretching  through  Kansas  into  Colorado  and  New 
Mexico,  towards  Arizona  and  Mexico.  The  Atlantic  and  Pacific 
Company  own  a  belt  eighty  miles  wide,  extending  across  New 
Mexico  and  Arizona  to  near  the  Pacific. 

For  the  first  twelve  years  of  the  system  of  national  aid  to  rail- 
ways, viz.,  from  1850  to  1862,  the  grants  were  in  all  cases  made  by 
Congress  to  the  several  States  and  by  the  latter  to  the  railway 
companies.  On  July  1st,  1862,  Congress  made  its  first  grant  of 
lands  direct  to  corporations,  in  the  cases  of  the  Union  and  Central 
Pacific  Companies.  In  the  earlier  grants  but  six  sections  of  land 
per  mile  were  granted.  In  the  later  the  grant  rose  to  forty  per 
mile.  Assuming  the  areas  actually  conveyed  under  these  grants 
to  be  185,000,000  aci'es,  they  amount  to  two-and-a-half  times  the 
total  ai'ea  of  Great  Britain  and  Ii'elaud(74, 137, 600).  The  thirteen  or- 
iginal States  of  the  Union  have  204,001,280  acres,  or  but  little  more 
than  the  quantity  thus  conveyed.  The  Empire  of  Austro-Hungary, 
the  Kingdom  of  Italy,  with  Switzerland  and  the  Netherlands,  have 
250,112,720  acres,  and  the  Empire  of  Germany,  with  Italy, 
Portugal,  Greece,  and  the  Swiss  Republic  combined,  have 
251,163,520  acres.  Meanwhile,  with  the  war  period  and  the  ijolicy 
of  concentration  above  referred  to,  the  great  upbuilding  of  manu" 
factures,  cheapening  of  ii'on,  and  increase  of  travel,  the  railroads 
passed  out  of  insolvency  and  became  magnificent  fortunes  to 
nearly  all  who  were  interested  in  them.  The  rate  of  construction 
rose  until,  from  having  only  29, 000  miles  of  pooi'ly  equipped  road  in 
1860,  laid  mostly  with  iron  rails,  there  were  in  1880  112,000  miles, 
about  one-half  of  which  w^ere  laid  with  steel  rails,  and  the  manu- 
facture of  locomotives  and  rolling  stock  had  become  the  best 
extant.  Even  our  mileage  of  railroads  laid  equaled  that  of  all 
other  nations  combined. 

62.  Socialistic  Reaction  against  Railways. — No  sooner 
had  the  railroad  investments  emerged  from  their  period  of  bank- 
ruptcy into  one  of  prosperity  than  several  modes  of  popular  agi- 
tation arose,  based  on  their  alleged  abuses  and  mismanagement. 
Associations  of  farmers,  calling  themselves  grangers,  began  form- 
ing in  1864-5  in  the  Western  States,  to  oppose  the  policy  of  the  roads 
in  charging  at  a  lower  rate  per  ton  per  mile  for  long  hauls  of 
fi'eight  than  for  a  short  one.  At  first  the  legislatures  attempted 
to  fix  rates  of  freight  and  fares  for  roads.     The  effort  ended,  how- 


STA  TE  BEG  ULA  TION.  1 5  9 

ever,  in  the  designation  of  State  Board  of  Eailway  and  Warehouse 
Commissioners  to  do  so ;  and  when  these  had  been  appointed  and  had 
acted  in  most  of  the  raih'oad  States  for  several  years,  the  demand 
for  State  regulation  assumed  the  form  of  a  demand  for  National 
regulation.  Bills  were  introduced  into  Congress  which  i)roposed 
that,  under  the  power  conferred  on  that  body  to  regulate  commerce 
between  the  several  States,  Congress  should  assume  a  national 
charge  of  the  rates  for  transportation,  on  all  railways  and  i-ailway 
systems,  which  by  consolidation,  "  pooling  receipts,"  orothercon- 
tracts  between  the  roads,  had  become  inter-State  lines.  This  was 
opposed  by  railway  managers,  partly  as  being  impracticable  in 
itself,  for  lack  of  foreknowledge  on  the  part  of  Congress  of  the 
many  exigencies  i-equired  to  be  considered  to  avoid  great  obstruc- 
tions to  railway  business,  partly  from  the  fact  that  it  would  leave 
lines  which  lay  wholly  within  one  State,  like  the  New  York 
Central  and  Pennsylvania  Central,  an  unfair  advantage  over  their 
competitors,  the  Erie  and  Baltimore  and  Ohio,  which  lay  in  several 
States,  and  would  act  as  a  stimulus  to  the  Grand  Trunk  Railway 
of  Canada,  which  had  its  termini  in  Chicago,  111.,  and  Portland, 
Me.,  but  most  of  its  route  oiatside  the  Union,  since  Congress 
could  pretend  to  no  control  over  either  of   these  classes  of  I'oads. 

There  has  also  developed,  since  1860,  a  State  socialism  concern- 
ing railways  and  telegraphs,  which  finds  expression  in  a  desire 
that  these  works  shall  be  owned  and  run  by  the  nation  at  large. 
The  extent  of  the  feeling  in  favor  of  such  a  change  can  not  be 
numerically  stated  with  accuracy,  but  it  is  large  when  the  profits 
of  the  business  are  large,  and  disappears  as  the  railway  and 
telegraph  investments  pass  into  a  period  of  disaster. 

As  in  the  similar  case  of  the  socialistic  desire  to  nationalize  the 
lands,  mines,  etc.,  some  of  the  socialists  believe  the  present 
rights  of  owners  should  be  respected,  and  that  they  should  be 
paid  for  their  ])roperty.  Others  say  that,  as  private  title  to  lands, 
railways,  and  all  other  capital,  is,  according  to  their  theory, 
only  a  robbery  from  the  beginning,  to  pay  for  nationalizing  the 
lands  and  railways,  l)y  distributing  among  their  present  owners, 
an  amount  of  new  national  bonds  equal  to  their  present  value, 
would  only  be  to  perpetuate  the  crime.  The  nationalizing  of 
the  railways,  telegraphs,  and  lands,  by  issuing  national  bonds 
in  payment  for  them,  would  involve  an  issue  of  bonds  to 
the  amount  of  at  least  one-half  the  total  wealth  of  the  nation, 
or  say,  $25,000,000,000,  being  about  ten  times  the  quantity  of 
debt  incurred  to  defeat  the  Southern  secession. 


160  ECONOMIC  PHILOSOrnY. 

63.    Objections   to    Socialistic    Theories    Concerning 
Railways. — The  effective  answer  to  the  objection   that  railway 
concentration  gives  a  few  pei'sons  the  power  to  raise  freights  and 
fares  has  been,  that  in  the  degree  that  they  have  been  conti'olled 
by  a  few  persons,  they  have  reduced  the  rates  of  freiglit  and  fare. 
When  it  has  been  urged  that  the  post-office  illustrates,  by  its 
cheap  postage  system,  how  admirably  the  government  is  adapted 
to  take  charge  of  railways,  it  is  replied  that  the  govei'nment,  by 
its    jDostal    depai'tment,    only  sorts    the    letters,   and    that    the 
railways  themselves  carry   them.     In   looking  back,  it   is   per- 
ceived that  courts  and  legislatures  set  their  faces  honestly  but 
crudely   against  railroad  consolidation,  and  held,    to  the   end, 
that  any  one  stockholder,  objecting,  had  the  legal  right  to  prevent 
the  others   from   effecting   the  consolidation.     But   courts  and 
legislatures,  herein,  served  the  cause  of   production  less  wisely 
than  the  railways.    When  one  set  of  shippers  has  risen  up  to 
demand  that  railways  be  forbidden  to  get  traffic  where  tlaey  can, 
by  making  such  reductions  in  rates  as  Avill  secure  the  traffic,  even 
though  they  carry  for  one  shipper  a  gi'eat  distance  for  less  than 
they  charge  another  for  a  short  one,  another,  and  usually  a  more 
powerful  class  of  shippers,  has  demanded  that  they  be  given  these 
low  rates  on  the  long  hauls.  When  objection  has  been  made  to  the 
issue  of  an  excessive  quantity  of  stock,  it  has  been  met  by  the  jjrop- 
osition  that  the  aggregate  dividends  a  free  railway  can  pay  are  not 
increased  by  the  issue  of  stock,  since  this  can  have  no  effect  either 
to  expand  the  earnings,  or  diminish  the  expenses  of  the  road. 
Dividends  can  only  come  from  the  excess  of  earnings  over  ex- 
penses.    X  long  period  of  agitation,  for  the  legislative  reduction 
of  rates,  has  been  suddenly  arrested  by  the  spectacle  of  millions 
of  capital  squandering  itself  in  carrying  freights  and  passengers 
for  rates  so  low  as  to  work  a  rapid  impairment  of  the  value  of 
the    stock.      A  recent    shrinkage  of  one-third*  in  the  railway 
values  generally,  both  in  England  and  America,  has  done  much 
to  destroy  the  temptation  to  socialistic  agitation  for  the  control 
of  railways  by  the  State. 

Indeed,  hardly  had  the  agitation  in  behalf  of  national  control 
of  railways  reached  the  surface,  wdien  railway  owners  were  found 
tentatively  encouraging  a  scheme  which  would  enable  them  to 
"  unload"  their  property,  by  turning  it  over  to  the  government. 
Speculations  in  favor  of  a  system  of  opening  all  railways  to  com- 

*  In  1884. 


INTER-STATE  COMMERCE.  161 

petition,  between  the  cars,  engines,  locomotives,  etc.,  of  compet- 
ing lines,  have  been  intUilgecl  in  by  various  writers.  In  this,  as  in 
relation  to  land,  it  seems  thus  far  as  if  title  in  one  best  preserves 
the  use  to  many.  In  land,  there  is  no  mode  so  effectual  to 
exclude  each  from  the  effective  use  as  to  vest  the  title  in  all.  In 
railways,  it  may  also  appear  that  private  profit  is  the  only  induce- 
ment adequate  to  supply  them  in  the  degree  which  shall  give 
society  their  most  advantageous  and  abundant  use. 

The  latest  outcome  of  the  desire  that  railways  shall  be  regu- 
lated as  to  their  charges  and  services  by  government  supervi- 
sion, instead  of  by  their  owners'  sense  of  profit,  is  seen  in  the 
Inter-State  Conmiei'ce  Law.  Thus  far,  the  law  has  given  rise  to 
a  sort  of  exchange,  for  the  acquisition  of  information  concerning 
the  raili'oad  business,  and  the  removal  of  errors  concerning  pos- 
sible modes  of  reform.  As  a  rule,  the  intended  reformers  have 
furnished  most  of  the  errors  needing  correction,  and  the  officers 
of  the  various  railways  have  supplied  the  facts  requii-ed  to  correct 
these  errors. 

The  lovers  of  good  and  pure  English,  among  whom  the  framers 
of  the  Constitution  were  conspicuous,  can  not  fail  to  feel  their 
teeth  set  on  edge  by  the  audacity  with  which  a  majority  in  Con- 
gress has  assumed  that  it  could  cause  the  word  "commerce  "  in 
the  Constitution  to  include  "  transpoi'tation  "  by  simply  enacting 
it.  Commerce  is  a  change  of  ownership  in  products,  and  may  be 
without  change  of  i)laces.  Transportation  is  change  of  place,  and 
maybe  without  change  of  ownership.  "Commerce  between" 
(the  people  of)  "  different  States  "  may  imply  that  transportation 
will  occur  as  the  means  of  completing  the  exchange.  It  certainly 
does.  But  the  meaning  of  the  two  words  is  as  distinct  as  title  is 
from  locality.  But  a  clause  in  the  Constitution,  autliorizing 
Congress  to  regulate  exchanges  of  goods  between  citizens  of  dif- 
ferent states  will  doubtless  continue  to  be  construed  to  authorize 
Congress  to  regulate  the  mode  of  doing  business  by  the  corpora- 
tions that  carry  the  goods. 


CHAPTER  V. 


PROFIT  AND  LOSS. 

64.  The  Beginning's  of  Industry. — Industry,  in  any 
proper  sense  of  the  word,  develops,  as  wealth  and  values  do,  only 
with  civilization.  Savageism  is  a  condition  of  intended  indolence, 
broken  only  by  the  exertion  rendered  necessaiy  as  the  alternative 
to  immediate  want  of  food,  clothing,  or  shelter.  The  savage  stops 
work  when  these  wants  are  sufficiently  supplied  to  yield  him 
time  for  slumber  or  debauch.  Such  labor  as  is  performed  in 
savage  life  consists  almost  solely  in  the  toil  of  appropriating  or 
reducing  to  possession  the  wild  game  and  fish,  in  capturing  which 
a  day's  labor  may  be  required  to  successfully  appropriate  enough 
for  a  meal.  The  entire  toil  of  savages,  therefore,  in  hunting, 
fishing,  digging  roots,  and  picking  berries,  consists  of  appropria- 
tion, which  is  not  yet  diflferentiated  from  production,  and  largely 
of  a  form  of  labor  to  which  the  well-to-do  and  nobles  of  aristo- 
ci'atic  civilization  return  as  the  highest  form  of  sport.  Title, 
possession,  and  enioyment  are  acquired  by  one  act,  and  that  an 
act  of  manual  force.  No  anterior  pains  have  been  taken  by  the 
savage  to  cause  his  game,  fish,  berries,  or  roots  to  exist. 

So  far  as  industry  consists  of  mere  appropriation,  man's  life  does 
not  rise  above  that  of  the  beast  of  prey,  and  falls  below  that  of  the 
agricultural  ants,  which  keep  flocks  and  plant  rice,  and  below  the 
bees  who  collect  and  store  honey  and  practice  division  of  labor. 
The  principles  of  accumulation,  and  of  the  organization  of  labor 
through  rank,  force,  or  slavery,  evidently  do  not  originate  with 
man,  but  are  amply  illustrated  in  many  orders  of  animals.  They 
are,  therefore,  instincts  of  the  animal  organization,  and  not  human 
inventions,  or  elements  of  character  which  man  can  choose 
whether  he  will  have  or  dispense  with. 

When  the  savage  ceases  to  be  content  with  appropriating  the 
means  of  food,  clothing,  and  shelter,  which  can  be  had  by  hunt- 
ing, fishing,  digging  roots,  and  snaring  birds,  and  begins  to  plant 
seeds,  dig  the  ground,  tame  and  herd  his  wild  goats  and  sheep,  and 
set  out  fruit  trees,  he  becomes  a  x^roducer,  and  the  form  of  his  toil 
changes  from  hunting  and  fishing  to  industry.     Production  and 


HIRERS  AND  LABORERS.  163 

industry,  therefore,  imply  a  degree  of  pi'ovidence  or  forethought, 
in  the  production  of  things  not  immediatelj^  enjoyable ;  which 
forethought,  and  care  for  the  future,  are  the  germ  of  civilization. 

65.  Capital  and  Labor  Part  to  be  Partners.— Simul- 
taneously with  this  beginning  of  industry,  values  or  possessions 
divide  into  two  kinds,  viz.,  the  enjoyable  and  the  reproductive. 
The  game  which  is  shot  is  the  enjoyable  wealth.  The  bow  and 
arrow  used  in  shooting  it  are  the  reproductive.  The  former  is 
exhausted  by  a  single  use,  but  ministers  directlj'"  to  human  sus- 
tenance or  comfort.  The  latter  is  capable  of  a  long  period  of  use, 
and  only  mmisters  indirectly  to  human  want.  The  former  is  re- 
ward for  effort,  and  approximates  more  or  less  closely  to  wages ; 
the  latter  is  means  of  production,  or  of  appropriation,  and  soon 
begins  to  be  called  capital.  The  former  is  perishable,  and  must 
be  used,  if  at  all,  immediately.  The  latter  is  persistent  and  may 
be  used  indefinitely.  To  work  with  the  latter  (i-eproductive 
wealth),  to  obtain  the  former  (means  of  consumption),  is  industry. 
The  man  who  owns  his  own  implements  of  industry  is  said  to  be 
his  own  employer.  If  he  does  not  own  his  own  implements  of 
industry,  but  is  furnished  them  by  another,  and  keeps  the  product 
of  his  industry,  some  return  to  that  other  is  made  for  the  loan  of 
the  implement.  This  return  may  be  called  rent  if  it  be  land 
leased,  interest  if  it  be  money  loaned,  or  pi'ofits  if  it  be  merchan- 
dise sold.  If  the  worker  with  another's  implements  surrenders  the 
product  to  the  owner  of  the  implements,  the  latter  makes  a  return 
to  the  former  for  his  work,  which  may  be  called  also  share,  profit, 
or  wages.  If  this  return  to  the  worker  is  proportionate  to  the 
value  of  the  product  obtained  it  is  called  share  or  profit.  If  it  is 
irrespective  of  the  product,  but  a  definite  payment  for  time  and 
labor  expended,  it  is  called  wages.  The  person  owning  the  imple- 
ments of  industry,  and  employing  others  to  work  for  him  at 
wages,  is  called  the  investor,  capitalist,  entei'priser  {entrepreneur 
Fr.)  contractor,  or  employer.  From  the  time  the  two  functions  of 
owning  the  means  of  labor,  and  furnishing  the  labor,  become 
separated  between  two  persons,  the  term  industry  covers  the  joint 
co-ojjcration  of  the  two  ;  the  term  enterprise  covei-s  the  function 
of  the  cojitributor  of  the  capital  or  means  of  industry,  and  the 
term  labor  covers  the  act  of  working  for  wages,   hire,  or  share. 

This  division  of  men  into  those  able  to  pay  wages,*  and  those 

*  "  The  ultimate  partners  in  any  production  may  be  divided  into  two  classes,  capi- 
taliets  and  laborers.  If  the  distributor  be  the  capitalist,  the  share  of  the  laborer  is 
called  wages.  If  the  distributor  be  the  laborer,  the  sharo  of  the  capitalist  is  called 
either  interest  or  rent."    (Hearn's  "  Plutology,"  pp.  3;i5-7.) 


164  ECONOMIC  PHIL0S0PII7. 

compelled  to  wovk  for  wages,  arises  in  a  state  of  developecl,or  free 
society,  and  where  labor  is  organized  by  capital,  irresistibly  out 
of  the  fact  that  of  two  persons  having  an  equal  start,  one  will 
hoard  while  the  other  spends,  and  the  one  will  make  while  the 
other  loses,  until  it  comes  to  pass  that  one  is  able  to  employ  while 
the  other  is  glad  to  be  employed. 

Historically,  however,  the  relation  of  employer  and  wages- 
worker,  when  traced  backward,  does  not  find  its  origin  in  any 
primeval  Eden  of  social  equality,  but  arises  gradually  in  most 
cases  out  of  an  antecedent  condition,  a  little  more  despotic  and 
enslaving,  known  as  boss  and  journeyman ;  and  this  originates  in 
one  still  more  arbiti^ary  known  as  master  and  servant;  and  this 
in  that  of  lord  and  vassal,  until  we  get  back  to  liege  and  bond- 
man, and  thence  to  patrician  and  slave  (n\  Rome),  citizen  and 
helot  in  Greece,  man  and  chattel  nearly  everywhei-e.  The  in- 
equality deepens  as  we  ascend  to  more  primitive  eras,  until  we 
reach  a  condition  where  the  owner  has  every  power  over  his 
working  man,  whether  of  death,  mutilation,  or  sale,  that  he  would 
over  his  ox.  The  races  wherein  the  love  of  personal  liberty  pre- 
vented this  degree  of  subjugation  remained  nomadic,  unorganized, 
or  merely  tribal.  If  the  spirit  of  subserviency  facilitated  such  a 
despotic  organization  of  society,  as  it  did  in  India,  Persia,  Egypt, 
Babylon,  Greece,  and  Rome,  then  national  greatness  was  reached, 
at  least  in  part,  through  a  subordination  of  individual  freedom 
that  seemed  to  enslave  all,  even  those  that  ruled. 

The  process  by  which  despotisms  thus  organized  emerged  into 
the  condition  of  wages-paying  nations  of  employers  and  em- 
ployed, was  sometimes  by  sudden  convulsion,  as  in  the  United 
States  (South)  in  1860-65,  but  generally  by  the  gradual  substi- 
tution of  money  for  force,  through  the  increase  in  the  volume  of 
the  former,  and  through  the  greater  economy  of  money  than  of 
force,  in  securing  that  subordination  of  will  and  concurrence  of 
purpose  without  which  there  can  be  no  extensive  co-operation  of 
labor. 

66.  Oi'ganization  of  Labor  by  Force. — In  speaking  of  the 
organization  of  society  by  force,  rank,  or  money,  it  must  not  be 
supposed  that,  in  the  period  of  force,  force  itself  has  the  same  dis- 
tastefulness  which  it  comes  to  liave  in  the  wages  period.  It  is  in 
the  nature  of  the  servile  to  be  proud  of  their  relations  to  those 
they  serve,  and  to  be  happy  in  feeling  that  their  lives  are  linked 
to  a  more  stable  means  of  subsistence  than  they  could  find  in  their 
own  efforts.     The  henchman  was  proud  of  his  laird,  the  page 


FROM  FORCE  TO   WAGES.  165 

loved  and  honored  his  knight,  and  the  slaves  in  many  Southern 
families  took  intense  pride  in  the  families  owning  them,  as  do 
to-day  the  hereditary  servants  among  aristocratic  families  every- 
where. 

The  transition  fi'oni  the  organization  of  labor  by  force,  to  that 
by  wages,  is  sometimes  jnade  through  a  substitution  of  rewards 
in  lieu  of  punishments,  until  these  rewards,  by  custom,  assume  the 
form  and  regularity  of  wages.  The  master,  in  wai'like  periods, 
getting  a  new  sword,  presents  his  old  one  to  his  servant,  who 
esteems  the  honor  of  wearing  his  master's  sword  as  a  species  of 
knighthood.  Or,  in  industrial  periods,  the  master  presents  his 
servant  with  a  house  and  garden,  or,  as  in  many  Southern  in- 
stances, even  makes  him  ruler  over  other  servants  and  foreman  in 
his  household.  Thus  the  habit  of  command  gradually  gives  way 
to  that  of  purchase,  and  the  habit  of  servility  to  the  sense  of  in- 
dependence. But  presents,  "tips,"  etc.,  remain  to  indi(rate  the 
earlier  system  of  favors  or  perquisites.  Under  the  system  of 
negro  slavery  in  the  United  States,  some  of  the  slaves  would  get 
more  material  comforts  by  this  system  of  presents,  tips,  and 
favors,  than  they  could  afterwai'ds  earn  as  wages.  They  would 
appear  in  their  master's  clothing,  and  jewelry,  after  it  had  been 
slightly  worn.  They  had  the  advantage  of  medical  attendance 
in  sickness,  and  of  an  active  interest  in  their  health  and  welfare, 
which  disappeax'ed  when  they  came  to  receive  wages. 

Stanley,  in  making  his  tour  across  the  Dark  Continent  of  Africa, 
bound  himself  to  ti*eat  his  280  black  servants,  whom  he  employed 
to  accompan}^  him,  kindly,  to  nurse  and  cai'e  for  them  in  their 
sickness,  to  defend  them  against  enemies,  and  "to  be  a  father 
and  a  mother  to  them."  The  serfs  and  villeins  of  the  feudal  time, 
in  entering  the  contract  of  homage  or  service,  knelt  on  the  ground 
before  their  protector  with  both  hands  in  that  of  the  master,  and 
promised  to  be  "his  man,  in  life  and  limb  and  terrene  honor.' 
Where  vassalage  is  thus  implied  on  one  side,  and  protection  on 
the  other,  the  wages  system  can  hardly  be  said  to  have  begun. 

When  the  chief  and  his  soldiers  settled  on  the  land,  the  ex- 
change was  at  first  a  rent  servnce,  bvit  gradually  the  element  of 
service  disappeared  from  rent,  and  it  became  a  payment  for  the 
use  of  land.  If  the  tenant's  services  were  wanted  they  were  at 
fii-st  compelled,  and  later  emjjloyed.  When  society  became  so 
addicted  to  commerce  that  tlie  laborer's  time  was  bought  and  paid 
for  like  any  other  commodity,  according  to  the  relation  which 
the  quantity  offered  for  sale  bore  to  the  quantity  of  money  eni' 


106  ECONOMIC  PHILOf<OPIIY. 

ployers  were  willing  to  pay,  various  theories  succeeded  each 
other  as  to  the  proper  basis  on  which  rates  of  wages  should  be 
determined.  In  the  military  and  knight-errantry,  feudal  and 
baronial  stage,  it  was  held  that  the  lord  should  have  what  befitted 
his  station,  and  he  took  pride  in  seeing  that  his  servants  and  re- 
tainers had  what  was  befitting  their  station.  The  principle  was 
equality  as  to  substantials  essential  to  life  and  comfort,  discrim- 
ination as  to  the  accessories  which  denote  rank.  This  truth  is 
accurately  portrayed  by  Shakesiieare  in  the  crowning  humiliation 
which  overwhelms  King  Lear  when  he  learns  that  his  ungrateful 
daughters  purpose  to  limit  him  as  to  his  retinue  of  servants  and 
as  to  their  right  to  make  merry  over  their  wine.  Abraham  and 
Lot  part  company  as  much  for  their  servants'  welfare  as  their  own. 
When  the  relation  of  master  and  servant  was  one  of  social  rank, 
it  was  the  master's  pride  and  part  of  his  means  of  control  to  pro- 
vide for  his  servant  as  liberally  as  his  station  would  permit.  In- 
deed, the  chief  source  of  bankruptcy  consisted  in  attempting  to 
provide  for  more  domestics  and  attendants  than  the  master's  in- 
come could  be  made  to  cover. 

In  getting  upon  the  commercial  basis,  the  English  statutes  show 
that  for  centuries  it  was  assumed  to  be  the  duty  of  the  ruling 
gentry  to  regulate  hours  of  labor  and  rates  of  wages,  always  by 
enacting  that  they  should  not  exceed  certain  rates,  and  by  for- 
bidding unions  of  workmen  to  obtain  more.  In  no  instance,  says 
their  chief  historian*  f  did  Parliament  legislate  to  raise  rates  of 
wages,  nor  to  restrain  conspiracies  among  employers  to  keep  them 
down. 

At  last,  by  the  absoi'ption  of  the  land  by  the  wealthy,  the  dis- 
possession of  the  poor  from  their  customary  holdings,  the  rise  of 
the  factory  sj'stem,  and  the  growth  of  the  capitalists  and  the 
wages  class  into  widely  separated  and  unsympathetic  classes,  labor, 
or  more  properly  labor-time,  became  a  commodity.  Economists 
found  an  average  rate  of  wages  existing  in  each  trade,  about  as 
steady  as  prices  of  goods  or  food  or  the  value  of  money.  What 
fixed  this  rate  ? 

07.  Adam  Smith  on  Wages. — Adam  Smith  made  a  curious 
mixture  of  the  errors  which  attend  unrestrained  a  priori  reason- 
ing, and  the  felicitous  effects  of  shrewd  observation,  in  his 
"  Chapter  VIII."  on  the  wages  of  laboi*.     He  began  by  supposing 


*  Thorold  Rogers'  "  Six  Centuries  of  M^ork  and  Wages  in  England." 
+  Adaui  Smith's  "  Wealtli  of  Nations,"  by  Mct'ullougli,  p.  30. 


WHEX  LABOR  PRODUCES.  1G7 

an  ''original  state  of  things  which  precedes  both  the  appropria- 
tion of  land  and  the  accumulation  of  stock"  (capital),  when  he 
said  "  the  whole  produce  of  labor  belongs  to  the  laborer."  From 
this  beginning  he  proceeded  to  treat  labor  as  the  one  producer, 
and  landlords  and  profit-makers  as  the  sources,  not  of  production, 
but  only  of  deduction  from  w^hat  labor  produced. 

This  beginning  overlooks  the  historical  fact  that  in  most  races, 
if  not  in  all,  history  opens  with  the  fact  that  the  laborer  is  the 
first  property  to  be  appropriated — slavery  preceding  often  the 
appropriation  of  the  land,  and  the  ownership  of  labor  being  the 
fu'st  form  of  circulating  capital.  This  was  wholly  the  rule  among 
tlie  Egyptians,  Greeks,  and  Romans,  and  largely  so  among  the 
Asiatic  races.  If  there  was  any  early  golden  age  among  the 
Germans  and  Saxons  when  labor  was  not  owned,  it  disappeared 
before  Roman  conquests  and  feudal  institutions. 

Dr.  Smith  then  says  :  "It  seldom  happens  that  the  person  who 
tills  the  ground  has  wherewithal  to  maintain  himself  until  he 
reaps  the  harvest.  His  maintenance  is  genei'ally  advanced  to 
him  from  the  stock  (capital)  of  a  master,  the  farmer  who  employs 
him,  and  who  would  have  no  interest  to  employ  him  unless  he 
was  to  share  in  the  produce  of  his  labor,  or  unless  his  stock 
(capital)  was  to  be  replaced  to  him  with  a  profit.  This  profit 
makes  a  second  deduction  from  tlie  produce  of  the  labor  which  is 
employed  upon  land."  * 

Dr.  Smith  gets  at  the  nugget  of  the  truth  which  he  seems  deter- 
mined to  ignoi'e.  He  assumes  that  his  laborer  is  a  destitute  per- 
son, without  land,  implements  to  work  with,  or  the  means  to  sub- 
sist him  until  the  harvest  is  reaped.  In  fact,  his  so-called  laborer 
is  not  a  laborer  at  all,  but  a  helpless,  suffering  image  of  destitu- 
tion, lacking  the  land  to  labor  upon,  the  food  to  sustain  himself, 
or  the  implements  to  work  with.  Is  he  in  this  condition  a  pro- 
ducer ?  Certainly  not.  All  that  he  can  pi-oduce  is  famine.  The 
landlord  who,  in  this  stage  of  his  fate,  advances  him  land  to  work 
upon,  and  the  farmer  who  gives  him  means  and  subsistence  while 
he  labors,  are  the  true  producers  of  his  work.  In  tliis  case,  and 
in  all  in  which  the  laborer  is  wholly  destitute,  lie  has  not  the 
initiative  in  production,  but  must  be  initiated  from  without,  as 
truly  as  must  the  labor  of  an  ox,  mule,  or  engine. 

Only  that  can  be  said  to  be  the  producer  which  has  the  power 
per  se  to  initiate  production.     Since,  of  the  three  forces  at  work, 

♦  Bent  of  tlie  land  on  whicli  he  labors  being  the  first. 


108  ECONOMIC  PHILOSOPIIY. 

the  landlord,  the  farmer  (or  capitalist),  and  the  laborer,  the 
second  is  the  one  who  initiates  production  by  hiring  tlie  land  and 
employing  the  labor  ;  and  since,  as  Dr.  Smith  perceives,  the  mo- 
tive to  him  is  profit,  evidently  Profit,  though  it  may  be  the  last 
element  to  be  counted  out,  into  the  hand  of  its  recipient,  when  the 
product  is  sold,  is  the  first  to  inspire  the  production. 

It  is  Profit*  that  hires  the  land  and  agrees  to  pay  the  rent. 
Profit  fences  it,  drains  it,  manures  it,  plants  and  cultivates  it,  and 
markets  its  pi'oduct.  Profit  picks  up  the  destitute  imuper  from 
the  highway  and  converts  him  from  a  hungry  appetite,  ready  for 
crime  itself,  unless  he  can  be  fed,  into  a  laborer  co-operating  in 
producing  commodities  for  which  there  is  some  demand.  For 
the  destitute  man,  as  a  mere  walking  appetite,  there  may  have 
been  so  little  demand  that  parishes  would  compete  to  crowd  him 
on  each  other,  and  emigration  committees  would  woo  him  to 
leave  the  country.  Fagins  would  tempt  him,  judges  would 
gladly  banish  or  serenely  hang  him,  and  poets  would  write 
rhymes  upon  him  as  perhaps 

One  more  unfortunate, 

Weary  of  breath, 
Kashly  importunate, 

Gone  to  his  death. 

In  the  economic  sense,  he  is  converted  from  a  commodity  for 
which  there  is  no  demand,  into  a  worker,  co-opei-ating  to  make 
society  wealthy,  by  the  profit-maker,  who  has  the  initiative  in 
industry,  by  being  possessed  of  the  capital  to  sustain  him,  the 
enterprise  to  obtain  a  job  for  him,  and  the  courage  to  risk  the  loss 
of  a  capital,  all  of  which  he  might  convert  into  the  means  of  his 
own  enjoyment  without  employing  any  body.     Under  these  cir- 


*  McCullough's  note  to"  Wealth  of  Nations,"  p.  159,  says:  "  It  is  plain,  therefore,  that 
the  prosperity  of  a  country  is  to  be  measured  by  the  rate  of  profit  which  her  capital 
yields,  or  (for  it  is  the  same  thing)  by  her  capacity  of  employing  capital  and  labor  with 
advantage,  and  not  by  the  actual  amount  of  her  capital  or  the  number  of  her  people. 
The  capital  of  Holland  is  undoubtedly  much  larger,  compared  with  her  population,  than 
that  of  the  United  States  ;.  though  as  the  latter  is  able  to  employ  her  capital  with  far 
greater  advantage  than  the  former,  every  one  is  ready  to  admit  that  she  is  also  by  far  the 
most  prosperous.  '  The  progressive  state  '  is  justly  characterized  by  Dr.  Smith  as  be- 
ing in  reality  the  cheerful  and  hearty  state  to  all  the  different  orders  of  the  society  ;  the 
stationary  is  dull,  the  declining  melancholy.  But  as  this  progressive  state  is  mainly  a 
consequenre  of  a  comparatively  high  rate  of  profit,  he  ought  in  consistency  to  have 
maintained  the  doctrine  that  the  rate  of  profit  realized  in  different  employments  is  the 
best  standard  by  which  to  judge  of  tlieir  advantageousness." 

Mr.  McCullough  is  here  thinking  of  economic  advantage,  not  of  intellectual,  moral^ 
Pi  social. 


PROFITS  THE  SOURCE  OF  WAGES.  169 

cumstances,  is  it  fair  to  say  with  Dr.  Smith  that  this  impersona- 
tion of  destitution  is  the  producer,  and  that  the  profit-maker  and 
the  landlord  are  the  vampires  that  merely  suck  a  part  of  his 
blood  ?  Is  it  not  absolutely  true  that  the  profit-maker  is  the  sole 
producei',  and  that  rent  is  a  first  deduction  f  i-om  profit's  share  of 
the  product  ?  Raw  materials  are  a  second  deduction,  implements 
and  plant  are  a  third,  wages  of  labor  are  a  fourth,  and  so  on  ? 

Dr.  Smith,  however,  saw  clearly  that,  between  the  employers 
and  workmen  there  goes  on  a  system  of  profit-sharing, 
in  which  the  true  source  of  rise  in  wages  is  rise  in  profits. 
He  says,*  "It  is  not  in  the  richest  countries,  but  in  the  most 
thriving,  or  those  ichich  are  growing  rich  the  fastest,  that  the 
Avages  of  labor  are  the  highest."  Again,  on  p.  40,  he  says,  "The 
rise  and  fall  in  the  profits  of  stock  (capital)  depend  upon  the 
same  causes  with  the  rise  and  fall  in  the  wages  of  labor,  the 
increasing  or  declining  state  of  the  wealth  of  society."  Again, 
on  p.  37,  "  The  liberal  reward  of  labor,  therefore,  as  it  is  theelfect 
of  increasing  wealth,  so  it  is  the  cause  of  increasing  population." 
P.  33,  ' '  The  liberal  reward  of  labor,  as  it  is  the  necessary  efi'ect, 
so  it  is  the  natural  symptom  of  increasing  national  wealth." 

The  term  used  here,  "rapid  increase  of  national  wealth,"  is 
identical  in  meaning  with  high  rate  of  pi'ofit  on  capital. 

Repeatedly,  ^also,  Dr.  Smith  explains  that  the  high  rate  of  profits 
induces  a  higher  rate  of  wages  through  its  effect  to  cause  a  com- 
petition among  employers  for  the  hire  of  workmen. 

Dr.  Smith  had  thus  laid  the  ground- work  for  making  the  wages 
of  labor  depend  upon  the  profits  of  capital,  when  he  di'ops  into 
the  error  expressed  in  the  following  (p.  41)  :  "In  a  thriving 
town,  the  people  who  have  great  stocks  (capitals)  to  employ, 
frequently  can  not  get  the  number  of  workmen  they  want,  and 
therefore  bid  against  one  another,  in  order  to  get  as  many  as  they 
can,  which  raises  the  wages  of  labor  and  lowers  the  profits  of 
stock.  In  the  remote  parts  of  the  country  there  is  frequently 
not  stock  sufficient  to  emjjloy  all  the  people,  who  therefore  bid 
against  one  another  in  order  to  get  employment,  which  lowers 
the  wages  of  labor  and  raises  the  profits  of  stock.'' 

Capitalists  do  not  bid  against  each  other  for  more  workmen 
merely  because  they  have  large  amounts  of  unemployed  capital 
on  hand.  They  let  their  capital  lie  idle  until  there  is  such  a 
margin  between  cost  of  raw  materials  and  wages  added  on  one 

*  "  Wealth  of  Nations,"  by  Mr.  McCullough,  p.  31. 


170  ECONOMIC  FUIL  OSOPIIY. 

side,  aud  the  price  they  will  get  for  the  finished  product,  as 
presents  a  fair  show  of  profit.  This  is  illustrated  in  Chapter  XV. 
of  this  work,  in  the  cotton  famine  in  Lancashire,  in  1864,  pro- 
duced by  the  cessation-  of  supplies  of  American  cotton.  The  raw 
cotton  went  up  so  suddenly  as  to  be  worth  more  per  pound  than  the 
cotton  goods,  thus  eliminating  the  possibility  of  profit  in  the 
manufacture.  The  mill-owners  had  abundance  of  capital,  but 
they  did  not  disperse  it  in  wages  after  the  margin  for  profit  was 
gone.  They  shut  down  and  waited  until,  by  the  consumption  of 
the  stocks  of  cotton  goods  on  hand,  the  prices  of  the  goods  climbed 
up  far  enough  above  the  price  of  cotton  and  wages  to  leave  the 
margin  of  profit.  The  instant  prices  showed  the  margin  the  mills 
resumed. 

Nor  is  it  always  true  that  in  remote  parts  of  the  country  peo- 
ple bid  against  each  other  actively  for  employment,  and  so  make 
wages  low.  They  ofteuer  withdraw  from  seeking  employment 
at  the  hands  of  others,  live  upon  nature,  or  within  themselves, 
by  those  barbarous  pursuits,  hunting,  fishing,  and  trapping, 
which  consist  only  in  appro j)riation,  but  engender  independence. 
Capital  is  scarce  and  insecure  in  such  places,  and  rates  of  interest 
are  high  because  its  investments  are  precarious,  not  because  they 
are  profitable,  or  rather  none  but  the  most  profitable  investments 
will  overcome  the  deterrent  effect  of  the  precariousness  of  the 
venture.  Wages  may  in  like  circumstances  be  high  where  they 
are  paid  at  all,  because  the  people  are  so  accustomed  to  living 
without  them  that  unless  paid  high  wages  they  decline  to  work. 
While  this  may  not  be  the  universal  rule,  it  is  therefore  the 
frequent  fact  that  in  remote  localities  the  profits  of  capital  are 
high,  so  far  as  capital  consents  to  engage,  and  the  wages  of  labor 
are  high,  .so  far  as  men  consent  to  work,  but  both  the  nien  and 
the  capital  (what  there  is)  are  largely  idle. 

By  means  of  this  partial  error  Dr.  Smith  was  led  into  the  gener- 
alization that  "as  wages  rise  profits  fall,"  which  was  subse- 
quently elaborated  by  Eicardo.  This  is  true  in  the  same  short 
sense  as  it  is  true  that  when  the  clouds  appear  the  sun  ceases  to 
shine.  In  fact,  behind  the  clouds  the  sun  is  always  shining,  and 
the  density  of  the  clouds  becomes  the  most  powerful  measure,  as 
well  as  efi'ect,  of  the  intensity  of  the  sun's  shining.  So  it  is  rising 
profits  alone  that  can  ever  be  the  potential  cause  of  rising  wages. 
Let  that  cause  actually  cease,  and  the  effect  would  be  like  that  of 
the  extinguishment  of  the  sun  upon  the  clouds.  They  could 
n°ver  reappear.     But  so  long  as  that  cause  is  active,  a  temporary 


WHAT  FIXES  THE  RATE.  171 

rise  in  wages  may  seem,  for  a  brief  time,  to  extinguish  profits, 
just  as  a  temporary  condensation  of  moisture  may  seem  to  extin- 
guish the  sun's  Hght.  That  which  seems  to  be  extinguished  is  in 
reahty  the  AU-Powei'ful  Cause  of  the  existence  of  that  which 
seems  to  extinguish  it. 

68.  Equivalence  ofExchaiige  in  the  Wages  Contract.— 
The  pohtical  economist,  lifting  the  veil  from  society  at  work, 
brings  to  light  a  wholl}'^  involuntary  system,  not  merely  of  co- 
operation but  of  social  government,  far  more  pervading  in  its  in- 
fluence, and  searching  in  its  power,  than  the  exterior  State,  whose 
framework  exists  in  constitutions,  and  whose  dignitaries  fill  the 
various  offices  of  the  visible  commonwealth.  This  social  plexus, 
this  network  of  self-interest,  this  labyrinth  of  production  and 
exchange,  commands  our  service,  not  merely  at  occasional  inter- 
vals or  through  official  substitutes,  but  every  moment  and  as  to 
every  person.  In  all  our  pursuit  of  wealth  we  obey  it.  In  all  business 
it  reigns.  Its  capitals  are  where  capital  is.  Its  proj)hets  are  where 
profit  is.  We  may  adopt  infinite  resolutions  to  the  effect  that  all 
men  are  equal,  but,  in  the  very  act  of  adopting  them,  we  appoint 
a  ruler  to  preside  at  their  adoption,  and  apply  to  capital  to  print 
them,  which  request  it  grants  through  the  obedience  it  is  able  to 
exact  from  labor. 

Is  this  dominance  economically  necessary  ?  Is  it  a  product  of 
natural  law?  Political  economy  answei's  Yes;  socialist  critics 
answer  No.  Nine-tenths  of  that  organization  of  industry,  or  asso- 
ciation of  men  in  co-operative  production,  which  distinguishes 
civilization  from  barbarism,  and  industry  from  anarchy,  is  ef- 
fected by  the  payment  of  wages.  To  discuss  the  cause  of  rates 
of  wages,  therefore,  is  to  discuss  the  justice  of  the  economic  order 
of  society. 

Wages  are  the  compromise  between  the  highest  sum,  w^hich 
capitalists  will  pay  rather  than  forego  their  chance  of  pi-ofit,  and 
the  lowest  sum  laborers  will  accept,  rather  than  forego  their  chance 
of  employment.  If  there  is  a  margin  between  these  two  sums,  if, 
for  instance,  the  employer  would  pay  $1  per  day  rather  than  forego 
his  hope  of  profit  from  tlie  employment,  and  the  wage-worker 
would  accept  60  cents  a  day  rather  than  be  out  of  work,  then 
either  will  yield  to  the  other,  according  to  the  degree  in  which  lie 
regards  it  necessary  to  him  to  secure  the  profit  or  the  wage.  All 
this,  however,  relates  merely  to  the  motives  of  tlie  dicker.  Wliat 
is  it  that,  getting  down  to  the  economic  bedrock  of  tlic  bargain, 
determines  whether  the  employer  will  lose  a  profit  unless  he 


1 '  2  ECONOMIC  PHILOSOPHY. 

employs  a  workman,  and,  vice  versa,  whether  the  workman  will 
lose  a  wage  unless  he  works  at  the  rate  offered?  Supposing  both 
parties  to  judge  of  their  own  interests  with  accuracy,  it  will  be  the 
fact  that  the  product,  of  their  co-operation  in  industry,  will  sell  for 
enough  to  yield  the  employer  a  return  on  his  capital  better  than 
he  could  get  elsewhere,  after  paying  the  laborer  a  wage  better  than 
he  could  get  elsewhere.  Here  are  two  equations,  each  of  which 
takes  in  a  vast  market  of  transactions.  They  are  made  between 
two  classes  of  persons,  between  whom  some  things  are  equal  and 
some  things  are  unequal.  Among  the  things  in  which  they  are 
equal  is  that  the  jiortion  of  the  capital  of  the  employer,  which 
will  hire  a  man,  is  of  just  as  much  value  to  the  man  whom  i^ 
employs,  as  that  man's  work  is  to  his  employer.  For  where,  of  two 
co-operative  agents,  neither  can  act  without  the  other,  both  are 
equal,  and  being  equal  in  efficiency  should  have  equal  pay. 

Again,  a  dollar  to  a  rich  man  is  exactly  equal  to  a  dollar  to  a 
poor  man,  in  the  sense  that  if  a  rich  man  renders  a  service  woi'th 
a  dollar,  his  right  to  the  dollar  is  as  good,  in  ethics  and  equity,  as 
that  of  a  poor  man.  If,  therefore,  he  brings  to  the  poor  man  a 
co-operative  agent,  viz.  capital,  with  which  the  poor  man  is  enabled 
to  earn  a  dollar  which  he  otherwise  could  not,  he  renders  an 
equal  service  to  that  which  the  poor  man  renders  to  him,  if  the 
poor  man  so  uses  this  capital  as  to  cause  it  to  earn  a  dollar  for  the 
capitalist,  through  capital  which  would  otherwise  earn  less. 

So  if  the  two  parties  were  merely  fishermen,  one  of  whom  had 
furnished  boat,  lines,  and  bait,  but  could  not  fish  himself,  while 
the  other  fished,  but  had  neither  boat,  lines,  nor  bait  of  his  own, 
the  aid  of  each  being  equally  necessary  as  that  of  the  other,  it 
would  be  equitable  that  the  fish  product  should  be  divided  equally 
between  them,  no  matter  how  many  other  men  the  owner  of  the 
boat,  lines,  and  bait  might  employ  in  the  same  way.  Here  we 
strike  a  principle  of  equity  as  between  man  and  man.  This  is,  that 
the  amount  of  capital  which  employs  a  man's  labor,  and  the 
amount  of  human  labor  which  gives  emi^loyment  to  this  same 
amount  of  capital,  should  have  an  equal  share  of  the  joint  product, 
if  they  are,  as  usually  they  must  be,  equally  necessary  to  the 
joint  result.  If  this  is  a  sophism,  I  am  not  able  to  discern  itg 
fallacy. 

Now,  in  every  business,  there  is  an  aggregate  capital,  and  an 
aggregate  labor  force.  Suppose  the  capital  to  be  $60,000  and  the 
labor  foi'ce  50  men.  The  unit  of  capital  that  employs  each  man  is 
$1,200.    For  50  men  putting  up  $1,200  each  could  employ  them- 


EQUAL  SERVICE,  EQUAL  PAY.  173 

selves ;  virtually,  therefore,  the  w^age  employment  is  a  loan  by  the 
employer  to  each  of  his  workmen  of  $1,200  with  which  to  effect 
a  work  of  production.     If  the  mode  of  production  is  ill-advised,  or 
the  product  is  not  in  sufficient  demand  to  pay  a  I'eturn  of  more 
than  say  $1,000  a  year,  while  the  wages^of  the  workmen,  the  rent, 
and  other  costs  are  $25,000  a  year,  then  the  employer  will  sink  his 
entire  capital  in  two  years,  while  the  workmen  will  get  their  wages. 
But  the  economic  assumption  is  in  accordance  with  the  average 
course  of  industry,  which  requires  that  it  should  be  socially  in 
demand.  Suppose  it  pays  a  return  of  fifty  per  cent,  on  the  capital, 
or  a  profit  of  $25,000  after  paying  wages.      This  will  attract  capi- 
tal from  evei'y  quarter,  until  the  rate  of  return  is  reduced  to  the 
average  rate  which  capital  yields   in  other  similar  enterprises. 
When  it  has  reached  this  stable  rate  of  gross  return,  what  propor- 
tion of  the  gi'oss  return  must  go  to  capital  and  what  to  labor  to 
make  the  transaction  just?    Should  not  that  unit  of  capital  which   , 
employs  a  man,  and  the  man  himself,  share  alike  ?   True,  one  man    ', 
may  own  twenty  units  of  capital,  and  in  tliat  way  get  a  return 
equal  to  that  of  twenty  men.     What  matter,   if  the  service  he 
renders  to  each  of  the  twenty  exactly  equals  the  service  each  ren- 
ders to  him?    His  aggx*egate  services  to  the  twenty  must  be  equal 
to  the  aggi'egate  of  the  services  of  the  twenty  to  him.      Hence,  if 
he  furnishes  the  capital  which  employs  twenty,  or  five  thousand, 
he  should  receive  an  aggregate  return  equal  to  that  of  the  whole 
number  of  persons  to  each  of  whom  he  reciprocates  an  equal  ser-    ■ 
vice.     In  this  way  only  can  there  be  equality,  and  equity,  in  each   S 
of  his  exchanges  of  service  for  service. 

69.  Instances  of  Equality  of  Division. — A  case  which  was 
among  the  first  to  suggest  that  there  may  be  a  natural  tendency  in 
the  aggregate  capital,  to  work  on  equal  shares  with  the  aggregate 
labor,  employed  in  any  branch  of  production,  was  that  of  the  fifty- 
four  railways  which  report  annually  to  the  railway  commission- 
ers of  Illinois.  They  embrace  a  cost,  for  construction  and  equip- 
ment, of  $1,251,792,029.74,  and  have  a  par  capital  of  $2,800,000,000. 
The  number  of  persons  who  own  shares,  or  hold  loans,  against 
them  is  not  known,  and  is  not  perhaps  capable  of  being  made 
definitely  known,  as  it  is  liable  to  hourly  changes.  The  number 
of  persons  employed,  from  president  down  to  switchmen  is  156,007. 
The  companies  report  that  they  pay  for  the  use  of  their  capital  ui 
all  its  forms,  i.e.,  in 

Dividends  and  interest, $81,720,265.53 

And  in  wages  and  salaries, 81,936,170.81 


174  ECONOMIC  PHILOSOPHY. 

Total     gross    income   or  joint  eai'nings    of 

labor  and  capital, $163,656,436.34 

Excess  of  labor's  share  over  capital's  share,  .     .     $215,905.29 

Variation  from  equality  in  division,  one-eighth  of  one  per 
cent. 

Mr.  Edward  Bates  Dorsey,  in  a  paper  read  before  the  American 
Society  of  Civil  Engineers,  states  that  the  total  gross  earnings  of 
the  railways  of  the  United  Kingdom  are  $355,311,350,  of  which  the 
"  operating  expenses  "  absorb  $186,842,810,  and  the  total  net  earn- 
ings are  $168,468,540,  thus  making  the  foi-raer  absorb  fifty- three 
per  cent,  and  the  latter  forty-seven  per  cent.  I  have  not  the  data 
by  which  to  determine  that  the  operating  expenses  are  identical 
v^-ith  wages  and  salaries,  or  whether  as  to  some  small  part  they 
may  not  cover  purchases  of  commodities  which  are  really  addi- 
tions to  the  fixed  or  circulating  capital  of  the  roads.  If  in  opera- 
ting expenses  are  included  any  rents,  or  purchases  for  renewal  of 
the  fixed  capital,  as  of  engines,  etc.,  or  payments  for  accidents 
and  losses,  then  the  true  "wages  and  salaries"  account  would  be 
diminished  by  so  much. 

The  unit  of  capital  required  to  employ  one  man  in  the  railway 
business  in  the  United  States  is  $8,000.  That  sum,  invested  in  rail- 
ways earns  the  same  return  as  the  man  it  employs,  within  one- 
eighth  of  one  per  cent,  per  annum,  so  far  as  the  railways  reporting 
to  the  Illinois  commissioners  are  concerned,  and  these  are  about 
one-fourth  of  all  the  railways  in  the  country.  This  seems  to  indicate 
an  involuntary  tendency  on  the  part  of  railway  enterprises, employ- 
ing labor  and  capital  at  the  cheapest  competitive  rates  at  which 
they  can  buy  both  in  the  market,  to  divide  equally  between  labor 
and  capital  as  wholes,  paying  the  same  sum  to  the  unit  of  capital 
which  renders  the  employment  of  one  man  possible,  as  they  pay 
to  that  man  whose  employment  renders  the  use  of  the  unit  of 
capital  possible.  On  referring  to  the  census,  some  materials  are 
supplied  for  inferring  the  terms  of  division  of  the  product  between 
the  aggregate  labor  and  aggregate  capitals  there  indicated.  In  doing 
so  no  occasion  exists  to  use  the  figures,  relating  to  capital,  which 
numerous  critics  have  successfully  impeached.  It  makes  no  dif- 
ference, with  reference  to  this  calculation,  whether  the  principal 
cajiital  of  an  establishment  includes  borrowed  capital  or  not,  or 
good  will,  or  whether  deduction  is  made  for  loans  or  debts,  or,  in 
short,  whether  the  capital  of  any  or  all  establishments  is  set  dowii 
as  $10  or  $10,000,000. 


THE   WAGE  FUND.  '  175 

Simply  take  the  value  of  the  gross  product  of  the  various  indus- 
tries, i.e.,  what  the  product  sells  for  in  the  market.  The  figures  of 
the  census,  for  this,  have  not  been  improved  upi)n  or  attacked. 
From  this,  deduct  the  cost  of  raw  materials  used  as  per  census, 
which  also  is  as  yet  unimpeached.  This  diffei'ence  between  cost 
of  raw  materials,  and  value  of  finished  product,  is,  of  course,  the 
increment  of  value  which  arises  in  the  particular  process  of  manu- 
facture under  consideration.  This  is,  in  the  long  run,  and  making 
no  consideration  of  losses,  the  fund  which  is  to  be  tUvided  be- 
tween capital  and  wages.  In  manufactures  the  wages  are  paid 
before  the  product  could  be  sold.  In  railroading  the  product, 
transportation,  is  sold  a  month  or  so  before  the  wages  are  paid,  but 
in  searching  for  the  ratio  of  economic  distribution  of  the  joint 
product,  between  capital  and  labor,  the  time  when  the  wages  are 
paid  is  immaterial.  Wages  are  usually  paid  before  the  employer 
knows  whether  his  product  will  I'eimburse  him,  and  some- 
times it  does  not  reimburse  him.  But  this  is  true  also  of  his 
rent,  his  plant,  and  every  other  element  which  undergoes 
economic  distribution,  and  is  therefore  also  immaterial  in  any 
effort  to  trace  out  the  principles  on  which  capital  and  labor  usually 
divide,  in  order  to  give  rise  to  existing  rates  of  profit  and  wages. 

From  the  joint  product  above  obtained,  by  deducting  cost  of  raw 
materials  from  value  of  finished  product,  deduct  still  further  the 
aggregate  wages  paid  as  given  by  the  census.  This  quantity  is  un- 
impeached by  the  criticisms  on  the  census,  as  it  does  not  involve 
the  average  amount  of  wages  paid  per  man,  the  ratio  of  the  total 
amount  to  the  time  worked,  or  any  disputed  fact.  The  residue  left 
by  this  last  deduction  would  be  the  amount  which  capital  would 
at  least  receive  for  distribution,  or  reimbursement,  and  for  profits. 
It  would  be  the  sole  fund  from  which  capital  would  repair  or  ex- 
tend its  plant,  pay  for  losses  in  bad  years  or  by  bad  debts,  pay  for 
wear  and  tear  of  plant  and  implements,  rent,  insurance,  etc.  The 
net  sum,  remaiiiing  to  the  employer  after  covering  all  disburse- 
ments, would  be  profits. 

It  irmst  bo  borne  in  mind  also  that  the  labor  bill,  referred  to  in 
the  census,  is  not  to  be  mistaken  for  the  entire  labor  bill  involved 
ill  the  product,  which  includes  also  the  labor  bills  involved 
in  the  construction  of  plant  and  raw  materials.  It  is  the  labor 
bill  involved  in  the  last  process  only  of  manufacture,  viz.,  that  of 
which  the  census  professes  to  be  an  enumeration. 

By  this  method  it  appears  that  the  total  manufactui'ing  indus- 
tries of  the  United  States,  in  1880,  paid,  as 


176 


ECONOMIC  PHI  LO  SO  PUT. 


Wages  to  labor, 

Caiiital's  share    for 
profits, 


disti'ibution. 


including 


Excess  of  capital's  share  over  labor's, 
Excess  over  half, 


947,952,7-45 
1,023,801,837 

76,848,092 
38,424,046 


Variation  from  equality  of  division  of  the  joint  product  between 
capital  and  labor,  four  per  cent,  in  favor  of  capital.  As  the  rate  at 
which  capital  extends  its  plant  in  manufactures,  a  service  equally 
beneficial  to  labor  as  to  capital,  is  not  far  from  four  per  cent, 
per  annum,  the  rate  of  effective  division,  or  of  actual  beneficial 
equality,  is  about  as  perfect  in  manufactures  as  in  railroading. 

In  the  chapter  on  labor  other  illustrations  of  this  rule  or  coin- 
cidence appear.  These  instances  are  presented  tentatively,  and  as 
showing  a  tendency,  rather  than  as  demonstrating  a  law  which,  in 
the  present  state  of  research,  can  be  clearly  defined.*     Some  pro- 

*  Many  facts  bearing  on  this  general  point  seem  to  confirm  this  ratio. 

Mr.  Mallock  (in  "  Property  and  Progress,"  p.  202)  figures  the  gross  income  or  joint 
earnings  of  the  British  people  (including  Ireland)  at  between  £1,300,000,000  and  £1,200,- 
OOO.OOOby  the  census  of  1881.  Of  this  sum  the  wages-class  received  £625,000,000  defi- 
nitely, leaving  the  aggregate  receipts  of  the  class  having  incomes  exceeding  £150  at 
about  £577,000,000.  A  email  share  of  these  incomes  may  also  in  the  economic  sense  be 
properly  wages,  which  would  require  a  deduction.  But  doubtless  a  much  larger  share 
of  incomes  were  concealed  or  underrated.  So  a  substantial  equality  is  indicated 
throughout  Great  Britain  between  the  earnings  of  capital  on  one  side  and  labor  on  the 
other.  It  is  indicative  of  equality  in  a  rude  but  substantial  way  that  in  the  United 
States  the  deposits  in  savings  banks,  wliich  here  represent  very  closely  the  uninvested 
receipts  of  the  aggregate  wages-class,  about  equal  the  total  deposits  in  National,  State, 
and  private  banks,  which  are  the  uninvested  receipts  of  the  capital  class. 

The  apt  diagrams  used  in  this  connection  by  Mr.  Grunlund  insetting  forth  the  di- 
vision between  the  wages-fund  and  the  capital-fund  are  marred  only  by  Mr.  Grunlund's 
deceptive  term  "  surplus."  Mr.  Grunlund's  allowance  of  5  per  cent,  for  wear  and  tear 
of  capital  is  quite  inadequate.  With  these  qualifications  he  presents  the 
system  of  division  of  the  gross  earnings  of  the  manufacturing  industries  of  the  United 
States  in  four  successive  census  years  as  follows  : 


1860. 


i 

Capital  Fund, 
53  per  cent. 

Wages  for 

957,000 
"hands." 

o 

•-r 
O 

3 

c 

3 
& 

Wages  for 
1,300,000 
"hands." 

$4.37,000,000. 

$805,0 

oo,coa. 

WORKING   ON  SHARES. 


Ill 


cesses  of  exchange,  for  instance,  may  illustrate  a  far  greater  power 
in  capital  than  in  labor,  and  one  which  will  content  itself  with 
only  the  lion's  share  of  the  joint  product. 


18T0. 


Wages  for 

2,000,000 

"hands." 

Capital  Fund, 
53  per  cent. 

$]„310,000,000. 


1880. 


• 

Wages  for 

Capital  Fund, 

2,739,000 

48  1-3  per  cent. 

"  hands." 

$1,834,000,000. 

It  is  made  evident,  by  the  facts  collected  concerning  rents  and  interest  in  England, 
that  the  normal  share  of  the  gross  produce  of  land,  hired  for  industrial  purposes,  which 
goes  for  rent,  is  one-fourth,  or  more  frequently  21  per  cent.,  and  that  the  normal  sliare 
of  gross  produce  which  goes  for  interest,  when  the  whole  capital  is  borrowed,  is  another 
fourth.  As  capital's  share  is  two-fourths  of  the  gross  product,  if  we  suppose  tlie  man- 
ufacturer hires  his  factory  and  pays  rent,  and  hires  his  whole  capital  and  pays  interest, 
it  is  evident  that  a  line  directly  through  ihe  eo-called  "surplus  "of  Mr.  Grunlund 
would  devote  half  of  it  to  rent  and  the  other  half  to  interest,  and  leave  the  enterpriser 
DO  "  surplus  "  whatever. 

7fae'«  "Contemporary  Socialism,"  p.  309,  says:  "In  Arthur  Young's  'Political 
Arithmetic,' published  in  1779  (Partii.,  iwgus  27,  31),  he  estimated  the  gross  agricultural 
produce  of  England  (exclusive  of  Wales)  at  £72,820,827,  and  the  gross  agricultural 
rental  at  £19,200,000,  or  21  per  cent.,  very  nearly  one-fourth  of  the  produce.  To  come 
down  nearer  our  own  time,  McCuUoch  estimated  the  gross  agricultural  produceof  Eng- 
land and  Wales  in  1842-3  to  have  been  £141,000,857,  and  the  gross  agricultural  rental 
£37,795,905,  or  20  per  cent,  of  the  produce.    ("Statistical  Account  of  the  British  Em- 


178 


ECONOMIC  PHILOSOPHY. 


Adam  Smith  thought  that  agricultural  rent  was  "seldom  less 
than  a  fourth  and  frequently  more  than  a  third  of  the  whole  pro- 
duce" (Book  ii.  Ch.  v.),  but  that  "  in  the  progress  of  improvement 

pire,  3dEdn.,  p.  553.)  The  gross  agricultural  produce  of  the  United  Kingdomis  now  two 
hundred  and  seventy  millions  sterling,  and  the  gross  agricultural  rental  seventy  millions. 
Mr.  Mulhall,  indeed,  estimates  it  at  only  fifty-eight  millions,  but  at  seventy  millions 
it  would  be  as  nearly  as  possible  26  per  cent.,  curiously  enough  the  same  figure  as 
in  1843  and  in  1779,  and  almost  the  same  as  in  1689."  These  facts  show  that  rent  tends  to 
take  a  fourth  part  of  the  gross  product  of  such  industries  as  are  carried  on  on  the  rented 
surface,  or  that  the  enterpriser  who  hires  all  his  plant  pays  out  one-half  the  capital 
share  for  rent. 

As  to  rates  of  interest,  it  is  easy,  by  comparison,  to  see  tliat  they  usually  range  at  one- 
half  the  profits  earned  by  a  capital  invested  by  its  owner  in  active  business.  Says 
Roscher : 

"  At  the  end  of  the  last  century  English  farmers  expected  10  per  cent,  profit  on  their 
capital,  i.  e.,  after  paying  for  rent,  wages,  implements,  and  raw  materials."  As  current 
ratesof  interest  were  5  per  cent,,  it  would  follow  that  if  the  farmer  borrowed  all  his 
capital  he  would  work  at  the  halves  with  hia  usurer.  The  principle  of  division  be- 
tween usurer  and  farmer  is  the  same  as  between  farmer  and  landlord.  (A.  Young, 
"View  of  the  Agriculture  of  Suffolk,"  179,  138,)  Senior  is  of  opinion  that  in  Eng- 
land to-day  (1830)  indu.strial  enterprises  of  £100,000  yield  a  profit  of  less  than  10 
per  cent,  a  year  ;  those  of  £40,000  at  least  12}4  per  cent.;  those  of  from  £10,000  to 
£20,000  15  per  cent.;  smaller  one?  20  per  cent,  and  even  more.  He  mentions  fruit  huck- 
sters who  earned  over  20  per  cent,  a  day,  i.  e.,  over  7,000  per  cent,  a  year  ("Outlines," 
203  seq.)  In  Manchester  manufacturers,  according  to  the  same  authority,  turn  over  their 
capital  twice  a  year  at  5  per  cent,  (each  turn),  retail  dealers,  three  times  a  year  at  3J^ 
percent.  (Ibid.  143.)  Torrens,  "The  Budget,"  (1844)  108,  designates  7  per  cent,  as  the 
minimum  profit  which  would  induce  an  English  capitalist  to  engage  in  an  enterprise  of 
his  own."    (No'e  to  Am.  Edn.  of  Roscher,  Pol.  Econ.,  vol.  ii.,  p.  151). 

By  profit  in  the  last  illustration  I  assume  is  meant  the  residue  after  paying  rent, 
wages,  cost  of  raw  materials,  and  every  other  charge  except  that  of  interest  on  the 
capital  invested.  The  profit  of  per  cent,  therefore  would  be  the  regular  rate  of  interest, 
viz.,  5  per  cent.,  and  the  regular  rate  of  commissions  on  managing  small  Investments, 
viz.  2%  per  cent.  Each  of  the  above  cited  rates  of  profit  is  twice  the  current  rates  of 
interest  in  transactions  of  similar  dimensions.  For  it  is  well  known  that  in  tiie  same 
circumstances  in  which  profits  on  small  capitals  rise  to  20,  30  or  40  per  cent,  interest  on 
small  loans  rises  to  10,  15  and  20  per  cent.  Hence  interest  ranges  at  a  fourth  of  the 
gross  proceeds  of  the  industry  on  which  the  capital  is  loaned.  The  mode  of  distribution 
of  the  price  of  the  gross  product  tends  theoretically  toward  the  following  result : 


Raw  Materials. 

.^^' 

X 

Rent.            V 

^                Interest. 

. - , 1 

EVANESCENCE  OF  TRUE  PROFITS.  179 

it  increases  iu  proportion  to  the  extent,  but  diminishes  in  propor- 
tion to  the  produce  of  land"  (B.  ii.  Ch.  iii.)  thus  leaving  it  at  not 
more  than  one-fourth. 

Adam  Smith  saw  this  ratio   of  division  between  capital  and 

But  thia  is  equivalent  to  saying  that  tlie  distribution  tends  constantly  to  obliterate 
profits,  to  one  who  neither  owns  his  plant  nor  his  capital.  This  is  true.  It  la  exceed- 
ingly rarely  that  euch  an  one  can  continuously  maintain  himself  in  any  business.  It  is 
almost  an  axiom  that  a  profit-maker,  to  succeed  as  such,  must  own  either  his  fl^ed 
capital,  or  hia  circulating  capital,  or  both.  Without  either,  he  is  a  man  of  straw,  an  ad- 
venturer, and  is  likely  to  travel  out  of  one  bankruptcy  into  another.  Hence,  iii  practice, 
profita  proper,  i.  e.,  considered  apart  from  both  rent  of  land  and  remuneration  to  capi- 
tal, seem  almost  to  narrow  themselves  down  to  a  reward  for  getting  the  start  of  every 
body  ;  for  making  money  in  new  or  shrewd  modes  not  known  to  eitnermoney-lendera 
generally  or  to  landlords  generally.  Of  course  the  profit-maker  nas  four  funds  out  of 
which  to  save  a  profit  if  he  can,  viz.:  in  buying  rawmaterials,  in  hiring  labor,  in  hiring 
hia  plant,  and  in  borrowing  his  capital.  He  hasfour  more  out  of  which  to  create  a  new 
gain,  viz. :  in  discovering  new  channels  of  demand,  in  inventing  new  processes  of  sup- 
ply, in  widening  his  market,  and  in  cheapening  his  means  of  reachingit.  Butoutof  all 
these  there  ia  none  which  has  the  fixity  which  belongs  to  rales  of  wages,  of  rent,  or  of 
interest.  Hence,  it  is  singular  that  Adam  Smith  should  have  begun  to  reason  concern- 
ing distribution  by  assuming  an  ordinary  rate  of  profit  on  capital  as  a  first  fact.  Profits, 
meaning  a  compensation  for  capital  in  excess  of  rates  of  interest,  are  so  fluctuating  aa 
to  be  always  extraordinary.  For  if  profits  perform  the  same  function  v.'hich  a  rudder 
of  a  ship  performs,  viz. :  that  of  steering  the  course  of  industry,  the  rudder  must  be  con- 
stantly changing,  even  when  the  course  of  the  vessel  is  straight.  Hence,  of  two  com- 
mercial houses  in  business  side  by  side,  one  may  be  making  heavy  profits,  one  may  be 
losing  heavily,  and  both  may  be  mistaken  as  to  their  actual  condition,  or  whence  the 
profits  or  losses  will  come. 

It  may  seem  that  the  proportion  above  claimed  for  the  share  of  capital  is  widely  in 
confiici  with  that  arrived  at  by  Mr.  Edward  Atkinson,*  wlio  expresses  the  opinion  that 
"  what  portion  "  of  the  total  product  of  a  nation's  industry  "constitutes  the  average 
share  of  the  capitalist  at  the  present  time  can  not  be  substantially  proved.  In  a  normal  . 
year  under  normal  conditions,"  Mr.  Atkinson  is  "  of  the  profound  conviction  that  not  I 
exceeding  10  per  cent,  can  be  set  aside  as  either  rent,  interest,  profit,  or  savings  ;  "  and  •' 
that  nine-tenths  constitutes  the  share  of  the  laborer,  which  by  subdivision  becomes  ex- 
pressed in  personal  wages."  In  saying  that  "  not  exceeding  10  per  cent,  can  be  set 
aside  as  either  rent,  interest,  profit,  or  savings  "  Mr.  Atkinson  first  awards  10  per  cent, 
to  each  of  these,  making  40  p-^r  cent,  for  all,  but  by  assuming  that  nine-tenths  of  the 
product  would  be  left  for  wages  he  reconstructs  his  10  per  cent,  so  as  to  make  it  cover 
all  instead  of  each  of  the  four.  This  may  be  a  slip  of  the  pen,  but  in  view  of  the  actual 
facts  it  seems  much  like  a  fatal  leap  in  the  thouglit.  Among  fully  one-half  tlie  popu- 
lation of  the  United  States,  and  over  three-fourths  of  the  area,  say  in  all  parts  south  of 
Cincinnati  and  west  of  Toledo,  10  per  cent,  is  the  current  and  average  rate  of  interest 
alone  on  all  loans  except  the  largest  of  those  made  in  cities.  Most  real  estate  rented 
for  productive  purposes  draws  from  8  to  10  per  cent,  rent,  even  in  Eastern  cities,  and 
frequently  20  percent.  Most  corporate  sliares  arc  rated  at  the  principal  sum  on 
which  they  will  pay  80  per  cent,  instead  of  10,  thus  showing  tiuit  capital  values  itself 
foi  investment  at  20 per  cent.,  not  10.  Thus  a  corporation  having  a  par  capital  of  $200,- 
000  and  earning  $200,000  a  year  will  sell  its  shares  in  the  agt^regate  at  about  $1,000,000, 
or  the  sum  on  which  it  ))uy8  20  per  cent.  Twenty  per  cent.,  therefore,  is  capital's  own 
valuation  on  itself  when  invested  productively.  Again,  the  ratio  of  the  annual  prod- 
»  Essay,  "  What  Makes  the  Kate  of  Wages,"  p.  27. 


ISO  ECONOMIC  PHILOSOPHY. 

labor  and  states  it  very  compreheusively.  (Book  ii.  Ch.  iii.) 
He  says  :  ' '  That  part,  of  the  annual  produce  of  the  land  and  labor 
of  any  country,  which  replaces  a  capital,  never  is  immediately 
employed  to  maintain  any  but  productive  hands.  It  pays  the 
wages  of  productive  labor  only." 

"  When  it  (the  annual  produce)  first  comes  either  from  the 
ground  or  from  the  hands  of  the  i^roductive  laborers  it  naturally 
divides  itself  into  two  parts.  One  of  them,  and  frequently  the 
largest,  is  in  the  first  place  destined  for  replacing  a  capital  {i.  e. , 
re-imbursing  for  wages  paid)  or  for  renewing  the  pi'ovisions, 
materials,  and  finished  work,  which  had  been  withdrawn  from  a 
capital  ;  the  other  for  constituting  a  revenue,  either  to  the  owner 
of  this  capital,  as  the  profit  of  his  stock  (or  interest),  or  to  some 
other  person  as  the  rent  of  his  land.  Of  tlie  produce  of  a  great 
manufactory,  in  the  same  manner,  one  part,  and  that  always  the 
largest,  replaces  the  capital  of  the  undertaker  of  the  work  ;  the 
other  pays  his  profit,  and  thus  constitutes  a  revenue  to  the  owner 
of  this  capital." 

Dr.  Smith  also  describes  interest  as  ruling  at  one-half  the  cur- 

uct  of  the  nation's  industry  to  its  principal  capital  is  25  per  cent.,  showing  a  tendency 
to  earn  that  amount  through  the  joint  efforts  of  capital  and  labor.  Again,  Mulhal)  and 
other  statisticians  estimate  the  annual  national  savings  alone,  or  the  increase  of  wealth 
that  goes  over  to  another  year,  at  upwards  of  $800,000,000,  or  at  least  13  per  cent.  Sup- 
pose A  to  desire  a  property  worth  $20,000  for  manufacturing  purposes.  As  rents  go 
he  would  begin  by  paying  $2,000  for  it  as  rent.  If  he  should  form  a  stock  company  the 
capitalized  value  of  the  shares  in  the  money  market  would  be  that  sum  on  which  his 
earnings  would  pay  from  15  to  20  per  cent,  dividends.  How  many  times  would  he  turn 
his  entire  capital  over  in  a  year?  In  a  daily  newspaper  at  least  three  times.  In  other 
branches  of  manufactures  nearly  as  often.  The  total  value  of  the  establishment  will 
be  the  principal  on  which  the  profits  of  these  three  turnings  over  will  be  20  per  cent. 
The  average  of  business  establishments  apply  nearly  10  per  cent,  per  annum,  sooner  or 
later,  to  the  extension  of  their  business  or  to  private  residences  of  their  owners.  Either 
is  an  embodiment  of  profit.  Contemplate  the  enormous  manufacture  of  private  resi- 
dences constantly  going  on  as  a  means  of  embodying  the  profits  of  business.  All  this 
does  not  come  out  of  a  10  per  cent,  on  the  money  invested. 

Mr.  Atkinson  seems  to  have  in  mind,  moreover,  the  net  profit  of  the  capitalist  ap- 
propriable to  personal  and  family  expenditure,  after  paying  cost  of  erection  and  annual 
wear  and  tear  of  plant  and  implements,  insurance,  losses  of  bad  years,  and  the  like. 
The  distributive  share  which  capital  must  disburse  in  other  ways  than  in  payment  of 
wages  and  raw  materials  is  another  matter.  The  latter  forms  the  object  of  my  pur- 
suit. 

It  is  to  be  regretted  that  neither  Smith,  Ricardo,  Mill,  Carey,  Cairnes,  MacLeod,  nor 
any  other  writer,  so  far  as  I  have  met  with  their  writings,  attempts  to  fix  the  ratio  of 
the  distributive  share  of  capital  by  an  appeal  to  data  sufticiently  extensive  to  be  called 
scientific.  Hence  any  attempt  to  reduce  the  hitherto  unrestrained  course  of  assumptioa 
to  a  basis  of  fact  may  give  rise  to  the  charge  of  empiricism .  This  we  must  endure,  so 
that  the  course  of  the  combat  may  in  time  be  shifted  from  the  empirical  to  the 
Bcientific  basis. 


LABOR  BECOMIXG  CAPITAL.  l8l 

rent  rates  of  profit.  (Book  i.  Ch.  x.)  He  had  thus  in  mind, 
exactly  the  division  outlined  in  this  chapter,  viz.,  one-half  to  re- 
imburse capital  (which  he  defines  as  all  going  to  pay  wages  of  pro- 
ductive labor)  and  the  other  half  to  interest  (one-fourth)  and  rent 
(one-fourth). 

Three  facts  in  our  American  rates  of  wages  tend  to  confirm  this 
view.     These  are : 

1.  The  standard  of  wages  in  agriculture  goes  far  toward 
fixing  the  standard  of  wages  in  manufactures.  In  agriculture 
the  extent  to  which  the  farm  labor  contracts  to  work  for  half  the 
product,  as  against  the  land  and  the  capital  jointly,  both  of  which 
get  the  other  half,  shows  that  in  farming  the  real  rate  of  wages 
is  adjusted  upon  the  principle  of  giving  half  the  product  to  labor 
and  half  to  capital  and  land  jointly.  A  presumption  would  arise 
that  the  same  must  be  true  in  manufactures,  mining,  railroading', 
and  merchandising,  simply  as  an  effect  of  the  natural  tendency 
toward  an  equation  of  rates  of  wages  (other  things  being  equal) 
in  all  occupations. 

2.  The  practice,  in  manufactures,  of  arranging-  the  wages  of 
workmen  on  a  sliding  scale,  whereby  the  workman's  compensa- 
tion is  proportionate  to  the  price  of  the  products,  prevails  in  cer- 
tain branches  of  the  iron  manufacture,  and  indicates,  so  far  as  it 
goes,  that  wages  in  manufactures  generally  are  j^roportionate  to 
product. 

3.  When  colored  laborers  in  the  Southern  States  were  the  sub- 
jects of  property,  the  price  which  attached  to  the  laborer  as  an  ob- 
ject of  pui'chase  would  naturally  be  adjusted  according-  to  the 
amount  of  capital  on  which  his  earnings  in  excess  of  the  cost  of  sub- 
sisting him  would  pay  a  better  profit  than  would  be  obtained  on  the 
same  capital  in  other  forms  of  industry,  other  things  being  equal. 

Agricultural  laborers  brought  from  $800  to  $1,200.  In  free 
agricultural  labor  at  the  same  period  the  amount  of  capital  re- 
quired to  work  in  partnei'ship  with  a  laborer,  i.e.,  the  amount  of 
capital  which  would,  when  invested  in  farming,  land,  and  imple- 
ments draw  the  same  return  which  the  laborer  would  draw,  was 
fx'om  $800  to  $1,200.  Of  course  the  slave  became  himself  capital,  to 
the  amount  of  the  capital  he  exempted  his  owner  from  the  neces- 
sity of  acquiring,  in  order  to  use  his  labor.  The  free  laborer  works 
in  partnership  with  this  same  equivalent  of  capital,  invested  in 
land  and  implements  and  takes  half  the  product. 

Doubtless  in  a  shrewdly  conducted  commercial  business  like 
that  of  the  late  A.  T.  Stewart,  the  share  of  capital,  and  even  per- 


182  ECONOMIC  nilLOSOPHY. 

haps  the  annual  net  profits  of  the  propinetor,  might  amount  to 
more  than  the  clerk  hii'e  and  labor  bills.  But  I  have  heard  it 
remarked,  by  practical  merchants,  that  what  a  clerk  or  salesman 
makes  in  his  last  years  of  clerking  and  the  profits  of  his  first  years 
of  trade,  are  so  nearly  on  a  level  as  seldom  to  result  in  any  sud- 
den change  in  his  condition. 

70.  Productive  Industry  Is  a  Form  of  Social  Govern- 
ment.— Though  I  have  thus  far  treated  the  wages  contract  as  if 
labor  were  the  thing  sold  by  the  worker  to  his  employer,  it  will 
help  to  clear  away  many  deceptions,  which  have  misled  some  to 
their  injury,  if  I  point  out  that,  as  a  rule,  the  essence  of  the  wage 
contract  is  not  in  the  sale  of  labor  but  of  obedience,  sovei'eignty, 
or  will,  so  as  to  produce  not  so  much  force,  as  flow  or  harmony  of 
action,  which  can  only  come  from  the  subordination  of  many 
wills  to  a  single  will.  A  man  may  ]3ut  any  amount  of  time  and 
vigorous  toil  into  his  work,  but  if  it  is  done  disobediently  to  his 
employer's  will,  he  is  entitled  to  no  pay  legally  or  morally.  It  is 
universally  understood  that  what  the  employer  buys,  is  not  so 
much,  or  so  specifically,  muscular  effort,  as  the  right  to  direct  the 
effort,  whatever  its  kind,  whether  it  be  muscular  or  nervous,  bod- 
ily or  mental.  The  porter  who  stands  at  the  door  of  a  residence, 
hotel,  or  restaui'ant,  and  opens  the  door,  perhaps  electrically  by 
touching  a  spring,  whenever  he  sees  a  guest  about  to  enter,  can  not 
be  said  to  labor,  for  no  more  physical  effort  is  required  to  do  this 
than  to  do  nothing.  But  lie  earns  his  wages  and  is  a  productive 
laborer.  Why  ?  Because  his  employer's  interests  prosper  better,  or 
his  employer's  pleasure  is  subserved  more  truly,  by  impi'essing 
every  person  who  enters  with  a  sense  of  politeness  pervading  the 
establishment  than  if  the  visitor  is  required  to  ring  and  wait,  or  is 
left  to  open  the  door  himself.  In  this  case,  tlierefore,  the  wages 
are  earned,  not  by  labor,  but  by  that  subserviency,  which  sliall 
stand  for,  and  represent,  the  intended  j)oliteness,  or  taste,  or  style, 
or  dignity  of  the  master. 

Suboi'dLnation,  therefore,  is  the  one  thing  bought  and  paid  for  in 
the  wages  contract.  "They  also  serve  who  only  stand  and  wait." 
On  the  other  hand,  insubordination  destroys  utterly  the  working 
value  of  the  most  capable,  skillful,  or  experienced  worker.  It  is,  in 
the  wages  contracts,  the  chief  and  most  unpardonable  of  all 
viciousness.  An  insubordinate,  or  self-inspired  worker,  can  not  be 
depended  on,  in  any  capacity  which  requires  organization  or  co-op- 
eration with  others  on  a  large  scale,  and  must  either  become  his 
own  employer  or  must  degenerate  into  paupex'ism. 


OBEDIENCE  IN  LABOR.  183 

Uninstructecl  persons,  of  insubordinate  or  truculent  temj^ers, 
often  pride  themselves  upon  what  they  stj^le  their  independence, 
meaning  thereby  their  readiness  to  quarrel  or  argue  with  employ- 
ers, and  thereby  to  bring  on  themselves  discharge  from  employ- 
ment. 

They  should  understand  that  there  is  no  baseness  in  the  sort  of 
obedience,  which  is  called  for  and  paid  for  as  the  essence  of  the 
wages  contract,  for  the  reason  that  only  in  this  way  can  industry 
be  steered  in  the  direction  of  demand,  which  is  the  function  which 
employers  subserve  in  industry. 

The  employer's  business  is  to  seek  and  yield  to  the  public  de- 
mand. His  phrase  to  his  workmen  is,  "I  must  please  the  public ; 
you  must  please  me."  It  is  through  the  subserviency  of  the  em- 
ployer to  the  public,  followed  up  by  the  subserviency  of  each 
employe  to  his  or  her  own  employer,  that  the  entire  force  of 
employes  may  be  held  to  the  work  of  satisfying  a  public  want. 
This  is  organization  in  industry.  It  is  the  only  practicable  way 
in  which  men  and  women  ordinarily  can  render  those  services  to 
their  fellow-men  sufficient  to  call  for  that  return  service  at  the 
hands  of  others  known  as  "  a  comfortable  living." 

For,  as  a  rule,  each  person  in  business  gains  his  living  by  the 
service  he  renders  to  strangers  in  the  economic  sense,  i.  e. ,  to 
persons  to  whom  he  is  under  no  obligations,  and  very  likely  does 
not  know,  and  who,  in  turn,  do  not  know  him.  The  engineer 
on  a  railway  really  serves  the  passengers  and  the  owners  of  the 
freight  which  are  entrusted  to  be  drawn  by  his  engine.  Both 
these  classes  are  strangers  to  him.  The  medium  of  enabling  him 
to  serve  these  sti*angers  is  his  wage  contract  wath  the  railroad 
company,  which,  in  this  case,  is  the  middleman  effecting  an  ex- 
change of  the  engineer's  time  and  that  of  others,  working  to- 
gether in  the  use  of  the  stockholders'  capital,  i.  e.,  the  rolling 
stock,  in  order  to  sell,  to  the  freight  owners  and  passengers,  a  joint 
product  of  capital  and  laboi*,  viz.,  transjiortation.  But  on 
analysis  it  is  not  really  capital  and  labor  that  effect  the  trans- 
portation, but  it  is  command  and  obedience.  For,  no  matter  how 
much  capital  is  put  up,  if  commands  are  not  obeyed,  the  railway 
is  converted  instantly  from  a  means  of  transportation  into  a  mere 
means  of  wholesale  slaughter.  The  labor  of  transportation  in 
this  case,  i.e.,  tlie  physical  force  which  draws  the  train,  is  not  put 
forth  by  the  engineer  but  wholly  by  his  engine.  The  supervision 
of  flie  engineer  is  directed  wlioUy  to  making  the  engine  obey  the 
time-table.     This  may  be  called  labor  on  his  part ;  but  it  may  be 


184  ECONOMIC  PIIILOSOPIIT. 

merel}^  a  labor  of  watching — the  end  of  which  is  obedience,  pure 
and  simple,  but  the  alternative  of  which  is  destruction,  sudden 
and  terrific.  The  organization  of  labor  in  society,  therefore,  is 
effected  by  means  of  a  system  of  subserviency  and  obedience, 
whereby  every  industrial  act,  every  sale  of  a  service  or  a  com- 
modity, and  every  performance  of  a  service,  or  a  contract,  is  part 
in  a  chain  of  causation  of  which  the  supply  of  all  is  the  ultimate 
eflfect,  and  the  demand  of  all  is  the  primary  moving  power  and 
stimulus.  The  steering  and  piloting  is  all  done  to  make  profits. 
The  manual  and  methodized  labor  is  all  done  to  earn  wages.  But 
these  terms  are,  in  the  final  analysis,  interchangeable.  Wages 
are  always  the  profits  a  man  wins,  by  investing  his  time  and  sell- 
ing his  will,  judgment,  and  obedience,  in  the  manner  which  he 
draws  his  wages  for,  rather  than  any  other.  And  profits  are  the 
wages  a  man  gets  for  risking  his  means  in  a  given  investment, 
and  abstaining  from  enjoying  the  principal  while  it  is  so  invested. 
Hence  there  is  an  ultimate  sense  in  which  wages  are  profits  and 
profits  are  wages.  Just  as  we  have  seen  in  Chapter  I.,  there  is  an 
ultimate  sense  in  which  capital  performs  labor,  or  labor  is  capital. 
71.  Do  the  Indispensable  Means  of  Labor  IDarn  a 
Share  of  the  Product  ? — While  Karl  Marx  nowhere  presents 
any  facts  showing  what  the  ratio  of  the  wages  share  to  the 
capital  share  really  is,  he  constantly  assumes  that  it  is  equal.* 
But  by  assuming  also  that  the  wage  laborer  is  the  sole  producer 
of  value,  that  the  capitalist's  contribution  of  the  means  of  work 
is  in  no  way  necessary,  and  should  not  be  permitted  to  reap  any 
return,  since  these  means  are  themselves  the  result  of  previous 
robbery  and  not  of  saving ;  and  that  the  wages  paid  are  in  all 
cases  only  the  cost  of  sustenance  of  the  laborer,  with  just  enough 
added  to  enable  him  to  pi'opagate  his  class  without  increase  or 
diminution ;  that  mere  exchanges  of  commodities  do  not  create 
values,  hence  that  the  functions  of  the  capitalist,  enterpriser,  and 
trader  are  all  needless,  Karl  Marx  is  able,  through  the  necro- 
mancy of  bald  assumption,  to  convert  a  division  between  two 
equal  partners,  in  the  ratio  in  which  they  contribute  to  production, 
into  a. spoliation  or  "  exploitation  "  of  labor,!  by  capital,  to  the  ex- 

*  "  Kapital,"  vol.  i.,  page  175. 
t  The  choice  of  the  word  "exploitation"  by  the  Bocialists  is  particularly  happy,  since 
it  is  in  fact  truthful  when  accurately  understood.  Exploitation  does  not  mean  "  spoli- 
ation," but  simply  creating  or  causing  exploits  or  achievements  where  otherwise  there 
would  be  inaction.  It  implies  that  capital  energizes  labor,  but  this  implication  is 
ignored.  Its  perversion  into  a  term  signifying  robbery  is  part  of  the  general  system  of 
*'  exploitation  "  of  economic  terms  carried  on  by  socialist  writers. 


ALL   CAPITAL  A  LOAN  TO  LABOR.  185 

tent  of  100  per  cent,  on  what  labor  produces.  He  constantly  styles 
the  cost  of  the  sustenance  of  the  laborer  his  natural  wages,  under 
the  iron  law  of  Ricardo  and  Torrens,  and  assumes  that  he  gets 
no  more,  ignoring  the  fact  that  most  capitalists  start  in  life  as 
wage  laborers,  and  begin  their  capitals  through  the  savings  from 
their  wages.  All  the  value  commodities  have,  at  any  time,  over  the 
cost  of  sustenance  of  the  labor  which  produces  them,  he  denominates 
"  surplus  value, "  exploitation,  or  robbery.  Tims  that  form  of 
economic  "criticism"  which  begins  by  assuming  that  lack  of  the 
means  to  work  with,  which  is  what  we  call  labor-power,  creates 
all  values,  speedily  ends  in  that  form  of  war  on  society  and  in- 
dustry known  as  Anarchism  or  Thuggism. 

The  first  truth  to  be  embraced  by  one  who  would  really  com- 
prehend the  plexus,  or  interlocking  of  labor  with  capital,  in 
the  present  organization  of  industry,  is  that  all  reproductive 
capital — the  machinery  with  which  the  profit-maker  works,  is  in 
use  by  the  workers  themselves,  and  is  their  means  of  earning 
Avages. 

In  his  "  Chapters  on  Socialism,"  Mr.  Mill,  who  was  himself  in 
many  senses  an  avowed  socialist,  says  : 

"  Another  point  on  which  there  is  much  misapprehension  on  the  part  of  socialists,  as 
well  as  of  trades  unionists  and  other  partisans  of  labor  against  capital,  relates  to  the 
proportion  in  which  the  produce  of  the  country  is  really  shared,  and  the  amount  of 
what  is  actually  diverted  from  tlwse  who  produce  it — " 

Mr.  Mill  here  falls  into  the  very  socialistic  error  which  he  is 
attempting  to  rebuke,  by  assuming  that  all  that  wage  laborers  do 
not  get  is  so  much  "diverted  from  those  who  produce  it" — 

— "  to  enrich  other  persons.  When,  for  instance,  a  capitalist  invests  £20,000  in  his 
business,  and  draws  from  it  an  income  of,  suppose,  £2,000  a  year,  the  common  impres- 
sion is,  as  if  he  were  the  beneficial  owner  both  of  the  £20,000  and  of  the  £2,000,  while 
the  laborers  own  nothing  but  their  wages.  The  truth,  however,  is  that  he  only  obtains 
the  £2,000,  on  the  condition  of  apjilying  no  part  of  the  £30,000  to  his  own  use." 

And  of  loaning  its  use  in  some  form  to  labor,  i.  e.,  to  relative 
destitution — 

He  has  the  legal  control  over  it,  and  might  squander  it  if  he  chose  ;  but  if  he  did  he 
would  not  have  the  £2,000  a  year  also.    For  all  personal  purposes,  they  have  the  cap- 
ital, and  he  has  the  profits,  which  it  only  yields  to  him  on  condition  that  the  capital  ' 
itself  is  employed  in  satisfying,  not  his  own  wants,  but  those  of  laborers. 

A  truer  statement  would  be  that  the  capitalist  has  the  power  to 
steer  industry  in  the  direction  of  wliat  he  deems  to  be  the  profit, 
which  is  always  that  of  the  effective  social  demand.  For  tliis 
power  he  takes  the  profits,  and  incurs  the  losses,  incident  to  the 
employment  of  reproductive  capital.     Operative  workers  have 


186  ECONOMIC  PIIlLOSOrUY. 

tlie  loan  of  his  capital  for  their  vise,  as  the  condition,  or  means, 
or  partnership  by  aid  of  which  they  can  produce,  and  without 
the  aid  of  which  they  would  loaf  in  idleness.  And  the  customers 
of  the  business  or  purchasers  of  the  product  of  their  joint  labors, 
who  are  nearly  equivalent  to  society  at  large,  have  its  services,  as 
they  do  those  of  labor,  by  paying  for  its  product. 

72.  Does  the  Risk  of  Loss  Give  Valid  Title  to  the 
Profit  ? — Many  socialists  concede  that,  in  the  present  organiza- 
tion of  labor,  the  rule  of  the  profit-maker  over  the  w^ages-earner 
is  temporarily  just,  so  long  as  it  is  made  necessary,  by  the  lack 
of  ownership,  by  the  wage-earner,  of  the  job,  implements,  means 
of  subsistence  and  capital,  from  which  to  make  up  to  the  wage- 
earners  and  to  others,  the  ultimate  loss  of  wealth  which  will 
result  to  society  if  industry  is  steered  toward  the  production  of 
unprofitable  products. 

But  they  desire  us  to  believe  that  it  is  not  intrinsically  and 
economically  just,  and  will  not  be  perpetual.  In  short,  they 
hold,  with  Mr.  Mill,  that  "  it  rests  upon  the  arbitrary  institutions 
and  customs  of  men,  and  not  on  irreversible  economic  law." 

If  it  be  possible  for  society  to  evolve  into  such  a  condition  that 
all  men  will  own  their  own  jobs,  implements,  means  of  subsis- 
tence, and  capital,  from  which  to  make  up  losses,  the  social 
problem  would  have  been  solved  by  the  elimination  of  the  wages 
class,  and  by  the  fact  that  none  but  capitalists  would  remain. 
But  the  prediction  of  such  a  state  of  things  falls  within  the 
domain  of  proiihecy,  presumption,  or  quackery — of  the  first  if 
true,  of  the  second  if  undemonstrable,  and  of  the  third  if  false. 
Economists  can  only  say  that  in  the  kind  of  world  we  live  in, 
the  reign  of  the  enterprisers  and  f>rofit-makers  over  the  wage 
earners  must  continue,  so  long  as  any  class  of  men  need  to  work 
in  order  to  live,  and  have  not  the  means  to  work  with. 

Henry  George  declares  that  creation  alone  gives  title.  We  ac- 
cept this  definition  for  the  profit-maker's  title  to  his  profits.  When 
ten  thousand  men  lie  idle,  who  would  gladly  do  their  share 
toward  building  a  I'ailway,  if  some  profit-maker  will  but  come 
and  incur  the  risk  of  loss  implied  in  the  furnishing  the  means 
with  which  to  build  the  road,  but  who  are  powerless  and  starving 
because  he  does  not  come,  can  it  be  said  that  it  is  this  inertia  of 
destitution  that  alone  builds  the  road  ?  The  profit-maker  comes. 
Instantly  they  spring  to  their  feet  and  commence  building.  Why? 
Because  they  have  sold  themselves,  their  muscles  and  their  time, 
to  him  for  a  day.    What  for  ?    So  that  he  might  out  of  their 


BUYiya  LABOR- TIME.  187 

idleness  create  labor — out  of  theii'  incoherence  create  co-operation 
—out  of  their  babel  create  unity — out  of  their  destitution  and 
incapacity  create  wealth.  He  does  create  all  these,  buj^s  them 
by  buying  the  laborer's  time,  and  the  right  to  command  his 
obedient  will.  Having  created  them,  shall  he  not  own  what  he 
has  created  ?  If  so,  then,  for  the  purposes  of  the  day's  work,  he 
is  owner,  aiid  the  laborer  is  implement.  He  is  Mind,  Force, 
Energy,  and  the  laljorer  is  cart-horse  and  harrow,  mere  clay  in 
the  hands  of  the  i)otter.  How,  then,  shall  the  clay  say  to  the 
potter,  "  I  am  the  pi'oducer?"  The  universal  conscience  of  man, 
and  even  the  very  definitions  laid  down  by  socialists,  alike  agree 
that  when  the  profit-maker,  by  incurring  a  risk  of  loss,  whei*e 
others  will  not,  leads  forward  the  industrial  host  into  enterprises 
in  which  others  dare  not,  and  so  creates  labor  itself  where  others 
would  let  it  rust,  and  the  result  proves  that  he  has  met  and  satis- 
fied a  social  demand  which  others  did  not  see,  he  shall  have  a 
valid  title  to  the  profit  because  he  created  it,  as  well  as  a  valid 
command  over  the  labor  which  he  evokes,  because  he  creates  that 
also. 

The  moral  and  legal  right  of  the  profit-maker  is  to  rule  industry, 
subject  to  its  power  to  rule  him.  By  this  we  mean  it  is  his  right 
to  select  the  kind  of  w^ork  on  which  he  shall  enter  or  continue 
solely  with  reference  to  whether  he  sees  a  profit  in  it,  and  to 
refuse  or  stop  when  he  sees  no  profit,  to  px'escribe  the  hours  on 
which  he  will  consent  to  run  his  industry,  subject,  of  course,  to 
such  opposing  foi'ces  as  society  may  bring  to  bear.  It  is  his  right 
to  get  all  the  effective  service  out  of  his  working  force  which  he 
is  willing  to  buy  and  pay  for,  as  it  will  naturally  devolve  on  his 
working  force  to  get  all  the  wages  out  of  him  which  they  can 
make  the  services  rendered  bear.  If  he  exploits  their  labor,  so  do 
they  exploit  his  capital.  But  he  becomes  one  power,  and  their 
aggregate  becomes  another,  in  an  equal  contest.  Each  unit  of 
capital,  or  sum  necessary  to  employ  a  man,  acquires'au  equality 
in  exchange  as  against  that  man.  Its  indispensability  in  i)roduc- 
tion  is  worth  as  much  as  his.  Its  capacity  to  earn  equals  his.  Its 
capacity  to  bless  or  curse  mankind,  to  do  good  or  harm,  equals  his, 
because,  if  he  declines  to  labor  on  its  terms,  it  can  usually  find  one 
who  will.  What  the  laborer  produces,  therefore,  by  laboring,  is 
not  the  commodity  which  figures  as  the  joint  product  of  labor 
and  capital.  A  laborer  is  the  sole  pi-oducer,  only,  of  a  diversion 
to  himself  of  wages  which  would  otherwise  go  to  another  laborer. 
In  himself  alone,  he  is  exactly  as  productive  as  any  other  commod- 


188  ECONOMIC  PUILOSOPUY. 

ity,  for  that,  by  its  sale,  jiroduces  a  diversion  of  a  price  which 
would  otherwise  have  gone  for  another  commodity  ;  so  does  he 
sell  a  commodity  and  another  takes  its  place.  Discharge  a  laborer 
and  another  takes  his  place.  Hence  Karl  Marx's  phrase,  surplus 
value — meaning  the  value  a  laborer  produces  above  the  wages  he 
receives — defines  a  modicum  of  moonshine.  He  produces  his 
wages,  or  rather  their  diversion  from  another  to  himself — no 
more  and  no  less.  All  that  remains  above  his  wages  is  the  share 
which  accrues  to  the  profit-maker,  who  is  the  sole  producer  of  the 
commodity,  process,  or  result  which  commands  both  the  wages 
and  the  profit. 

If  a  profit-maker  produces  that  which  society  does  not  want,  he 
is  punished  for  it  by  loss  of  capital ;  if  he  continixes  in  his  course, 
by  bankruptcy.  He  is  as  severely  dominated  by  society  as  his 
workmen  are  by  him.  That  which  he  produces  without  adequate 
demand,  he  must  sell  for  as  much  less  than  it  cost  him  to  produce 
it,  as  society  has  less  need  of  it  than  of  other  things  which  might 
have  been  produced  by  the  same  efl'ort. 

Having  no  power  to  compel  society  to  pay  him  more  for  his 
product  than  it  pleases,  as  society  pleases  to  pay  him  less  than  its 
cost,  the  difference  is  his  loss,  penalty,  and  punishment  for  igno- 
rantly  assuming  to  lead  social  industry  into  any  other  form  of 
work,  or  to  any  greater  cost  for  a  particular  form  of  work,  than 
that  for  which  there  was  most  effective  social  demand.  It  is 
upon  condition  of  sustaining  all  these  losses,  that  the  profit-maker 
enjoys  his  counter-privilege,  of  collecting,  as  profits,  the  excess  of 
price  which  demand  puts  upon  his  product,  over  its  cost  of  produc- 
tion. "  Nothing  ventured,  nothing  had."  It  is  the  courage  to 
risk  this  loss  that  constitutes  enterprise  and  cx'eates  all  industry. 
Hence  the  title  of  profit-maker  rests  on  his  utility  as  a  creator, 
and  is  valid. 

73.  Loss  as  Well  as  Profit  an  Economic  Force. — The  fear 
of  loss  brings  often  as  much  suffering  to  the  successful  as  the  dread 
of  want  brings  to  the  poor.  All  men  have  a  nearly  equal  capacity 
for  painful  and  pleasurable  emotion,  and  the  tendencies  to  emo- 
tion of  either  kind  are  a  nearly  constant  quantity.  The  portion 
ot  a  rich  man's  wealth  which  he  deems  secure,  and  the  portion 
of  a  poor  man's  living  which  becomes  habit,  fall  out  of  the  emo- 
tional range  of  their  natures,  and  cease  to  afford  pleasure  or  pain. 
These  spring  from  the  periphery  of  uncertainty  which  surrounds 
the  habitual,  and  in  this  s^Dhere  the  sweets  of  pleasure  and  tbe  pangs 
t)f  pain  live  on,  as  in  a  tree  the  sap  circulates  only  between  tliQ 


LOSSES.  189 

growing  roots  below  and  the  growing  leaves  above,  leaving  the 
interior  channels  of  fixed  habit  to  decay  and  hollow  death.  Man 
living  at  his  points  of  growtli  only,  which  are  his  points  of  utility 
to  himself  and  his  fellows,  finds  a  nearly  equal  chance  to  keep 
green  and  fresh  those  emotions  which  are  the  ultimate  and  final 
wealth  of  his  nature,  whether  he  be  poor  or  rich. 

All  values  evanesce  rapidly.  All  wealth  is  constantly  losing 
its  value.  Bankrupts  discovered,  settled,  and  cleared  America. 
But  the  bankruptcy  came  after  the  service.  They  that  founded 
its  cities,  built  its  railways,  inaugurated  its  inventions,  also  be- 
came bankrupt.  Columbus  found  in  Spain  a  prison.  Hudson 
met  in  the  northern  seas  a  dagger.  The  wife  and  children  of 
Goodyear  were  buried  as  paupers  by  charity.  Even  Prof.  Morse 
was  lifted  out  of  destitution  by  private  friendship. 

Arkwright,  too,  by  his  talent  for  organization  principally,  like 
Siemens  and  Edison,  attained  to  princely  wealth,  while  Har- 
greaves,  a  greater  inventive  genius  than  Arkwright,  from  a  tech- 
nical point  of  view,  had  to  bear  all  the  hardships  of  extreme  pov- 
erty. * 

An  experienced  Frenchman,  Godard,  estimates  that  in  France, 
of  one  hundred  industrial  enterprises  attempted  or  begun,  twenty 
fail  altogether  before  they  have  so  much  as  taken  root  ;  that  from 
fifty  to  sixty  vegetate  for  a  time  in  continual  danger  of  failing 
altogether,  and  that  at  farthest  ten  succeed  well,  but  scarcely  with 
an  enduring  success.     (Enquete  Commerciale  de  1834,  ii.  233.) 

Pioneers  of  enterprises  in  which  fortunes  ultimately  arise  often 
die  beggars.  Losses  are  seldom  summarized  or  collected.  They 
represent  only  the  vacancies  left  by  explosions,  the  nothing  which 
takes  the  place  of  something.  We  all  hear  of  Cyrus  W.  Field, 
for  he  laid  the  cable  which  was  rescued  from  oblivion  by  profit. 
We  do  not  hear  of  those  who  sought  to  perform  the  same  service 
by  a  telegraph  line,  through  Alaska  and  Russia,  from  New  York 
to  London.     The  success  of  the  cable  was  their  failure. 

The  reasons  why  the  mass  of  mankind  are  wage-workei*s  is  not 
that  they  have  always  lacked  the  means  to  become  profit-makers. 
It  is  that  they  once  possessed  them,  i)layed  at  the  game,  and  lost. 
For  when  they  lose  they  die,  or  fall  back  into  the  ranks  of  wage- 
workei-s.  Very  few  men  work  for  wages  that  do  not  at  some 
time  attain  as  large  capitals  as  those  with  which  Vanderbilt  began 
to  row  his  passengers  from  Staten  Island  to  New  York,  or  with 

*  Note  to  Roscher,  Am.  Edn.  p.  140. 


H»0  ECONOMIC  PHILOSOPUT. 

which  Peter  Cooper  started  his  cofFee-stand  on  the  sidewalk,  or 
with  which  Bennett  began  tlie  Herald. 

To-day  the  deposits,  nearly  all  of  which  belong  to  wage-work- 
ers, in  the  savings  banks  of  the  United  States  represent  a  capital 
of  about  $1,200,000,000,  which  is  a  sum  equal  to  the  entire  aggre- 
gate deposits  of  the  business  men  in  the  State  and  National  banks 
combined.  The  avei-age  deposit  to  each  person  is  $360.  Every 
such  person  is  a  wage- worker  fi'om  preference,  because  he  fears 
the  risks  of  business. 

I  am  aware  that  the  wage-worker  points  to  the  lock-outs,  strikes, 
commercial  crises,  times  when  he  is  out  of  work,  or  works  for  an 
insolvent  employer  who  does  not  pay  him,  and  insists  that  he,  too, 
shares  in  the  losses  of  industry  due  to  its  being  turned  into  chan- 
nels where  its  product  is  not  demanded.  In  the  cases  of  lock-outs 
and  strikes,  the  wage-worker  is  paid  while  he  works,  but  his  work 
stops.  There  is  no  loss  of  pay  for  work  actually  performed,  con- 
sequently no  wealth  passes  out  of  him  to  compensate  society  for  a 
mal-employment  of  labor.  On  the  contrary,  he  may  have  grown 
richer  by  that  very  mal-employment  of  labor  by  which  society 
would  have  grown  poorer,  but  for  the  fact  that  the  whole  loss  to 
society  is  paid  for  out  of  his  employei^'s  capital. 

In  commercial  crises  labor  and  capital  both  stand  still.  Labor 
contributes  no  value  which  is  capable  of  compensating  society  for 
a  loss.  But  the  capitalist  who  has  invested  $50,000,000  in  build- 
ing a  railroad  worth  $5,000,000  has  sustained  a  net  loss  of  $45,000,- 
000,  which,  if  society  in  the  aggregate  were  the  capitalist,  would 
have  to  be  borne  by  society  at  large.  And  if  thousands  of  small 
capitalists  were  the  owners,  it  would  send  ruin  into  as  many  fam- 
ilies. 

In  1883  to  1885  railway  shares  in  the  United  States  shrank  in 
value  by  one-third,  without,  it  is  believed,  causing  poverty  to  be 
felt  in  a  single  household  or  the  discharge  from  employment  of  a 
single  workman. 

The  only  case  in  which  the  wages-worker  makes  a  loss  which 
makes  him  a  sharer  in  the  punishment  due  to  an  unprofitable 
guidance  of  industry  is  when  he  woi'ks  for  an  employer  in  creat- 
ing reproductive  wealth  and  his  employer  so  fails  as  not  to  pay 
him.  In  this  case  the  wages- worker  "adventures,"  or  I'isks,  his 
labor  intentionally  on  his  employer's  responsibility  only,  but  vir- 
tually on  the  success  of  the  enterprise.  Neai'ly  everywhere  he  is 
given  a  lien  which  guards  against  his  loss  if  the  improvement 
ever  attains  value.    To  make  the  adventure  fair,  his  wages  ought 


TIME  IN  PROFITS.  191 

to  be  enough  higher  than  he  could  earn  elsewhere  to  cover  this 
rislc. 

As  a  rule,  and  in  the  large,  tlie  profit-maker  relieves  society  of 
all  pecuniary  loss  by  the  unprofitable  misdirection  of  labor  in  the 
production  of  that  for  which  there  is  less  than  the  highest  current 
demand.  He  exempts  society  from  all  waste  of  labor  by  paying 
the  penalty  of  such  waste  himself. 

Who  can  estimate  the  value  of  the  vast  saving  to  society  which 
accrues,  and  the  vastly  more  rapid  growth  of  wealth  which  re- 
sults, and  the  prodigiously  greater  amount  of  mental  service  ren- 
dered by  each  part  of  society  to  every  other,  under  a  system  wliich, 
by  shoving  over  all  uneconomic  and  unprofitable  effort  on  those 
who  cause  it,  resolutely  holds  the  great  mass  of  workers  to  effort 
that  may  be  perhaps  distasteful  and  uncongenial  to  nearly  every 
person  engaged  in  it,  but  which,  by  the  fact  that  it  pays  a  profit, 
is  inexoi'ably  proved  to  be  the  most  demanded  of  any  service  that 
could  be  rendered.  The  instinct  which  draws  society  toward 
profit  is  analogous  to  the  attraction  in  nature  which  draws  plants 
toward  light. 

74.  The  Rate  of  Profit.— Prof.  H.  D.  MacLeod,  with  great 
force  and  acuteness,  points  out*  that  the  rate  of  profit  varies, 
directly,  as  the  excess  of  the  price  of  the  product  above  the  cost 
of  production,  and  invei'sely,  as  the  time  in  which  the  profit  is 
made.  Hence,  if  the  capital  advanced  be  £100  and  the  profit  £20, 
the  rate  of  profit  depends  on  the  time  within  which  it  is  made.  If 
it  be  made  in  a  year,  the  rate  of  profit  is  20  per  cent,  per  annum  ; 
if  in  a  month,  it  is  240  per  cent,  per  annum  ;  if  in  a  week,  it  is 
1,040  per  cent,  per  annum  ;  if  in  a  day,  it  is  7300  per  cent,  per 
annum.  Thus  the  same  profit  may,  if  made  in  a  different  length  of 
time,  be  a  very  diff'erent  rate  of  profit.  The  profit  is,  in  all  cases, 
the  difference  between  cost  of  production  and  price  of  product. 
The  rate  of  profit  is,  in  all  cases,  the  percentage  of  the  return 
earned,  to  the  capital  invested,  within  a  given  time.  The  rate  of 
profit,  therefore,  as  between  different  industries,  depends  largely 
on  the  proportion  of  the  capital  which  can  be  brought  into  active 
use,  or,  as  the  phrase  is,  turned  over,  and  the  time  required  to 
turn  it  over,  as  well  as  on  the  percentage  of  the  gross  return  to 
the  principal.  In  American  farming  at  least  two-thirds  of  the 
capital  is  in  the  land,  which  is  not  turned  over  in  the  ecvniomic 
sense  except  as  it  rises  or  falls  in  value,  and  this  rise  or  full  is  not 


*  "  Principles  of  Kcoii.  I'liil.,"  vol.  ii.,  \k  11. 


192  ECONOMIC  PHILOSOPHY. 

eifectively  realized  unless  it  is  sold.  The  farming  implements, 
though  capital,  make  no  separate  profit  on  their  own  turn  over, 
as  they  decline  in  value  each  year.  The  live  stock  and  crops, 
and  the  cut  of  gi-ass  and  forest,  are  the  yearly  portion  of  capital 
turned  over,  and  these  usually  only  from  once  to  twice  a  year. 
Most  manufacturing  concerns,  however,  turn  out  a  product  from 
once  to  five  times  their  capital,  or  virtually  turn  over  their  capi- 
tal as  many  times  each  year,  and  most  large  banks  loan  from  four 
to  six  times  their  capital. 

It  may  be  asked,  if  the  rate  of  profi.t  is  so  much  greater  in  bank- 
ing" and  manufactui'ing  than  in  farming,*  why  does  not  farming- 
capital  go  into  banking  and  manufacturing  until  the  rate  is 
equalized  ?  The  answer  is  that  the  risks  of  farming,  where  the 
farmer  owns  his  farm,  are  reduced  to  the  minimum,  and  are  lower 
probably  than  in  any  other  occupation.  This  at  least  is  true  of 
farming  in  the  Eastern  States.  Where,  however,  as  in  the  West- 
ern States,  farming  is  marked  by  an  increased  addiction  to  a  single 
crop,  produced  by  an  application  of  a  large  capital  to  a  very  large 
ai'ea  of  land,  the  risks  increase,  losses  are  frequent,  bankruptcy 
almost  as  frequently  overtakes  the  farmer  as  the  merchant,  and 
as  great  fortunes  and  as  high  a  rate  of  profit  is  made  in  farming 
as  in  any  other  occupation. 

Adam  Smithf  supposed  that  there  is  an  "ordinary  rate  of 
profit "  on  capital  sufficient  to  meet  the  losses  to  which  it  is  ex- 
posed, and  leave  a  certain  other  "ordinary  rate  of  clear  profit," 
or  business  would  not  be  carried  on.  This  was  because  he  began 
with  labor  as  the  efficient  agent,  instead  of  with  enterprise — with 
matter  instead  of  with  mind.  In  fact,  there  is  no  oi'dinary  rate 
of  profits,  and  no  two  investments  of  capital,  in  any  country,  that 
agi'ee  either  in  the  volume  or  the  rate  of  their  profits.    To  allege 


*  MacLeod  (Vol.  ii ,  p.  61)  regards  the-opposite  view,  as  held  by  Adam  Smith  ("Wealth 
of  Nations, "Bk.  ii.,  Ch.  v.)  as  mostextraordiuary,  and  contrary  to  the  plainest  facts  of 
history.  Dr.  Smith  says :  "  No  equal  capital  puts  in  motion  a  greater  quantity  of  pro- 
ductive labor  than  that  of  the  farmer  ...  no  equal  quantity  of  productive  labor 
employed  in  mannfactures-cau  ever  occasion  so  great  a  reproduction.  In  them  nature 
does  nothing,  man  does  all ;  and  the  reproduction  must  always  be  in  proportion  to  the 
strength  of  the  agents  that  occasion  it.  The  capital  employed  in  agriculture,  therefore, 
not  only  puts  in  motion  a  greater  quantity  of  productive  labor  than  an  equaliquantity 
employed  in  manufactures,  but  in  proportion,  too,  to  the  quantity  of  productive  labor 
which  it  eraploys.it^dds  a  much«greater  value  to  the  annual  produce  of  the  land  and 
labor  of  the  country,  to  the  real  wealth  and  revenue  of  its  inhabitants.  Of  all  the  ways 
in  which  a  capital  can  be  employed,  it  is  by  far  the  most  advantageous  to  society." 

t  "  Wealth  of  Nations,"  by  McCuIloch,  p.  41. 


.     HALF-PROFITS  MAKE  INTEREST.  1  OH 

such  an  agreement  would  impeach  their  balance  sheet  as  effectu- 
ally as  an  alleged  Chinese  census  is  impeached  when  two  large 
provinces  are  given  exactly  the  same  area  and  the  same  popula- 
tion. What  ordinarily  takes  place  is  not  that  those  who  lose 
their  capitals  have  them  made  up  to  them  by  succeeding  profits, 
but  that  they  are  eliminated  as  profit-makers  and  fall  back  into 
the  ranks  of  wage-workers.  They  go  at  something  else.  There 
is  an  ordinary  transfer  of  the  capitals  of  losers  into  the  hands  of 
winners,  and  in  this  way  capital  is  steered  out  of  losing  invest- 
ments into  proiitable  investments, 

Adam  Smith  was  nearer  the  truth  when  he  estimated  that  half 
the  average  i-ate  of  profit  would  be  the  ordinaiy  rate  of  interest.* 
For  the  principle  upon  which  we  have  supposed  the  division 
to  be  made  between  the  profit-maker  and  the  wages- worker  would 
also  apply  between  the  borrower  of  capital  and  the  lender.  A. 
man  will  borrow  capital  to  work  with  when  the  profit  he  can 
make  by  borrowing  it,  or  the  residue  he  will  have  left  after  pay- 
ing interest  on  it,  amounts  to  a  better  compensation,  for  his  care 
and  risk  in  superintending  the  work  he  will  set  on  foot  with  it, 
than  any  other  use  he  can  make  of  his  time  and  risk  at  the  same 
cost. 

If  his  own  capital  enable  him  to  employ  ten  men,  but  by  boi*- 
rowing  as  much  more  he  can  employ  thirty  men,  the  increased 
capital  increasing  the  efficiency  or  the  losses  of  his  establishment 
by  more  than  its  own  quantity,  he  may  obtain  on  the  labor  of  the 
thirty  men  a  gross  sum  out  of  the  product  twice  as  large  as  the 
wages  of  the  thirty  men,  and  he  may  only  get  a  product  half  as 
large  as  the  wages  he  pays.  If  he  and  the  lender  of  the  money 
meet  at  the  point  where  each  is  equally  indispensable  to  the  other, 
he  furnishing  the  lender  with  an  investment  he  lacks,  and  the 
lendei-  furnishing  him  witli  a  profit  he  lacks,  to  make  the  exchange 
equal  he  should  divide  equally. 

Profits  are  so  much  more  unstable  than  interest,  and  losses  to 
the  profit-maker,  are  so  much  more  frequent  than  to  the  money 
lender,  that  any  comparison  between  the  two  is  necessarily  one 
of  instability  with  stability. 

The  same  consideration  applies  to  any  comparison  of  rates  of 
profit  with  rates  of  rent  on  land. 

Adam  Smith,  starting  with  the  proposition  that  rates  of  profit 
on  capital  would  conform  to  a  certain  standard,  assumed  that 


*Bookl.,Ch.  ix.,  McCullough's  Edn.,  p.  41. 


194  EGONOMIO  PlIILOSOPIir. 

capital  would  migrate  from  the  better  to  the  worse  soils  as  fast  as 
it  could  earn  in  the  new  location  this  ordinary  rate  of  profit,  and 
would  leave  behind  it  for  the  landloi'd  in  the  form  of  rent  what- 
ever excess  it  might  earn  above  this  ordinary  rate  of  profit.  The 
highest  rates  of  profit,  however,  are  sometimes  made  where  the 
highest  rents  are  paid,  and  sometimes  where  no  rents  are  paid. 
The  London  and  provincial  banks  of  England  quite  generally 
make  dividends  of  twenty  to  twenty-five  per  cent.,  though  tlieir 
rents  are  as  high  as  any  known,  since  their  business  demands  as 
good  locations. 

Whaling-ships  and  privateers  also  may  make  high  rates  of  iDrofit 
and  pay  no  rent  at  all.  Perhaps  no  vessels  can  properly  be  said 
to  pay  a  rent.  Nor  does  capital  show  any  disposition  to  seek  out 
a  landlord  for  vessels  which  pay  a  high  profit,  and  pay  to  him  the 
difference  between  what  it  can  earn  in  the  use  of  those  vessels 
and  what  it  can  earn  by  sailing  the  meanest  hulks  afloat. 

That  there  is  a  very  uniform  ratio  between  rates  of  interest  and 
rates  of  rent  is  familiar  to  all.  But  this  arises  partly  because 
rates  of  rent  are  always  estimated,  not  upon  the  actual  cost  of  land 
and  buildings,  but  upon  a  capitalized  sum  which  is  virtually 
arrived  at  by  calculating  the  principal  sum  on  which  the  actual 
rents  will  pay  the  interest  at  cui^rent  interest  rates,  together 
with  taxes,  insurance,  and  a  moderate  i^rofit  for  the  gx'eater 
trouble  of  real  estate  investments.  Hence  the  ordinai^y  so-called 
rent-rate  is,  in  fact,  not  a  rent-rate  in  any  original  sense,  i.  e.,  it 
is  not  a  sura  computable  from  facts  relating  to  the  land,  its  area, 
cost  of  improvements,  or  the  like,  but  the  rent  is  itself  the  original 
factor,  and  from  this  the  value  of  land  is  arrived  at  as  the  prin- 
cipal on  which  the  rent  will  pay  interest.* 

A  good  deal  of  effort  has  been  expended  to  pi'ove  what  Mr. 
Mill  calls  ' '  the  tendency  of  profits  to  a  minimum  "  and  what 
Henry  C.  Carey  styles  "the  diminution  in  the  value  of  capital  as 
indicated  by  the  diminution  in  the  share  of  its  product  which  is 
given  for  its  use  by  those  who,  unable  to  purchase,  desire  to  hire 
it."  As  relates  to  each  particular  enterprise  in  which  profits  are 
won,  this  is  more  than  true,  indeed,  it  is  inadequate  to  the  truth. 
Profits  may  be  said  to  begin  at  unlimited  figures,  and  to  recede 
rai)idly  until,  as  profits  proper,  they  totally  disappear.  Each  par- 
ticular mode  of  investment  of  capital  invites  a  competition  fi-om 


*  Adam  Smith  (Book  ii.,Ch.  iv.)  Bays  "the  ordinary  market  price  of  land  depends 
every  where  ou  the  ordinary  market  rate  of  interest. " 


PROFITS  ARE  IN  THE  NEW.  195 

others,  a  rise  of  wages,  I'ent,  and  interest,  until  these  swallow  up 
all  the  returns.  If  this  were  not  so,  profit  would  not  be  the  migra- 
tory force  which  pioneers  the  way  to  new  fields,  processes,  and 
modes. 

But  when  this  doctrine,  of  the  tendency  of  profits  toward  elim- 
ination, is  transferred  from  a  law  of  each  individual  investment 
of  capital,  and  is  stated  as  a  "  tendency  of  profits  to  fall  as  society 
advances,"  as  Mr.  Mill  plainly  puts  it,  and  as  Dr.  Carey  and  Mr. 
Atkinson  seem  to,  it  is  a  palpable  absurdity  which  would  be  at 
war  with  the  potential  progress  of  society  if  it  could  be  true,  and 
in  conflict  with  daily  observation.  Capital  in  mining,  at  the  out- 
break of  the  California  and  Australian  mining  epoch,  made  such 
profits  that  percentages  were  lost  sight  of.  Bonanza  farming  has 
made  profits  of  five  or  six  hundred  per  cent,  per  annum.  Divide 
A.  T.  Stewart's  fortune  of  $80,000,000  over  fifty  years,  and  esti- 
mate it  as  a  "profit"  on  the  capital  of  $4,000,  with  which  he 
started.  It  would  be  $1,600,000  a  year,  or  an  average  of  four 
hundred  times  his  first  capital  each  year.  So  of  other  lai'ge  for- 
tunes. All  observation  indicates  that  as  large  profits  are  arising 
in  the  new  industries  as  the  old  gave  rise  to  when  they  were 
new,  or,  to  use  the  old  adage,  there  are  ' '  always  as  good  fish  left 
in  the  sea  as  ever  were  caught  out," 


CHAPTER  VI. 

CAPITAL. 

75.  Definitions. — Capital  is  that  portion  of  wealth  employed 
in  distributing-  or  producing  wealth  or  commodities.  The  dis- 
tribution, consumption,  and  productipn  of  commodities  is  to  be 
carefully  distinguished  from  the  distribution,  consumption,  or 
production  of  the  wealth,  or  the  values,  at  any  time  embodied  in 
those  commodities. 

When  corn  is  sent  from  Dakota  to  Massachusetts,  Pennsylvania, 
and  Liverpool,  commodities  are  distributed.  The  agents  in  the 
distribution  of  commodities  are  trade,  commei'ce,  and  transporta- 
tion. When  the  price  which  the  corn  brings  is  divided  between 
the  transporter,  the  middleman,  the  merchant,  the  banker,  the 
landowner,  the  land-farmer,  the  laborer,  the  tax-collector,  the 
school-teacher,  and  all  others  who  get  any  share  of  it  or  whose 
services  aid  in  its  production,  that  process  is  called  the  distribution 
of  wealth.  The  two  movements  are  therefore  in  oj^posite  direc- 
tions and  of  opposite  kinds.  One  is  production  or  taking  to 
mai'ket — satisfying  want.  The  other  is  payment — getting  home 
with  the  price — being  rewarded.  The  former  is  visible,  material, 
easily  understood.  The  latter  is  subtle,  evasive,  and  concealed. 
In  the  process  the  prices  received  for  the  corn  must,  on  the  average, 
pay  the  freight  of  the  transporter,  the  interest  of  the  banker  who 
loaned  money  to  the  farmer  to  help  him  produce  the  coi-n,  the 
commissions  of  the  middleman,  the  taxes  paid  on  the  land,  the 
teacher  who  taught  the  farmer's  children,  and  perhaps  the  preacher 
who  preached  to  them.  But  the  most  obvious  things  to  be  paid 
for  are  the  use  of  the  land,  the  interest  on  the  capital,  the  reward 
to  the  enterprise,  and  the  wages  of  the  labor  that  produced  the 
corn. 

If  the  wealth  were  not  distributed  among  the  producers,  the 
commodities,  in  which  it  is  embodied,  would  not  be  produced.  But 
producing  the  commodity  is  not  identical  with  producing  the 
wealth  it  embodies.  Corn,  when  reaped  in  Dakota,  is,  as  a  com- 
modity in  the  ordinary  sense,  as  completely  produced  as  it  will 


CAPITAL  CREATES  LABOR.  197 

ever  be.  This  ordinary  sense  is  not  a  very  true  sense,  since  things 
are  commodities  only  as  they  commode  people,  and  as  there  is  no 
body  in  Dakota  who  wants  that  portion  of  the  corn  which  is  sur- 
plus, it  is  much  less  a  commodity  there  than  it  will  be  in  New 
York.  The  word  commodity  is  a  word  of  value,  and  the  value  in 
the  corn  will  keep  increasing  as  it  approaches  nearer  to  those 
consumers  of  whose  esteem  and  need  the  value  is  the  measure. 

Since  capital  is  the  jjortion  of  wealth  which  is  devoted  first  to 
bringing  the  corn  into  existence  as  corn  (viz.,  land,  plows,  cul- 
tivatoi"s,  money  for  seed,  etc.),  and  then  to  enhancing  its  value 
by  forwax'ding  it  to  those  who  value  it,  it  may  be  said  that  the 
function  of  capital  is  to  create  labor,  commodities,  and  values, 
as  labor,  commodities,  and  values,  whenever  employed  in 
certain  ways,  become  capital.  Capital  is  etymologically  that 
which  leads  or  commands  or  has  the  headship  in  industry,  fi'om 
caput,  head.  Economically  it  is  exactly  what  it  is  etymologically. 
It  would  never  have  seemed  to  be  any  thing  else,  had  not  a 
desire  grown  up  to  define  words  in  a  way  to  win  votes,  instead 
of  with  a  view  to  scientific  precision.  As  capital  has  no  vote, 
while  those  whose  labor  it  creates  have,  it  was  deemed  courteous 
to  call  attention  only  to  the  fact  that  labor  creates  capital,  without 
calling  covmter-attention  to  its  complement,  that  capital  creates 
labor.  Tlie  circle  is  the  same  as  in  the  case  of  the  egg  and  the 
living  animal.  "All  life  from  the  Qgg''''  is  no  truer  than  "every 
Qgg  from  life."  Omnium  vivum  ex  ovo  finds  its  complement  in 
omnium  ovum  ex  vivo.  So  of  capital  and  labor,  each  hatches 
the  other. 

Nor  is  the  consumption  of  commodities  the  same  as  the  con- 
sumption of  wealth.  When  an  egg  is  hatched  out  into  a  chicken 
a  commodity  is  consumed,  for  no  egg  exists,  and  a  new  com- 
modity is  produced  in  its  stead.  But  there  has  been  no  con- 
sumption of  wealth,  as  in  each  stage  of  the  process  value  was 
increasing.  So  in  drawing  a  tx-ain  of  cars  coal  is  burned,  but  this, 
though  a  consumption  of  a  commodity,  is  no  more  a  consumption 
of  wealth  than  is  a  laborer's  sweat,  for,  as  in  human  labor  more 
than  the  value  of  the  labor,  and  generally  twice  as  much,  passes 
into  the  commodity,  so  in  the  transportation  of  corn  to  market  by 
rail  more  than  twice  the  value  of  the  commodities  consumed  in 
effecting  the  transportation  ai*e  embodied  in  the  corn,  i.e.  the 
purchaser  in  New  York  or  Liverpool  values  it  higher  as  it  draws 
nearer  to  him  by  more  tlian  the  cost  of  the  fuel  and  wages,  freigl)t, 
interest,  reiit,  and  profits  incurred  in  bringing  it. 


198  ECONOMIC  PHILOSOPHY. 

When  consumptiou  of  commodities  is  part  of  the  means  of 
enhancing  value,  it  is  reproductive  consumption,  and  is  a  phase 
of  productive  energy.  Nor  does  destruction  of  wealth  always 
imply  destruction  of  the  commodity.  When  things  are  made  at 
a  loss  commodities  are  ci'eated  but  wealth  diminishes. 

Capital  is  frequently  designated  as  fixed  or  circulating.  Fixed 
capital  implies  all  reproductive  wealth  that  can  be  used  again  and 
again  in  its  function  without  change  of  efficiency  or  change  of 
ownership.  Fuel  and  food  are  circulating  capital,  because  in 
a  single  use  they  lose  their  elficiency  as  fuel  and  food.  Money  is 
circulating  capital,  as  to  the  person  who  pays  and  receives  it, 
because  capable  of  but  one  use,  for  the  time,  by  one  person.  But 
the  unexportable  stock  of  money,  at  any  time  existing  in  a  country, 
may  be  viewed  as  fixed  capital  as  to  the  aggregate  society  of  that 
country,  because  its  social  efficiency  is  greater  the  oftener  it 
changes  hands.* 

76.  Distribution  of  Wealth  Precedes  and  Causes 
Production. — If  we  are  right  in  the  foregoing  definitions,  it 
will  be  evident  that,  as  it  is  the  consumption  of  commodities  that 
creates  the  effective  demand  for  them,  so  it  is  the  distribution  of 
wealth  that  causes  the  production  of  commodities  ;  for  men 
co-operate  in  producing  commodities,  only  as  they  are  presently 
or  efiiciently  incited  to  co-operate,  by  being  paid  to  co-operate. 
Hence  it  is  that  distribution  jirecedes  and  causes  pi'oduction,  viz., 
rent  must  be  paid,  raw  materials  must  be  bought,  men  must  be 
hired,  machinery  must  be  collected,  subsistence  for  tlie  men  must 
be  liad  and  maintained,  a  contract  for  a  job  must  be  agreed  upon, 
all  before  production  can  begin.  But  each  of  these  acts  involves 
a  distribution  or  jiaying  out  of  wealth,  viz.,  rent  of  plant,  interest 
on  capital,  wages  of  labor,  and  profits  on  raw  materials.  It  is 
because  distribution  precedes  production  that  only  those  who  have 
the  power  to  distriljute  wealth  can  })roduce  it  in  jjerson  and 
originally.  All  who  have  no  capital  are  mere  instruments  of 
production.  Tliey  can  neither  dictate  its  course,  its  mode,  nor  its 

*  Mr.  Moody  ("  Land  and  Labor,"  p.  179)  objects  to  the  statement  that  circulating 
capital,  i.e.,  money,  to  the  amount  of  $270,000,000  was  converted  into  fixed  capital  in 
1882  by  the  expenditure  of  that  sum  in  building  railroads,  because,  as  he  says,  the 
money  is  still  circulating.  This  is  true  as  to  society,  but  not  true  as  to  those  who  paid 
out  the  money.  They  no  longer  have  it  for  circulation.  If  we  assume  that  had  they 
not  built  the  railroads  they  would  have  paid  it  for  the  same  labor  to  raise  wheat,  and 
that  the  added  wheat  would  have  been  worth  it,  there  would  have  been  $270,000,000 
more  wheat  and  less  railroads  where  now  there  is  that  value  more  in  railroads  and  less 
in  wheat. 


SOCIETY  IS  JUST.  199 

terms.  If  tbey  seek  to  do  so  thz'ough  strikes  or  labor  contests,  it 
is  only  by  distributing  wealtli  out  of  tbeir  own  funds  tbat  they 
can  secure  the  degree  of  co-operation  necessary  to  produce  even  a 
strike.  Hence,  even  in  producing  an  obstruction  to  industry, 
distribution  precedes  production.  Hence,  too,  it  is  hopeless  to 
attempt  to  comprehend  the  phenomena  of  social  industry  except 
by  beginning  at  the  distribution,  not  of  commodities,  but  of 
wealth.  And  it  is  chiefly  because  Adam  Smith,  Ricardo, 
Malthus,  and  Mill  have  begun  at  labor  and  production  (meaning 
by  labor  the  condition  of  unaided  destitution,  and  by  production 
whatever  labor  does)  that  they  have  founded  not  only  their  own 
school  of  laissez  faire  economists,  which  make  unaided  labor  the 
sole  producer,  but  indirectly  and  by  reflex  action  they  have  also 
founded  the  German,  English,  and  American  school  of  social 
anarchists,  who  propose  that  unaided  labor,  having  produced  all 
the  wealth,  shall  have  it  all. 

77.  Is  Economic  Distribution  Just? — The  unequal  dis- 
tribution of  wealth  has  been  confessed  to  be  unjust  and  unneces- 
sary by  the  mass  of  mankind,  by  many  statesmen,  and  by  most 
economists,  without  discussion  or  examination.  The  moi^e  dis- 
posed the  mind  is  to  I'egard  undirected  and  empty-handed  labor 
as  transacting  the  whole  business  of  life,  a  disposition  which  in 
many  minds  rises  into  an  infatuation  easily  mistaken  for  benev- 
olence, the  more  plaintive  will  be  its  outcry  against  one  man 
having  more  than  another.  Thus,  Adam  Smith,*  after  speaking 
of  servants,  laborei'S,  and  workmen  of  different  kinds  as  "mak- 
ing up  the  far  greater  part  of  every  gi'eat  political  society,"  says 
"  it  is  but  equity,  besides,  that  they  who  feed,  clothe,  and  lodge 
the  whole  body  of  the  jieople  should  have  such  a  share  of  the 
produce  of  their  own  labor  as  to  be  themselves  tolerably  well  fed, 
clothed,  and  lodged." 

The  answer  to  this  is,  it  is  but  equity  that  they  who  obtain  the 
initiative  in  all  industry,  who  set  all  labor  in  motion  at  their  own 
risk,  and  provide  it  with  its  work,  implements,  and  subsistence, 
and  market  its  product,  should  be  recognized  by  a  professional 
economist  as  having  done  sometliing  toward  the  creation  of  labor, 
instead  of  being  maligned  as  the  crafty  purloiners  of  what  they 
have  had  no  hand  in  producing.  If  it  were  true  tliat  "  servants, 
laborers,  and  (wages)  workmen"  do  "feed,  clothe,  and  lodge  the 
whole  body  of  the  people,"  then  Adam  Smith  would  not  be  teach- 

*  McCuUoch's  "  Wealth  of  Nations,"  p.  30. 


200  ECONOMIC  PHILOSOPHY. 

ing-  sound  equity  in  saying  that  the  robbere  should  give  up 
enough  to  feed  and  clothe  the  producers  comfortably.  An  honest 
conscienced  woi'ld  will  spurn  with  scorn  any  such  mealy-mouthed 
compromise  with  felony  as  Smith  proposes.  Karl  Marx  would  be 
right  in  saying  the  profit-makers  should  give  up  all,  which  they 
did  not  produce,  to  the  last  red  cent.  Political  economy  must 
prove  society  to  be  in  accord  with  exact  and  minute  justice,  and 
with  true,  profound,  far-reaching  philanthropy,  as  well  as  with 
natural  law,  before  it  can  become  the  satisfactory  science  of 
society.  We  believe  the  philanthropy  of  economic  science  to  be 
the  major  key  in  social  harmony,  and  the  philanthropy  of  im- 
pulse and  sentiment  to  be  excellent  within  i^roper  limits,  but  a 
minor  and  subordinate  key  to  human  welfare.  It  is  the  rains  and 
the  rivers  of  natural  economic  law  that  chiefly  bless  mankind,  not 
the  levees,  stop  gaps,  umbrellas,  dams,  and.  make-shifts,  which 
enable  us  to  fight  the  rains  and  rivers  at  times.  So  the  principles 
of  economic  law  which  govern  social  industry  claim  scientific 
recognition  as  the  commanding  forces  which  contribute  to  the 
world's  comfort,  without  in  any  way  denying  that  when  these 
fail,  or  are  too  crude  or  brutal,  finer  and  more  delicate  impulses 
summon  us  to  works  of  impulsive  charity.  So  in  the  Hebrew 
economy,  they  who  plowed  and  sowed  the  fields  with  grain 
reaped,  as  the  major  rule,  but  the  widow  and  fatherless,  who 
neither  sowed  nor  reaped,  must  also  be  allowed  to  glean  after  the 
reapers.  This  was  the  minor  rule.  These  two  rules  reflect  the, 
relation  which  business  bears  to  charity  at  all  times.  But  when 
industry  is  so  misinterpreted  as  to  become  robbery,  charity,  by 
the  same  token,  becomes  insult.  Hence  it  is  that  even  the  right 
appi'ehension  of  the  true  nature  and  mission  of  the  altruistic  senti- 
ments becomes  impossible  until  the  proper  exercise  of  the  egoistic 
is  justified  and  defended.  Society  denies  the  right  of  industry  to 
be  kind  or  generous,  until  what  is  characterized  as  industry  is 
first  shown  to  be  inhei'ently  just  and  humane.  That  can  not  be 
done  on  the  bases  assumed  by  Smith  and  Mill. 

Mr.  Mill  says*  that,  "while  the  laws  and  conditions  of  the  pro- 
duction of  wealth  partake  of  the  qualities  of  physical  truths,"  in 
which  there  is  "nothing  optional  or  arbitrary,"  it  "is  not  so 
with  the  distribution  of  wealth.  That  is  a  matter  of  human  histi- 
tution  solely.  .  .  .  The  disti'ibution  of  wealth  depends  on  the 
laws  and  customs  of  society." 

^  ■--""' -■    ■  — — — — — — ' — — ' — — — ■ — — -     ...  -  -     —  — ■■  ■■  -  ,  / 

*  *'  Political  Enonomy/*  vol.  ii. 


MILL   ON  DISTRIBUTION.  201 

It  is  amazing  that  Mr.  Mill  sliould  think  that,  if  legislatures 
chose  to  enact  it,  wealth  and  capital  could  be  maintained  in  a 
state  of  constant  equal  distribution  among  all  persons,  or  that  it 
could,  perchance,  be  distributed  in  such  unequal  portions  that 
honesty,  piety,  learning,  complexion,  personal  beauty,  or  popu- 
larity, should  get  whatever  excess  over  the  share  which  would 
befall  the  lack  of  these  qualities  a  legislature  should  see  fit 
to  enact.  But  he  distinctly  affirms  that  wealth-distribution 
depends  on  parliamentary  and  judge-made  law,  and  on  such 
customs  as  society  may  choose  to  enact  for  itself.  "The 
rules  by  which  it  is  determmed,"  he  says,  "are  what  the 
opinions  and  feelings  of  the  ruling  portion  of  the  com- 
munity make  them."  But  how  comes  there  to  be  "a  ruling 
portion  of  the  community  ?"  Why  should  one  portion  of  the  com- 
munity be  ruled  by  another  ?  Only  because  one  portion  has 
wealth  and  the  other  is  in  povei'ty.  If  Crusoe  has  a  boat,  fish- 
ing-tackle, and  bait,  and  Friday  has  none,  then  Crusoe  is  capital, 
and  Friday  is  labor,  i.  e.,  Crusoe  has  got  in  his  power  the  results 
of  work  already  done,  Friday  has  got  a  hungry  body  which  is 
willing  to  work  if  enabled  to  do  so.  Work  done  commands  the 
mere  willingness  to  work.  This  is  the  rule  of  capital  over  labor. 
It  is  plenty  commanding  destitution,  distribution  commanding 
production. 

Mr.  Mill  holds  that  wealth  is  unequally  distributed  because 
those  who  liaveit  distribute  it  unequally,  between  themselves  and 
those  who  haven't  it.  That  inequality  whereby  a  portion  of 
society  rules,  is  due  to  the  fact  that  the  portion  which  rules  rules 
unequally.  Inequality  causes  the  persons,  laws,  and  customs  of 
society  to  be  unequal.  Mr.  Mill's  cause,  is  the  consequence  of  its 
own  effect,  and  his  effect  produces  its  cause  ! 

78.  Dispersion  of  Capital  Is  a  Mode  of  Destroying  It. — 
Wealth  being  a  power,  and  all  power  being  i)owerless  when  re- 
sisted by  an  equal  power,  it  follows  that  to  equalize  wealth,  as  be- 
tween those  who  are  to  wield  its  power  and  those  over  whom  it 
is  to  be  exercised,  is  to  destroy  it.  Wealth  does  not  consist  in 
means,  but  in  inequality  of  means.  Portions  of  wealth  co-oper- 
ating, as  among  shareholders,  to  control  labor,  strengthen  each 
other.  But  two  portions  of  wealth,  each  seeking  to  com- 
mand the  service  of  tiie  possessor  of  the  other,  paralyze  each 
other.  Hence,  between  two  persons  of  equal  powers  in  all  re- 
spects, and  of  equal  wealth,  the  phenomenon  of  one  em])loying 
the  other  to  do  any  thing  whatever,  would  be  anabsui'dity.     Tlie 


202  ECONOMIC  PIIILOSOPHT. 

story  is  told  of  Mr.  Stephen  Girard,  of  Philadelphia,  that,  being 
one  day  at  the  market  purchasing  jjrovisions  for  his  family,  a 
pompous  fellow  of  great  pretense,  but  of  small  means,  mistook 
the  ijlainly  clad  millionaire  for  a  laborer  or  porter. 

"Here,  my  good  fellow,"  said  he  to  Girard  patronizingly, 
"  don't  lose  your  time  moon-gazing,  but  shoulder  this  basket  of 
mine,  and  earn  a  shillmg  by  carrying  it  home  for  me.  I  live  just 
beyond  the  residence  of  that  tight  old  fellow,  Stephen  Girard.  If 
you  don't  know  me,  you  may  know  him.     Will  you  go  ?  " 

"  Certainly ,"  said  Girard.  Shouldering  the  man's  basket,  he 
followed  the  sti'anger  to  his  door  and  received  his  fee. 

"  By-the-way, "  said  his  customer,  "  I  may  have  occasion  to 
use  you  again;  have  you  a  card  with  you?  "     - 

"  I  have  no  card,"  replied  the  rich  man;  " but  you  can  prob- 
ably find  me  by  inquiring.     My  name  is  Stephen  Girard." 

Here  the  absurdity  of  a  poor  man  employing  a  rich  one  to 
render  a  menial  service  is  so  palpable,  and  the  willingness  of  the 
millionaire  to  render  it  becomes  so  humiliating,  that  only  the 
sheerest  combination  of  effrontery  and  ignorance  on  one  side,  and 
of  quiet  wit  and  equanimity  on  the  other,  could  effect  the  climax. 
Essentially,  the  rule  is  universal  that  only  the  relatively  poor  are 
open  to  employment,  and  only  those  having  more  means  can 
emploj^  them.  Out  of  this  inequality  grows  the  only  power  that 
wealth  possesses,  as  one  can  very  soon  learn  by  undertaking  to 
employ  one  much  richer  than  himself  to  i-ender  any  physical 
service. 

The  same  point  may  be  tested  in  another  way.  Divide  the 
whole  wealth  of  the  people  of  the  United  States,  $54,000,000,000, 
among  the  whole  people  equally;  $54,000,000,000  divided  among 
54,000,000  ijersons  gives  to  each  person  $1,000.  No  one  has  more, 
no  one  less.  Of  this  sum  $600  is  in  land,  and  $400  is  in  personal 
proi)erty.  If  the  land  were  divided  according  to  area,  instead  of 
value,  each  one  would  have  4.3  aci-es.  If  a  person  now  has  either 
of  these  sums,  what  can  he  do  with  them?  He  can  use  them  only 
for  consumption,  or  for  storing  value  temporarily  against 
immediate  want.  But  neither  consumable  values  nor  stored 
values  are  capital.  Hence,  as  capital,  they  have  ceased  to  exist. 
But  no  person  having  so  small  a  sum  could  safely  invest  it  in  any 
railway,  bank,  factory,  municipal  debt,  or  like  security.  No 
corporate  enterprise  could  be  jiermanently  conducted  which  con- 
sisted of  so  many  small  shareholders.  It  would  be  a  mob,  not  a 
directorate.    The  New  York  Central  Railway  would  have  300,000 


ECONOMIC  LA  W  IS  HUMANE.  203 

shareholders,  or  as  many  as  there  are  adult  males  in  New  York 
city.  Hence  the  great  concerns  which  now  constitute  our  capital 
enterprises,  and  which  employ  probably  three-fourths  of  the 
labor  of  Great  Britain,  France,  Germany,  and  America,  could 
have  no  existence.  For,  as  large  forces  of  workmen  practice  a 
division  of  labor  which  small  ones  can  not,  so  large  capitals  can 
effect  a  subdivision  of  their  potenc}''  in  the  form  of  credit  to  many 
more  persons,  functions,  and  places  than  a  small  one.  This 
increase  in  the  potency  of  capital,  through  credit,  magnifies  much 
more  raj^idly  than  the  capital.  (A  penniless  adventurer  who 
caused  it  to  be  believed  that  he  had  come  over  from  England  with 
five  millions  to  loan,  but  had  not,  in  fact,  the  means  of  paying  a 
single  hack  hire,  was  enabled  on  this  false  credit  to  open  a  bank- 
ing house  in  Wall  Street,  receive  deposits,  buy  a  country  estate, 
horses  and  carriages,  entertain  largely,  etc.  His  credit  woi'ked 
in  all  ways  and  directions.) 

To  subdivide  capital  is,  in  this  sense,  to  destroy  it.  But  without 
these  banks,  manufactories,  shipping  lines,  mining  enterprises, 
all  commercial  interchange  and  association  among  men,  in  the 
degree  adequate  to  maintain  existing  industries  and  civilization, 
would  be  not  only  impeded  but  paralyzed.  Equality  would  be 
annihilation.  Wliat  the  socialist  describes  as  justice  would  be 
famine.  Tlie  I'adically  equalized  mob  would  surrender  to  military 
force,  in  order  that  through  an  abject  abnegation  of  its  liberties  it 
might  begin  again  in  social  slavery,  and  thence  emerge  and 
return  to  its  present  condition  of  i-eciprocal  helpfulness  and  mutual 
freedom. 

79.  How  Distribution  of  Wealth  Attends  Its  Cumula- 
tion, and  Getting  Rich  Is  Doing"  Good. — Is  there  any 
economic  law  which  causes  men  to  create  and  distribute  the  com- 
modities of  which  others  have  need,  and  in  so  doing  to  distribute 
the  price  of  the  commodity  back  among  its  producers  with  that 
perfect  equity  which  shall  reward  each  according  to  his  economic 
merit,  but,  if  he  fail  of  economic  merit,  shall  still  supply  him 
according  to  his  need? 

Why  should  Chinamen  interest  themselves  in  carrying  bales 
of  tea,  or  raw  silk,  on  their  backs  over  the  mountains,  so  that  we 
may  enjoy  them  ?  It  is  because  the  wage  of  his  day's  service 
comes  to  liim  at  sundown,  indirectly  and  througli  various 
bankers  in  advance,  but  ultimately,  and  very  straightly,  from  those 
who  will  wear  his  silk  and  drink  his  tea.  But  for  this  distribu- 
tion of   wages  to  liim,  he  would  not  be  producing,  but  probably 


204  ECONOMIC  PHILOSOPHY. 

figlitiug  or  lunitiiig.  A  process  of  mutual  obsequious  service 
goes  on  hourly  between  strangers  all  over  the  world,  commerce 
consisting  of  a  duplex  system  in  which  commodities  and  services 
are  going  one  way,  and  their  equivalents  are  returning.  As  the 
commodities  unite  in  the  currents  of  transportation,  they  become 
great  cargoes.  As  the  payments  divide  m  the  return  currents  of 
distribution,  they  become  as  small  as  the  finest  atom  of  sugar  that 
can  be  detected  by  the  nerves  of  taste.  Mr.  Jevons  happily  states 
this  law  to  be,  that  value  is  due  to  need,  and  declines  with  satiety, 
in  each  individual.  Owing  to  tlie  fact  that  his  capacity  to  con- 
sume any  one  thing  is  very  limited,  while  his  capacity  to  produce 
many  things  is  almost  boundless,  as  is  also  his  desire  to  possess 
the  products  of  others,  a.  decline,  in  the  value  of  all  he  produces 
over  his  own  need,  can  only  be  prevented  by  his  forwarding  the 
surplus  to  him  who  needs  it  most,  such  last  named  need  being 
expressed  economically  by  the  value  of  the  return  service  he 
is  willing  to  render.  As  there  is  no  limit  to  the  degree  in 
which  one  can  desire  the  products  of  others'  labor,  so  there 
can  be  no  limit  to  the  degree  in  which  he  shall  be 
stimulated  to  produce,  however  small  may  be  his  capa- 
city to  consume  the  yqyj  thing  he  produces.  Every  com- 
moodity  declines  in  value  in  the  degree  that  it  exists  in  surplus 
at  the  point  of  production,  but  advances  in  value  as  it  approaches 
him  who  most  needs  it.  This  law  of  declining  and  advancing 
values  is  the  steam  which  propels  the  social  mechanism.  It  is 
the  involuntary  philanthropic  force  which  mainly  feeds,  shelters, 
clothes,  employs,  nerves,  stimulates,  educates,  and  governs  the 
world,  fii'st  in  its  industries,  and  then,  where  its  industries  fail  to 
give  relief,  in  its  charities,  which  are  as  it  were,  its  industries  in 
the  minor  key.  For  charity  is  evolved  among  men  because  it  is 
valued  ;  it  comes  in  obedience  to  demand.  Where  gifts  are 
highly  esteemed  they  are  made  ;  where  effort  for  others  is  appre- 
ciated it  is  put  forth.  For  all  moral  and  religious,  heroic, 
humane,  and  charitable  effort  results  in  a  subtler  and  more  spirit- 
ual form  of  profit,  carrying  with  it  an  mcrease  of  social  and  spirit- 
ual capital  and  power,  which  to  finer  natures,  is  more  regarded 
than  money. 

80.  The  Greater  the  Acciiinulations  of  Reproductive 
Wealth  the  More  Equal  the  Diflfusiou  of  Enjoyahle 
Wealth. — To  insure  a  complete  and  effective  distribution  of 
wealth  among  mankind,  involves  the  expenditure  of  an  enormous 
labor  power,  and  the  pressure  of   the  most  terrible  persistency  of 


WHAT  AVARICE  COSTS.  205 

motive.  It  is  accomplished  so  perfectly  that  cases  of  physical 
suffering  are  extremely  rare  in  all  parts  of  the  world,  are  usually 
associated  with  great  imprudence  or  with  stubborn  vices,  and 
are  easily  corrected  by  even  a  brief  return  to  prudent  ways.  To 
insure  this  pressure  of  motive,  wealth  is  divided  into  two  kinds, 
one  of  which  can  be  the  object  of  only  a  limited  avarice,  and  then 
immediately  satiates,  viz. ,  enjoyable  or  consumable  wealth,  and 
the  other  of  which,  reproductive  wealth,  is  the  subject  of  custody 
and  the  means  of  social  power,  and  can  not  be  directly  enjoyed.* 
So  instinctively  do  all  men  assume  this  truth  that  to  assume  the 
opposite  surprises  us  with  a  sense  of  humor. 

Col.  lugersoll  effects  this  surprise,  which  is  of  the  essence  of 
hnmor,  when  he  says,  "  How  absurd  that  a  man  who  already  has 
1,000,000  neckties,  of  which  he  can  only  use  one  a  day,  should 
work  all  day  to  get  another  necktie."  The  absurdity  consists  in 
selecting  as  the  object  of  avarice  a  form  of  consumable  wealth, 
instead  of  those  forms  in  which  wealth  may  be  stored  for  ostenta- 
tion, as  gold  and  diamonds,  or  by  which  it  may  be  reproduced,  as 
money,  houses,  lands,  ships,  banks,  factories,  machinery,  etc. 
The  passion  of  avarice  can  not  be  excited  in  favor  of  consumable 
wealth,  excejit  as  it  may  constitute  a  merchant's  stock  of  goods 
while  it  is  in  reproductive  use.  No  miser  works  all  day  for  an- 
other necktie,  or  apj)le,  or  orange.  The  passion  of  avarice  can 
only  be  felt  for  those  forms  of  wealth  whose  accumulation  in 
large  masses  is  a  means  of  production,  or  of  distribution,  or  of  os- 
tentation, or  of  security,  or  in  some  way  ministers  to  more  per- 
manent wants  than  enjoyable  wealth  does,  chiefly  in  the  organi- 
zation of  society.  The  one  might  be  called  individual,  pleasur- 
able, sensational,  transient,  emotional,  perishable  wealth.  The 
other  is  social,  instrumental,  indirect,  reproductive,  capitalistic 
wealth.  Food,  raiment,  shelter,  works  of  art,  entertainment 
and  instruction,  music,  books,  pictures,  etc.,  are  enjoyable  wealth, 
though  all  of  them  become  reproductive  capital  when  gathered 
in  stocks  for  sale,  and  the  more  permanent  of  them  appi'oach  re- 
productive wealth,  and  often  cross  and  recross  the  boundaries. 
Power's  "  Eve  "  or  Church's  "  Niagara,"  exhibited  for  an  admis- 


*  Prof.  Henry  Sidgwick  {"  Principles  Political  Economy,"  p.  80)  says  there  is  "  need 
of  a  broad  distinction  between  the  two  portions  of  a  country's  niiiterial  wealth,  which 
may  be  distinguished  aa  consumer's  wealth  and  producer's  wealth  respectively.  By 
consumer's  wealth  I  mean  euch  material  things  as  .  .  .  are  directly  available  for 
satisfying  human  needs  and  desires,  producer's  wealth  (and  similarly  of  course  pro- 
ducer's services)  being  only  useful  indirectly  as  a  means  of  obtaining  the  former." 


206  ECONOMIC  PHILOSOPHY. 

sioii  fee,  is  reproductive  wealth.  Placed  in  a  private  residence 
it  is  an  esthetic  and  high  grade  of  enjoyable  wealth,  useful,  also, 
like  gold  or  diamonds,  for  storing  wealth,  and  resembling  repi'o- 
ductive  wealth  in  the  fact  that  while  the  title  to  it  may  be  private, 
its  highest  uses  are  social.  Arms,  factories,  roads,  and  their  means 
of  conveyance,  mines,  ships,  shops,  stores,  banks,  machinery, 
money,  are  all  reproductive  wealth.  Mankind  are  chiefly  in- 
terested, both  from  the  economic  and  the  humane  point  of  view, 
in  a  distribution  of  these  several  kinds  of  wealth  in  divers  ways. 
Consumable  commodities  need  to  be  so  distributed  that  the 
capacity  of  each  individual  to  consume,  especially  clothing, 
raiment,  and  shelter,  shall  be  satisfied.  Consumable  wealth, 
when  returning  in  payment  for  commodities,  needs  to  be  so  dis- 
tributed that  each  agent  in  production,  capital,  labor,  land,  skill 
in  management,  etc.,  shall  be  paid  in  proportion  to  the  degree  in 
which  it  aids  production.  Reproductive  wealth,  since  it  can  not 
be  directly  enjoyed  by  the  body,  needs  to  be  so  allotted  that  man- 
kind shall  get  its  most  abundant  and  eflFective  use  on  the  most 
economic  terms  and  in  the  most  convenient  waj'. 

The  farmer's  wheat  is  governed  in  value  by  the  law  of  satiety. 
All  that  he  and  his  family  can  not  eat  becomes  worthless,  except 
as  he  can  send  it  to  those  who  produce  no  wheat.  The  question, 
what  distributive  share  of  the  price  the  farmer  will  get,  depends 
on  how  much  of  the  price  which  it  sells  for  in  New  York  or 
Massachusetts  will  have  to  be  deducted  for  railway  freight,  and 
paid  out  for  wages  and  rent  of  land,  or  interest  on  capital.  This 
depends  on  the  economic  laws  governing  the  use  by  society  of 
reproductive  wealth.  One  of  the  most  important  of  these  is  that, 
the  greater  the  accumulation  and  concentration  of  reproductive 
capital  under  a  single  control,  the  lower  will  be  the  rate  per  cent, 
at  which  society  can  get  its  use,  and  the  greater  will  be  the 
number  and  variety  of  the  uses  it  will  render. 

Here,  therefore,  are  two  laws,  both  appealing  to  the  same  pas- 
sion of  gain,  with  equal  potency  but  in  opposite  directions.  The 
law  of  satiety,  confined  to  consumable  commodities,  says  to 
their  owner,  "  Away  with  them  to  those  who  are  in  need,  send 
them  swiftest  to  where  the  want  is  greatest.  "  The  Law  of 
Economy  of  Capital  says,  "  The  greater  your  capital  the  cheaper 
must  its  use  be  lent  to  the  producers  and  consumers  of  consuma- 
ble wealth."  Society's  interest,  therefore,  is  in  making  con- 
sumable  goods  repulsive  to  the  owner,  producer,  and  capitalist 
the  instant  a  supply  sufficient  for  immediate   need  is  obtained. 


WEALTH  GETTING  IS  LIFE  GIVING.  207 

But  society's  interest  is  also  that  the  accumulation  of  reproductive 
wealth,  which  is  mere  control  or  management,  and  not  consump- 
tion, shall  go  on  under  the  sway  of  an  ambition  that  is  insatiable, 
until  it  results  in  a  power  larger  than  its  owner  has  the  capacity 
to  use  profitably — a  fact  which  is  both  made  known,  and  cor- 
rected, by  the  fact  that  he  begins  to  invest  unprofitably — therefore 
to  lose  on  his  investments,  and  thereby  to  disperse  his  capital. 

Tlie  function  of  all  reproductive  wealth,  ^.  e. ,  wealth  that  earns 
or  makes  wealth,  is  either  to  create  consumable  commodities,  as 
is  done  by  the  farmer,  manufacturer,  mechanic,  artist,  etc. ;  or  to 
forward  the  consumable  commodities  as  rapidly  as  possible  to 
their  consumers,  as  is  done  by  ships,  I'ailways,  carts,  and  wagons, 
steana-power,  mule-power,  porter-power;  or  to  distribute  the 
ownership,  and  subdivide  the  title  to  it,  among  all  these  con- 
sumers, as  is  done  by  merchants,  traders,  exporters,  and  middle- 
men ;  or  to  fix  stable  and  uniform  prices  on  commodities,  so  that 
j)rofits  and  wages  may  be  made  steady,  by  steadying  that  surj)lus, 
of  price  over  cost  of  production,  out  of  which  profits  and  wages 
arise,  as  is  done  by  produce  exchanges  and  boards  of  trade ;  or  to 
receive  from  consumers  and  transmit  to  producers  the  returns  or 
means  of  payment,  as  is  done  by  banks,  by  coin,  and  by  all 
agencies  that  issue  money;  or  to  distribute  these  means  of  pay- 
ment among  producers  according  to  their  sevei'al  shares,  as  is 
done  by  the  entrepreneur  and  capitalist  in  employing  labor, 
hiring  land  and  money,  and  paying  out  rent,  wages,  and  interest; 
or  to  maintain  order,  observance  of  contracts,  and  integrity  among 
all  these  interests,  as  is  done  by  courts  of  law;  or  to  create  such  a 
popular  conscience,  as  will  alleviate  the  cases  of  failure  and  suf- 
fering to  which  the  industrial  life  is  in  exceptional  cases  subject, 
as  is  done  by  i-eligious,  masonic,  co-operative,  philanthropic,  and 
benevolent  agencies  for  aiding  the  bereaved,  defective,  delin- 
quent, and  unsuccessful  classes. 

Reproductive  capital  is  to  society,  relative  to  consumable  com- 
modities, what  the  engines,  tunnels,  aqueducts,  and  water-pipes  of 
a  gi'eat  city  are  relatively  to  the  water  which  they  bear  to  tlie 
thirsty,  viz.,  means  of  forcing  it  from  the  point  where  it  exists  in 
surjilus,  and  is  therefore  useless,  to  the  million  points  where  it  is 
not  only  needed,  but  most  needed,  the  degree  of  need  being  al- 
ways certified  in  economics  by  the  return  of  effort  or  price  the 
supply  will  bring. 

The  qiiestion  whether  unequal  diffusion  of  wealth  is  favorable 
to  all  the  other  interests  of  society  as  it  is  to  production,  whether 


208  ECONOMIC  PHILOSOPHY. 

it  promotes  the  highest  development  of  intellectual  ability,  a 
wide  diffusion  of  education,  free  republican  institutions,  or  good 
morals  and  kindly  and  neighborly  feeling  among  men,  is  im- 
portant but  not  strictly  economic.  It  is  because,  what  has  been 
so  freely  and  frequently  said,  and  conceded,  on  these  grounds,  in 
behalf  of  equality  in  the  diffusion  of  wealth,  has  caused  a  part  of 
society  to  question  the  economic  necessity  and  justice  of  any  in- 
equality, that  a  defense  of  inequality  from  the  economic  stand- 
point is  necessary. 

81.  Capital  as  a  Laborer. — Who  first  made  the  estimate, 
that  the  machine-power  of  England  is  equal  to  the  manual  labor- 
power  of  six  hundred  millions  of  people,  lean  not  say.  It  has  been 
widely  current  nearly  fifty  years,  and,  whether  accurate  in  detail 
or  not,  expresses  a  general  truth  of  the  first  importance,  viz. ,  that 
in  modern  history,  since  the  advent  of  steam  and  steel,  capital, 
through  these  agencies,  utterly  dwarfs  manual  labor  in  its  power 
to  produce  commodities.  If  labor  be  defined,  as  the  direction  of 
effective  natural  force  toward  the  production  of  commodities  or 
services  for  the  relief  of  human  want,  which  is  manifestly  its 
broadest  purpose,  it  occurs  that  by  far  the  largest  portion  of  the 
world's  work  is  now  done  by  capital,  not  in  its  employing  capacity, 
but  in  its  capacity  as  a  physical  toiler  and  a  displacer  of  human 
toil.  Cajjital,  in  the  form  of  engines,  boilers,  tracks,  and  other 
rolling  stock  draws  all  crops  to  market  in  Western  nations, 
leaving  men  to  carry  them  on  their  backs  only  in  China  and  parts 
of  India.  Capital,  in  the  form  of  spinning  jennies  and  power 
looms,  does  all  the  weaving  of  cloth.  Capital,  mainly,  lifts  the 
coal,  and  melts  the  ore,  and  hammers  the  iron.  Capital  sets  the 
type,  prints  the  newspaper,  and  transmits  the  news  electrically 
over  its  wires.  Capital  constructs  watches,  predicts  the  weather, 
enffraves,  sews,  and  carves.  Almost  all  of  what  is  called  skilled 
labor  now  consists  in  the  wages-worker  acting  as  tender,  feeder, 
or  regulator  to  the  working  machine.  Hence  old-time  positions 
are  reversed.  Once  labor  toiled  physically  and  capital  superin- 
tended. Now,  in  the  mam,  capital  performs  the  physical  toil  and 
labor  superintends  the  machine  while  it  does  the  work. 

Thus,  on  the  elevated  railways  in  New  York  city,  all  that  tho 
employes  are  hired  to  do,  is  to  simply  do  a  little  'knowing.  The 
change-taker  must  know  that  the  ticket  does  not  pass  out  to  the 
passenger  until  it  is  paid  for.  The  ticket-man  must  know  that 
the  ticket  is  dropped  when  the  passenger  passes  through  to  the 
platform.     Tlie  gate-man  must  know  that  the  train  has  stopped 


CAPITAL  EXPELLING  LABOR.  209 

before  the  passenger  tries  to  get  ou  or  off — and  that  all  are  on  or 
otf  before  he  signals  the  engineer  to  start.  Finally,  the  engineer 
must  know  that  he  is  signaled  before  he  starts.  Not  one  of  all 
these  employes  performs  a  stroke  of  work  that  could  not  be  per- 
formed by  touching  a  spring  with  the  little  finger. 

This  revolution  has  several  economic  effects  of  the  utmost  im- 
portance. It  makes  every  effort  of  human  labor,  to  work  produc- 
tively without  the  aid  of  capital,  impossible.  A  man  can  not  walk, 
from  New  York  to  Chicago,  so  cheaply  as  he  can  pay  his  fare. 
The  difference  in  cost  of  subsistence  and  lodging  while  going 
would  make  walking  the  costlier  of  the  two.  So,  on  no  terms  of 
cheapness,  can  unaided  labor  compete  with  capital,  in  the  form  of 
machinery.  Yet,  as  capital  in  these  machines  does  the  same 
work  as  labor  would  otherwise  do,  it  fixes  the  wages  of  labor,  or 
the  value  of  the  share  which  manual  labor  can  earn  by  doing  it. 
This  is  admitted  by  Karl  Marx,  and  forms  the  chief  reason  why 
he  says  the  mass  of  society  should  be  the  owners  of  the  instru- 
ments of  production.  On  the  introduction  of  spinning  and 
weaving  machinery  in  England,  the  spinners  and  weavers  felt 
their  supersedure  so  keenly  that  they  gathered  in  wild,  riotous 
mobs  and  broke  the  machines.  Pretty  soon  their  services  came 
into  use  in  working  the  new  machines,  and  the  demand  for  En- 
glish labor  was  rather  greater  than  before,  and  wages  rose.  But 
this  rise  was  due  to  the  fact,  that  the  services  of  a  very  much 
larger  number  of  spinners  and  weavers  were  undergoing  displace- 
ment in  China,  Turkey,  Portugal,  the  United  States,  and  India. 
The  housewife  ceased  everywhere  to  be  the  manufacturer,  but 
only  in  Lancashii'e  did  the  housewife  get  the  profit  of  her  super- 
sedure, in  the  form  of  employment  on  the  new  looms.  But  for 
this  widening  of  the  market,  the  class  who  went  out  of  employ- 
ment in  England  must  have  remained  without,  at  least  in  any  de- 
partment of  weaving. 

The  performance  of  work,  by  capital,  always  works  an  immedi- 
ate supersedure  of  the  laborer,  and  only  re-employs  him  in  the 
same  general  industry  in  case  the  market  for  its  commodity  is 
widened.  What  would  become  of  laborers,  asks  the  sociaHst,  if 
capital  should  advance  in  the  use  of  machinery  until  it  could  i^er- 
form  absolutely  all  labor  without  invoking  human  aid  at  any 
point?  It  could  do  all,  and  possess  all,  and  where  then  would  labor 
be? 

The  logical  answer  to  this  question  would  be  that,  if  capital 
could  manufacture  the  machinery  of  production  without  the  help 


210  ECONOMIC  PUILOSOPUY. 

of  labor,  it  would  turn  it  out  so  cheap  that  a  song  would  buy  an 
engine,  and  the  machinery  of  production  could  not,  by  the  terms 
of  the  proposition,  any  longer  bear  a  price. 

An  increased  amount  of  co-operation  in  production,  a  spirit  of 
greater  mutual  subserviency,  is  necessary  in  consequence  of  the 
great  part  of  the  work  done  by  capital.     The  only  men  who  can 
fit  into  the  new  industrial  order  are  the  the  men  of  tact,  who  can 
accept    discipline  readily  and  obey  orders  implicitly,  for    only 
through  such  men  can  a  wide  organization  of  labor  and  capital,  in 
industry,  be  effected.     This  causes  the  highest  rewards  of  indus- 
try to  come  to  the  organizers.      Their  value  is  so  generally  recog- 
nized that  it  makes  but  little  difference  in  their  income,  whether 
they  work  with  then-  own  capitals  for  profit,  or  manage  the  ca])i- 
tals  of  others  for  salaries.    On  the  contrary,  it  becomes  difficult  for 
the  recalcitrant,  "  cranky,"  independent,  and  insubordinate  class 
of  workers  to  work  in  the  more  condensed  centers  of  industry. 
Their  best  interest,  is  to  move  out  toward  the  periphery  of  the 
societary  circle,  where  less  subserviency  to  central  headship  is  re- 
quired and  more  personal  independence  is  permitted.     Hence  the 
desire  of  every  man  "  to  be  his  own  boss  "  prompts  the  class  whose 
individuality  is  strong,  to  leave  the  centers  of  industry,  where 
capitals  rule,  for  the  pioneer  life,  which  can  still  be  had  by  those 
who  seek.     On  the  frontier  the  capitals  are  still  small,  machinery 
has  not  yet  superseded  hand-labor,  and  there  is  less  power,  but 
more  liberty. 

82.  Forms  of  Capital.— Are  land,  debt  and  credit,  money, 
reputation,  good- will,  forms  of  capital  when  employed  reproduc- 
tively  and  for  a  profit  ?  If  they  are  capital,  as  between  individuals, 
do  they  necessarily  become  additions  to  the  aggregate  capital  of 
all  the  individuals  in  a  country,  to  the  same  extent  as  they  become 
capital  between  borrower  and  lender  ?  And  if  so,  what  distinc- 
tion is  there  between  manufacturing  capital  and  running  in  debt  ? 
The  difficulty  m  assigning  to  land  the  quality  of  capital  arises  partly 
from  the  fact  that  "capital"  has  been  by  some  defined  as  the 
"fruit  of  abstinence,"  while  title  to  land  is,  on  the  contrary,  the 
fruit  of  appropriation.  The  power  to  appropriate  land,  however, 
arises  always  in  connection  with  a  prior  expenditure  in  the  nature 
of  abstinence  of  various  kinds,  but  more  usually  abstinence  from 
the  attractions,  and  high  rewards,  and  high  wages  and  ready 
amusements,  of  a  compact  social  life.  A  century  ago  the  tendency 
of  economists  was  to  speak  of  capital  as  the  fund  expended  upon 
land,  rather  than  as  including  the  land  itself. 


WHA  T  IS  CAPITAL.  2 1 1 

We  think  it  more  exact,  to  regard  every  economic  term  as  bear- 
ing a  change  of  definition,  according  to  tlie  changed  aspect  in 
which  it  is  presented,  or  the  cliange  in  the  function  it  performs. 
Land  may  be  capital  to  one,  and  a  mere  burden  on  the  capital  of 
another.  If  a  publisher  have  $50,000  of  capital  invested  in  his 
business,  and  withdraw  $15,000  of  it  to  invest  in  a  residence,  in 
this  case,  and  so  far  forth,  his  land  is  a  deduction  from  his  capi- 
tal. If,  however,  he  farms  his  land,  or  converts  it  into  a  driving 
park,  in  a  manner  that  intends  profit,  it  becomes  capital,  even 
though  he  lose  on  it,  but  it  is  an  unprofitable  investment  of  capi- 
tal. So  far  as  giving  mortgages  on  land,  or  otherwise  incurring 
debt,  leads  to  a  profit  which  otherwise  could  not  be  had,  they  are 
capital.  The  antithesis  of  capital  is  not  properly  labor,  but  either 
lack  of  means — destitution — or  means  not  set  in  motion  to  pi'O- 
duce  profit — i.  e.,  a  hoard.  Capital  is  means  in  motion — wealth 
at  work — financial  energy  in  action.  It  differs  from  a  mere 
hoard  as  steam  from  water,  or  a  river  from  a  pool,  or  life  from 
death. 

The  incurment  of  a  great  national  debt,  during  war,  is  frequently 
spoken  of  as  an  unredeemed  waste  of  capital,  as  the  firing  of 
wealth  out  of  the  mouth  of  cannon,  etc.  This  mode  of  expres- 
sion comes  into  conflict  with  a  broad  popular  sense  that  such 
periods  are  also  periods  of  an  extraordinary  activity  of  exchange, 
stimulus  to  production,  and  creation  of  wealth.  To  whatever 
extent  running  in  debt,  or  the  creation  of  credits,  or  even  the  de- 
stx'uction  of  values,  gives  rise  to  profits  which  else  would  not  have 
exi.sted,  and  increases  production  as  well  as  consumes  products,  it 
becomes  capital.  Much  of  the  loss  by  the  great  Chicago  fire  of 
1871  was  offset  by  the  increased  activity  induced  by  the  rebuild- 
ing. Much  of  the  apparent  possibility  of  gain  which  attends  long 
periods  of  peace  is  converted  into  relative  loss  by  the  increasing 
timidity  with  which  capital  shrinks  from  enterprise.  Hence  the 
history  of  the  period  of  England's  wars  with  Napoleon  was,  in 
both  England  and  America,  one  of  rapid  growth  of  capital.  The 
history  of  the  ensuing  peace,  from  1816  to  1837,  was  marked  by 
stringency  succeeding  stringency,  and  great  individual  distress, 
and  private  and  public  bankruptcy. 

In  outward  symj^toms  an  expansion  of  credits  has  all  the  ap- 
pearance of  a  growth  of  capital.  A  shrinkage  of  credits  affects 
industry  in  all  its  departments  as  a  destruction  of  capital.  Busi- 
ness men  will  repeat  with  great  conservatism  of  manner  the  saying 
tliat  things  are  getting  down  to  their  intrinsic  values,  or  down  "  to 


212  ECONOMIC  PHILOSOPHY, 

hard  pan,"  when  property  of  various  kmdsdedines  in  value  under 
the  influence  of  a  general  collapse  of  credit.  If  it  were  genei-ally 
understood  that  value  is  merely  the  esteem  in  which  the  things  are 
held  which  constitute  capital,  it  would  be  seen  that  the  process  of 
reduction  in  esteem  might  go  on  until  all  capital  and  civilization 
had  disappeared,  and  but  one  inhabitant  would  be  left  in  the  world, 
and  he  might  be  fleeing  before  a  pack  of  wolves,  in  which  case 
"hard  pan"  would  still  be  just  before  the  fugitive,  and  his  in- 
trinsic value,  to  the  wolf,  would  not  be  realized,  so  long  as  he 
was  able  to  maintain  his  flight. 

83.  Capital  as  an  Emancipator. — The  greatest  service,  per- 
formed by  capital  for  man,  consists  in  having  abolished  forcible 
slavery,  as  the  means  of  organizing  labor,  and  substituted  for  the 
lash  the  stipulated  wage  in  money. 

It  was  not  merely  necessary  that  money  should  exist,  and  be 
generally  and  actively  circulated,  before  masters  would  come  to 
see  a  more  ready  persuasive  in  wages  than  in  force.  It  was  in- 
dispensable that  money  should  take  the  form  of  capital  and 
machinery,  that  it  should  involve  calculations  so  intricate, 
and  labors  so  arduous  in  its  direction,  customers  so  numerous 
and  markets  so  distant  and  employes  so  multiplied,  that  em- 
ployers should  lose  both  the  time  and  the  desire  to  exert  a  per- 
sonal tyranny  over  their  men.  Workmen  may  grieve  at  the 
heartlessness  of  a  given  number  of  hours  of  their  labor  being 
treated  as  a  commodity,  but  how  priceless  to  the  slave  was  this 
boon  when  it  was  first  granted.  It  was  the  very  substance  of 
emancipation — the  essence  of  freedom. 

The  relegation  of  the  former  "  servant"  into  a  member  of  the 
"  proletariat,"  over  whose  hours  outside  the  shop  the  employer 
had  no  control,  was  also  in  its  time  emancipation.* 

It  may  now  be  said  that  among  all  the  largest  employers  of 
labor  the  desire  to  rule  laborers,  for  the  sake  of  ruling  only,  has 
essentially  ceased  to  exist.  The  model  capitalistic  employer  has 
now  no  more  desire  to  rule  a  laborer,  apart  from  the  motive  of 
profit,  than  he  has  to  dictate  styles  to  his  customers,  or  prices  to 
his  sellers  of  raw  materials.  The  animus  toward  despotism  has 
gone  out,   and  its  place  is  filled  by  a  desire  simply  to  do  the 

*  Griinland,  "  Modern  Socialism,"  p.  56,  says  :  "  Progress  takes  place  only  when 
either  some  individuals  control  other  individuals,  or  when  they  voluntarily  co-operate 
together.  But  voluntary  co-operation  is  a  hard  lesson  for  men  to  learn,  and  therefore 
progress  has  to  commence  with  compulsory  organization,  with  control  of  every  thing, 
with  slavery." 


WBAT  BECOMES  OF  WEALTH.  213 

most  profitable  thing.  But  this  also  the  workman  desires  to  do. 
If,  as  we  have  contended,  all  the  employment  of  labor  is  a  loan 
of  the  certain  unit  of  capital  essential  to  employ  the  laborer,  and 
hence  is  a  fair  and  equal  exchange,  the  laborer  dividing  the  joint 
product  equally  between  himself  and  the  share  that  hires  him,  it 
is  obvious  that  the  true  and  final  emancipation  from  the  wage 
condition  will  consist  in  the  laborer  buying  and  owning  the  capital 
that  hires  him.  He  will  then  be  drawing  the  profit  as  well  as  the 
wages.  In  railroad  enterprises  the  laborer  can  accomplish  this 
result  by  owning  $8,000  of  the  stock  in  the  road.  In  manufac- 
turing enterprises  he  need  own  only  $2,500  of  the  stock.  In 
farming  enterprises  $1,200  will  suffice.  When  he  has  bought 
this  amount  of  the  capital  of  the  enterprise  for  which  he  labors, 
he  will  be  reaping  the  entire  profit  on  the  capital  with  which  he 
labors.  When  all  the  workmen,  on  all  the  roads,  shall  have  placed 
themselves  in  this  position,  it  can  no  longer,  with  truth,  be  said 
that  any  one  is  making  a  profit  out  of  their  labor  but  themselves. 
This  would  consummate  emancipation  absolutely. 

84.  Redistribution  of  Ill-Used  Wealth. — That  invest- 
ment in  property  of  every  kind,  is  a  mode  of  distributing  wealth  in 
the  direction  of  the  greatest  demand,  appears  from  the  fact  that 
to  make  the  property  pay  a  return  it  must  either  be  improved,  or 
it  must  be  reserved  for  improvements  more  valuable  than  it  will 
now  bear,  or  its  holder  will  lose  all  he  invests. 

If  he  loses  all  he  invests,  this  is  certainly  an  effective  distribution 
of  his  wealth.  If  he  reserves  it  for  improvements  more  valuable 
than  it  will  now  bear,  this  is  part  of  the  process  of  improvement 
itself.  If  he  improves  it,  i.e.,  puts  on  buildings  for  rental,  he 
multiplies  the  supply  of  shelter  and  working  and  living  space, 
and  makes  one  investment  of  his  whole  capital  in  labor  in  the  act 
of  putting  up  the  buildings. 

If  the  profit-maker,  by  means  of  employing  labor  and  investing 
capital  successfully,  becomes  so  wealthy  that  he  desires  to  live 
luxuriously  and  ostentatiously,  he  enters  on  the  systematic  disper- 
sion of  his  wealth  among  the  laborers  of  distant  lands,  and  among 
those  classes  of  the  earth's  population  whose  existence  is  most 
precarious,  and  who  stand  most  in  need  of  financial  help  from 
the  centers  of  civilization,  because  of  their  distance  fi*om  civiliza- 
tion and  wealth. 

Luxurious  living  is  best  adapted  to  the  relief  of  the  precarious 
and  distant  workers,  while  reproductive  industry  is  best  calculated 
to  help  the  near,  sure,  and  strong   workers  immediately  around 


214  ECONOMIC  PIIILOSOPUY. 

us.  For  the  near,  sure,  and  strong  workers  immediately  around 
us  will  generally  be  found  producing  tlie  necessaries  of  life,  since 
the  pi'oduction  of  the  necessaries  of  life  always  commands  the 
surest  returns  and  pays  the  steadiest  rates  of  interest  on  capital. 
Therefore,  the  investment  of  capital  reproductively  employs  the 
raisers  of  the  crop,  builders  of  the  houses,  preparers  of  the  food, 
clothing,  and  shelter  in  and  on  which  we  subsist.  As  human 
subsistence  depends  on  these  occupations,  a  fair  return  must 
always  accrue  to  them  somewhere.  If  the  farmers  in  Ireland 
suffer  it  must  be  that  farming  is  carried  on  in  America  under 
more  favorable  conditions,  and  these  tbe  Ii-ish  farmer  comes  to 
America  to  obtain,  until,  by  the  mobility  of  labor,  the  conditions 
are  proximately  equalized. 

85.  Distribution  by  Luxury. — The  luxuries,  on  the  con- 
trary, are  precariously  produced.  The  hardy  Norway  or  Spitz- 
bergen  savage  moves  each  year  nearer  to  the  pole  in  order  to 
get  with  more  ease  the  ermine  which  is  worn  by  kings  and 
judges  in  the  courts  of  Europe,  and  the  eider  down  which  makes 
the  princess'  pillow  or  lines  the  duchess'  cloak,  as  well  as  the  seal- 
skin which  protects  the  fine  lady  from  the  cold  in  the  winter  of 
our  warmer  clime.  The  negro  on  the  Congo  brightens  his  home 
in  the  jungle  with  the  return  he  gets  for  the  ostrich  feathers  or 
ivory  which  he  sends  hither  to  be  worn  in  ladies'  hats  or  carved 
into  elegant  designs  for  ornamentiug  their  bureaus.  The  moun- 
taineer in  Peru  or  Hindostan  toils  hard  with  his  herd  or  pick  or 
drill  in  the  mountains,  knowing  that  he  can  live  on  the  flesh  and 
milk  of  his  few  goats,  and  now  and  then  may  be  made  rich  with 
the  price  of  the  crystal  of  value  which  he  finds,  or  even  a  diamond. 
The  Ceylonese  pearl-diver  is  lifted  higher,  in  worldlj^  comfort,  by 
the  fact  that  fine  ladies  in  Paris  pay  foi",  and  wear,  the  trophies 
which  he  brings  up  from  the  ocean's  depths.  The  Parisian  lace- 
maker  is  poor,  and  her  life  precarious,  because  fine  laces  can  never 
be  a  strict  necessity  of  life ;  but  lace-making  wards  off  the  wolf  of 
hunger,  and  makes  her  grateful  for  the  vanity  of  the  wearer  of 
fine  laces,  which  are  to  their  maker  life  itself.  The  diamond- 
cutters  are  poor.  The  diamond- wearers  are  rich,  but  the  diamond- 
cutters  ai'e  less  poor  than  they  would  be  if  no  one  wore 
diamonds.  The  Spanish  peasantry,  cultivating  grapes  and  making 
wine  on  the  Pyrenees,  are  poor,  but  they  are  richer  than  if  the 
distant  rich  abstained  from  wine. 

The  silk  and  tea  growers  of  China  produce  what  is  felt  to  them 
to  be  a  necessity,  and  are  in  such  a  condition    of  comfort  that 


RELIEF  THRO  UGH  L  UX  UR  V.  215 

Adam  Smith,  tliough  with  some  error,  sjieaks  of  China  as  the 
wealthiest  of  nations.  The  growers  of  roses  in  Bulgaria,  from 
which  attar  of  roses  should  he  made,  are  poor  amidst  their  flowers, 
but  richer  because  of  the  foreign  market  for  their  luxury.  Art  is 
a  luxury,  except  in  so  far  as  it  is  a  popular  amusement.  Hence, 
great  artists  have  struggled  hard  for  life,  but  not  so  hard  as  if 
fewer  patrons  of  art  had  been  willing  to  scatter  wealth  on  pictures. 
Historically,  the  fine  arts  have  depended  on  the  rich  for  their 
patronage.  These  instances  show  that  luxury  is  often  and 
generally  the  almoner  whose  benefaction  carries  relief  to  the  most 
diversified  classes,  and  to  the  farthest  distance,  both  geographically 
and  socially. 

86.  Its  Huniauity  Arraigned. — "But,"  asks  the  socialist, 
"is  it  economically  just,  or  necessary,  that  wealth  shall  be  so 
unequally  distributed  that  tlie  use  of  luxuries,  by  one  class  in  one 
part  of  the  world,  shall  be  necessary  to  relieve  the  misery  and 
squalor  of  the  poor,  in  others?  " 

Much  of  the  vigor  of  this  anthithesis  consists  in  the  assump- 
tion that  luxuries  are  identical  with  happiness,  and  that  poverty  is 
identical  with  misery  and  squalor.  No  social  fallacy  can  be 
more  apparent.  Those  who  use  luxuries  may  live  in  great 
misery.  Those  whose  lives  are  straitened  by  want,  in  a  way 
that  deprives  them  of  many  of  the  conveniences  of  life,  may  have 
better  health,  sounder  minds,  and  happier  lives  than  those  who 
are  surrounded  by  luxuries.  Therefore,  luxury  can  not  be  used 
as  the  antithesis  to  misery,  but  only  as  the  antithesis  to  plainness 
of  living.  Prince  Albert  of  England  died  in  his  palace,  of  breath- 
ing sewer  gas.  Hence  he  died  in  and  of  squalor  or  filth  as  truly  as 
if  he  had  lived  in  "  Tom-all- Alone's. "  A.  T.  Stewart  died  of  dys- 
pepsia. Hence  he  died  of  slow  starvation,  for,  if  nuti'ition  can  not 
be  carried  to  the  blood,  it  is  starvation  to  the  body,  whether  it  is 
stopped  by  lack  of  bread  in  the  pantry  or  by  lack  of  gastric  fluids 
in  the  stomach.  Sir  Isaac  Newton  labored  at  times  under  a  de- 
gree of  nervous  exhaustion  through  overwork  which  rendered 
him  irritable  and  unreasonable  in  his  treatment  of  his  friends. 
Profoundly  as  they  admired  him,  they  at  such  times  could  not  en- 
dure him.  Feeling  that  his  own  condition  bordered  on  insanity, 
he  may  not  have  been  as  truly  blest  in  his  career  as  the  healthy 
and  vigorous  glass-blower  who  shaped  the  lenses  for  his  tele- 
scopes. 

The  economic  govei-nment  of  the  world  is  such  that  the  prime 
requisites  of  life,  food,  clothing,  sheltei*,  and  society,  come  to  all 


216  ECONOMIC  PHILOSOPHY. 

the  inhabitants  of  earth,  with  casual  exceptions  that  are  rarer  than 
death  by  fire  or  flood.  The  human  body  and  mind  are  also  so 
elastic  that  they  everywhere  depend,  for  absolute  ability  to  be 
happy,  only  on  these  four  conditions.  Servants  are  as  generally 
happy  as  masters,  the  workers  as  the  idle,  the  poor  as  the  rich,  the 
obscure  as  the  famous,  the  weak  as  the  powerful,  the  ignorant  as 
the  learned.  The  true  question,  because  the  true  antithesis,  must 
not  be  between  wealth  and  misery,  but  between  luxurious  living 
and  spare  or  frugal  living.  The  question,  as  thus  modified,  be- 
comes this:  Is  it  economically  just,  or  necessary,  that  wealth  shall 
be  so  unequally  distributed  that  the  use  of  luxuries,  by  those  who 
have  more  wealth  than  they  can  expend  upon  n  ecessaries,  shall 
conduce  to  supply  those  who  produce  these  luxuries  with  the 
necessaries  of  life,  viz.,  food,  shelter,  clothing  and  society.  In 
this  form  nothing  can  be  more  just,  social,  or  humane. 

There  seems  to  be  as  strong  an  inherent  necessity  in  the  nature 
of  economic  science  that  wealth  should  be  unequally  distributed 
as  there  is  in  human  sentiment  to  oppose  inequality.  The  un- 
equal distribution  of  the  ownership  of  reproductive  capital  is  es- 
sential to  the  most  economic  steering  or  direction  of  industry,  the 
most  judicious  inauguration  of  the  enterprises  which  employ  capi- 
tal and  labor, to  the  most  universal  and  equal  employment  of  labor, 
to  the  greatest  diffusion  and  cheapness  of  the  products  of  labor, 
to  the  most  general  equality  in  the  wages  of  labor,  to  the  most 
rapid  and  effective  production  of  enjoyable  commodities,  and  to 
the  most  far-reaching  and  equal  diffusion  of  these  commodities 
for  consumption,  both  with  reference  to  space,  time,  andnumbei-s. 

We  have  defined  reproductive  wealth  as  that  portion  which  can 
not  directly  satisfy  any  want  of  man,  but  is  employed  to  promote 
the  production  of  enjoyable  commodities.  It  includes  land,  labor, 
in  certain  aspects,  machinery,  ships,  railroads,  beasts  of  burden, 
and  all  means  of  transportation,  money,  whether  coin  or  credit, 
banks,  title  deeds,  and  contracts,  and  the  courts  of  justice  for  en- 
forcing them,  buildings  rented  for  either  residence  or  individual 
occupation,  theaters,  churches,  schools,  manufactories,  stocks  of 
commodities  held  for  wholesale  jobbing  and  retail,  and  generally 
every  thing  that  will  not  be  eaten,  drunk,  worn,  or  otherwise  en- 
joyed, and  consumed  in  being  enjoyed,  by  its  pi-esent  possessor. 
Enjoyable  commodities  are  food,  the  shelter  of  home,  clothing, 
ornaments,  books,  and  all  reading  matter,  society,  instruction, 
amusements,  entertainments,  plays  to  him  who  attends  them, 
songs  to  those  who  sing  and  hear  them  sung,  and  every  act  or 


SA  VING  AND  SPENDING.  2 1 7 

thing  possessing  the  element  of  cost  or  value  which  ministers 
directly  to  human  gratification  or  produces  pleasurable  or  desired 
emotion. 

Reproductive  wealth,  considered  with  reference  to  the  use  its 
owner  will  make  if  it,  has  three  stages,  viz. :  the  period  of  absti- 
nence or  hoarding,  which  results  in  its  accumulation ;  the  period 
of  power,  in  which  it  is  employed  to  steer  or  du-ect  the  course  of  in- 
dustry, to  maugurate  new  enterprises,  employ  labor,  and  produce 
commodities  and  wealth  ;  and  the  period  of  dispersion,  waste,  or 
altruism,  by  which  it  passes  to  other  hands.  These  three  periods 
marking  the  rise  and  fall  of  fortunes,  correspond  to  the  pei'iods 
of  growth  and  decay  iu  living  organisms. 

87.  Society's  Gain  by  Economy. — In  the  period  of  absti- 
nence, the  worker  is  woi'king  for  small  i-eturns.  Perhaj)s  it  is  Cor- 
nelius Vanderbilt  rowing  a  boat  as  a  ferry  between  Staten  Island 
and  New  York  for  $1  a  day  or  John  Roach  working  iu  an  iron 
foundry  for  $2.50  a  day.  In  either  case,  many  others  are  getting 
as  much,  but  few  others  are  saving  as  much.  If  another,  getting 
the  same  wages,  spends  ten  cents  a  day  for  tobacco,  ten  more  for 
beer,  ten  more  for  riding  in  a  stage  when  he  could  walk,  and  thirty 
cents  a  day  for  good  clothes  when  he  could  wear  as  comfortable 
bat  less  genteel  for  ten  cents,  and  the  penurious  man  saves  the 
entire  fifty  cents,  it  is  plain  tliat  while  the  hoarding  is  going  on, 
the  one  who  does  not  hoard  has  more  enjoyments,  more  ease  and  a 
better  time  than  the  one  who  does.  Hence,  as  to  this  period,  the 
one  who  will  never  be  rich,  has  no  ground  of  complaint,  and  feels 
no  sense  of  injustice,  against  the  one  who  will. 

When  the  saving  of  fifty  cents  a  day  has  gone  on  for  a  year, 
it  represents  $150  capital.  If  the  ferry  line  consists  of  three  boats 
Avortli  $40  each,  Cornehus  can  now  buy  out  the  boats,  or  buy  new 
boats  and  start  an  opposition  line.  If  the  line  usually  carries 
thirty  passengers  a  day  at  one  shilling  each  (old  New  York  money) 
and  earns  freights  to  the  amount  of  $10  a  day,  here  are  $13.75  to 
be  got  by  hiring  two  men  and  working  himself,  after  buyifig  the 
three  boats  for  $120.  In  short,  he  suddenly  rises  from  wages  of 
$1  a  day  to  a  profit  of  $10.75  a  day,  while  he  continues,  by  his 
work  in  rowing  one  of  the  boats,  to  earn  also  $1  a  day. 

But  he  stands  a  chance  of  losing  his  $120,  for  something  may 
happen  by  which  travel  may  cease,  or  the  boats  may  be  wrecked, 
sunk,  or  burned.  This  chance  he  ventures.  Hence  his  increase 
of  income  is  due  to  tliree  quaUties — abstinence,  sagacity,  and 
courage.    Having  now  an  income  of  $11.75  a  day,  if  he  continues 


218  ECONOMIC  PniLOSOFUY. 

to  live  at  fifty  cents  a  day  lie  can  in  fifty  days  buy  a  sailing  sloop 
which  will  cost  $500,  and  increase  his  earnings  to  $20  a  day,  while 
lessening  his  labor  and  expenditure.  In  every  step  of  this  process 
he  benefits  the  labor  that  needs  employment  and  the  people  that 
need  transportation.  The  people  of  Staten  Island  get  a  public 
ferry  estabhshed,  greatly  to  their  profit,  without  being  at  any 
expense  in  its  establishment.  If  it  proves  to  be  a  mistake  of 
judgment,  and  a  losing  affair,  the  loss  all  falls  on  Cornelius. 
This  is  a  saving  and  gain  to  society  in  the  first  instance,  as  com- 
pared with  the  cost  of  imposing  a  general  tax  whereby  to  start 
the  ferry — a  jDroject  so  doubtful  that  it  would  perhaps  be  a  more 
costly  labor  to  get  the  people  to  vote  for  it,  than  to  start  it  at 
private  risk  and  run  it  at  private  cost.  Hence,  alike  in  the  period 
when  hoarded  capital  assumes  the  responsibility  and  risk  of 
inaugurating  new  enterprises,  steering  industry,  and  employing 
labor,  the  public  at  large  make  a  great  savmg  in  being  relieved 
of  all  risk  and  cost  in  a  matter  which  will  inure  to  their  great 
advantage. 

The  qualities  of  character  which  fit  a  man  to  employ  labor  and 
direct  industiy  are  : 

(1)  Parsimony. — This  disposes  him  to  devote  the  minimum 
of  his  means  to  personal  consumption  of  himself  and  household, 
and  the  maximum  to  reproductive  purposes.  This  is  what  society 
itself  at  this  stage  most  needs,  since  it  wants  reproductive  industry 
to  go  on  most  actively. 

(2)  A  Keen  Perception  of  Values. — This  enables  him  always 
to  so  adjust  his  purchases  of  raw  materials  and  of  labor,  and 
his  observations  concerning  the  tendencies  of  demand  or  the 
future  w^ants  of  his  customers,  that  he  will  buy  and  produce  for 
less  than  he  can  sell.  Only  thus  can  he  achieve  that  expansion 
in  his  capital,  by  which  to  expand  his  purchases  of  materials  and 
labor  and  the  magnitude  of  his  sales.  Hence  the  community  are 
interested  that  every  attempted  producer  of  wealth  should  have 
a  keeift  sense  of  value.  Without  it  his  business  can  not  obtain 
that  magnitude  which  is  essential  to  cheapness. 

Finally,  financial  courage,  or  the  will  to  let  money  go  when 
money  is  to  be  made  by  risking  it,  is  required.  Without  this, 
one's  capital  will  slowly  consume  in  expensive  timidity  and  unpro- 
ductive idleness,  while  one  is  waiting  for  those  ideal  opportunities 
to  arise  in  which  the  profits  are  large,  the  returns  certain,  and 
there  is  no  risk  of  loss.     Such  chances  never  come. 

Producing  on  a  large  scale  promotes  ]3roduction  on  a  cheap 


LARGENESS  AND  CHEAPNESS.  219 

scale ;  (a)  by  tlie  sub-division  of  labor  it  makes  possible ;  (b)  by  the 
substitution  of  machinery  for  manual  labor  which  usually  accom- 
panies it ;  (c)  by  getting  control  of  a  larger  demand  for  consump- 
tion ;  (d)  by  the  substitution  of  credits  for  cash  in  its  expenditures ; 
(e)  by  passing  securely  thi'ough  reverses  which  would  wreck 
industries  conducted  on  small  capitals ;  (f)  by  paying  wages  of 
superintendence  to  but  few  persons  in  proportion  to  the  whole 
number  employed ;  (g)  by  the  skill  and  delicacy  of  judgment  con- 
cerning questions  of  profit  which  is  developed  by  a  long  habit  of 
doing  only  profitable  things.* 

*Example  A. — Effect  of  large  capitals  to  induce  subdivision  of  labor. — Adam  Smith  be- 
gan his  great  work  ("  Weaith  of  Nations,"  Bli.  i.  Ch.  i.)hy  pointing  out  that  while  one 
man,  working  alone,  might  not  be  able  to  make  more  than  one  pin  a  day,  certainly  not 
twenty  pins,  ten  men,  each  making  a  particular  part,  one  drawing  out  the  wire,  another 
straightening  it,  a  third  cutting  it,  a  fourth  pointing  it  (or  rather,  pointing  numbers 
of  pins  at  once),  a  fifth  grinding  it  at  the  top  for  receiving  the  head,  the  other  three 
maliing  the  head  by  as  many  distinct  processes,  and  so  on,  the  whole  ten  could  make 
about  48,000  pins  a  day.  Each  one  would  thereby  increase  his  make,  by  mere  sub-divi- 
sion of  functions,  from  one  or  twenty  pins  to  4,800  pins. 

Many  persons  can  earn  their  own  living  by  rag-picking,  street-sweeping,  chimney- 
sweeping,  and  other  peculiar  occupations,  very  simple,  and  requiring  no  skill,  strength, 
or  endurance,  in  a  community  whf-re  there  is  a  great  division  of  labor,  who,  if  required 
to  live  by  farming,  hunting,  or  systematic  work  at  a  trade,  would  die.  Some  writers 
appear  to  so  mistake  the  fact  that  very  helpless  and  inefflcieut  workers  crowd  into  the 
great  cities  and  live  there  as  to  infer  that,  because  such  are  only  found  in  the  great 
cities,  therefore  there  is  eometliing  in  the  construction  or  management  of  society  in 
great  cities  which  makes  them  helpless  and  inefficient,  whereas  the  fact  is,  the  sub- 
division of  employments  in  great  cities  reduces  them  down  to  processes  so  simple  that 
the  simplest  minds  and  weakest  bodies  are  there  able  to  find  something  which  they  can 
do.    Hence  Henry  George  says  ; 

"  To  see  human  beings  in  the  most  abject,  the  most  helpless  and  hopeless  condition, 
you  must  go,  not  to  tlie  unfenced  prairies,  and  the  log  cabins  of  new  clearings  in  the 
backwoods,  where  man,  single-handed,  is  commencing  the  struggle  with  nature,  and 
land  is  yet  worth  nothing,  but  to  the  great  cities  where  the  ownership  of  a  little  patch 
of  land  is  a  fortune." 

Conceding  this  to  be  true,  it  only  indicates  that  thousands  of  people  can  get  a  living 
of  some  kind,  where  there  is  great  subdivision  of  labor,  who  would  perish  if  presented 
with  a  quarter  section  of  land  and  obliged  to  get  a  living  from  it. 

Example  B.— Substitution  of  machinery  for  manual  labor  brought  about  by  large  capi- 
tals.— Mr.  Moody*  computes  that  on  the  Grandin  farm  in  Dakota  wheat  worth  70  cents 
per  bushel  is  produced  at  a  total  cost  in  all  ways  of  only  10  cents  per  bushel,  leaving  a 
net  profit  on  the  first  year  of  farming  of  51  cents  per  biislul,  orover  300  percent.  Mr. 
Edward  Atkinsont  says:  "If  we  convert  the  work  done  in  the  direction  of  machinery 
upon  the  great  bonanza  farms  of  far  Dakota  into  the  yearly  work  of  a  given  number  of 
men,  we  find  that  the  equivalent  in  a  fair  season,  on  the  best  farms,  of  one  man's  work 
for  300  working  days  in  one  year,  is  5,500  bushels  of  wheat.  Setting  aside  an  ample 
quantity  for  seed,  this  wheat  can  be  moved  to  Minneapolis,  where  it  is  converted  into 
1,000  barrels  of  flour,  and  the  flour  is  moved  to  the  city  of  New  York.  Uy  similar 
processes  of  conversion  of  the  work  of  milling  and  barreling  into  the  labor  of  one  man 
*  "  Land  and  Labor  in  United  States,"  by  Wm.  Godwin  Moody,  p.  52. 

t  "The  Rate  of  Wages,"  p.  75. 
I 


220  ECONOMIC  ruiLosoruT. 

88.  Society's  Gain  by    Liarge    Accuniiilations. —Large 

capitals  draw  lower  rates  of  interest  than  small,  notwithstanding 
that  equivalent  quantities  of  capital  in  them  often,  and  except  in 

for  a  year,  we  find  that  the  work  of  milling  and  putting  into  barrels  1,000  barrels  of 
flour  is  the  equivalent  of  one  man's  work  for  one  year.  By  a  computation  based  upon 
the  trains  moving  on  the  New  York  Central  Railroad,  and  the  number  of  men  engaged 
in  the  work,  we  find  that  120  tons,  the  mean  between  4  500  bushels  of  wheat  and  1,000 
barrels  of  flour,  can  be  moved  1,700  to  2,000  miles  under  the  direction  of  one  man, 
working  eighteen  months,  equal  to  one  and  one-half  men  working  one  year.  When 
this  wheat  reaches  New  York  City,  and  comes  into  possession  of  a  great  baker,  who 
has  established  the  manufacture  of  bread  on  a  large  Ecale,  and  who  sells  the  best  of 
bread  to  the  working  people  of  New  York  at  the  lowest  possible  price,  we  find  that 
1,000  barrels  of  flour  can  be  converted  into  bread  and  sold  over  the  country  by  the  work 
of  three  persons  for  one  year.  Let  us  add  to  the  six  and  a  half  men  already  named  the 
work  of  another  man  six  months,  or  half  a  man  one  year,  to  keep  the  machinery  in 
repair,  and  our  modern  miracle  is  that  seven  men  suflice  to  give  1,0'X)  persons  all  the 
bread  they  customarily  consume  in  a  year.  If  to  these  we  add  three  for  the  work  of 
providing  fuel  and  other  materials  to  the  railroad  and  to  the  baker,  our  final  resul  t  is  that 
ten  men  working  one  year  serve  bread  to  1,000." 

'"Again,  iron  lies  at  the  foundation  of  all  arts.  At  an  average  of  200  lbs.  per  head  in 
the  United  States,  the  largest  consumption  of  iron  of  any  nation,  we  yet  find  that  the 
equivalent  of  one  man's  work  for  a  year,  divided  between  the  coal  mine,  the  iron  mine, 
and  the  iron  furnace,  suflices  for  the  supply  of  500  persons.  One  operator  in  the  coiton 
factory  makes  cloth  for  200,  in  the  woolen  factory  for  300  ;  one  modern  cobbler  (who 
is  any  thing  but  a  cobbler),  working  in  a  boot  and  shoe  factory,  furnishes  1,000  men,  or 
more  than  1,000  women,  with  all  the  boots  and  shoes  they  require  in  a  year.  So  it  goes 
on,  and  the  more  efifective  the  capital  the  higher  the  wages,  the  lower  the  cost  the 
more  ample  the  supply." 

Of  course,  if  the  general  cost  of  producing  wheat  thronghout  the  world  could  be 
brought  down  to  the  low  figures  of  production  in  Dakota,  wheat  would  soon  fall  every- 
where to  about  twenty  cents  a  bushel,  and  bread  to  one  cent  a  loaf. 

In  printing,  seventy -five  men  can  do  as  much  work  on  a  modern  printing  press  as  ten 
thousand  men  could  have  done  with  the  hand-presses  in  use  in  the  beginning  of  the 
century.  In  building,  the  planing  machine  does  the  work  of  twenty  men.  In  boot  and 
shoe  making,one  man  fifty  years  ago  would  make  two  hundred  pairs  of  boots  and  shoes 
in  a  year— now  three  hundred  pairs.  One  woman  will  sew  on  a  machine  as  much  as 
twelve  with  the  needle. 

Example  C.—Ofthe  use  of  large  capitals  in  controlling  a  larger  demand  for  consump- 
tion.—This  is  consTpicnonsly  seen  in  the  operations  of  competition  between  rival  rail- 
ways and  great  manufacturing  companies,  and  underlies  their  tendencies  toward 
consolidation.  Mr.  Vanderbilt  purchased  the  flarlem  Road  when  its  shares  were  worth 
from  eleven  to  nineteen  cents  only,  and  when  it  was  almost  without  business.  He  then 
offered  to  carry  ail  the  traffic  coming  into  Albany  over  the  New  York  Central  for  one 
fifth  of  what  had  previously  been  paid  to  the  Hudson  River  Road  for  the  same  service 
provided  the  Central  would  make  a  like  discrimination  in  favor  of  the  traffic  coming 
to  Albany  over  the  Harlem  against  that  coming  by  the  Hudson  River.  The  induce- 
ment was  too  great  to  be  resisted.  In  a  few  days  Hudson  River  Railroad  stock  fell  so 
enormously,  and  Harlem  rose  so  rapidly,  that  Vanderbilt  was  seen  to  be  master  of  the 
three  roads  by  owning  one.  He  soon  passed  into  legal  control  of  all  the  three.  By 
massing  his  capital,  so  as  to  effectively  control  the  largest  possible  demand  for  the  work 
of  his  road, he  revolutionized  the  railway  business,  and,  applying  the  same  tactics  to  the 
other  roads,  compelled  their  virtual  consolidation  with  the  New  York  Central,  thus 
converting  railways  from  single  roads  into  systems.  This  made  him  the  richest  man 
living,  and  did  much  to  improve  railway  transportation  and  cheaper  freights.    .^ 


DECLINE  OF  PROFITS.  2  2 1 

farming  usually,  effect  a  larger  production  of  wealth ;  and  thus 
the  community  makes  an  economy  out  of  large  capitals  which  it 
could  not  effect  with  the  same  quantity  of  capital  subdivided 

The  rates  at  which  railway  freights  were  cheapened,  largely  through  the  increase  of 
traffic  and  cheapness  of  service  brought  about  by  this  system  of  concentrated  control, 
are  shown  by  the  following  table,prepared  by  the  Hon.  Joseph  Nimmo,  Jr.,late  Chief  of 
the  Bureau  of  Statistics  : 


By  lake  By  lake 

By 

By  lake  By  lake     By 

Years. 

and 

and 

all 

Yeara. 

and 

and 

all 

canal. 

rail. 

rail. 

canal. 

rail- 

rail. 

Cents. 

Cents. 

Cents. 

Cents. 

Cents. 

Ctnts. 

1868     .    . 

.    .    .    2454 

29.0 

42.6 

1877     . 

.    11.24 

1.5.8 

20.3 

1869     .    . 

.    .     .    23.12 

25.0 

35.1 

1878     . 

.      9.15 

11.4 

17.7 

1870     .    . 

.     .     .     17.10 

22.0 

33.3 

1879     . 

.    11.60 

13.3 

17.3 

1871      .    . 

.     .     ,    20.24 

250 

31.0 

1880     . 

,     12.27 

15.7 

19,7 

1872     .    . 

.     .     .    24.50 

28.0 

33.5 

1881      . 

.      8.19 

10.4 

14.4 

1873     .    . 

.     .     .     19.19 

26.9 

33.2 

1882      . 

,      7.89 

10,9 

14.6 

J874     .    . 

.     .    .     14.10 
.     .     .     11.43 

16.9 
14.6 

28.7 
24.1 

1883     , 

8.40 
6.60 

11.5 
9.75 

16.5 

1875    .     .    , 

1884,  Jan. 

to  Sept. 

13.0 

1876    .    .     . 

.     .      9.58 

11.8 

16.5 

Quotation 

s  are  wai 

iting  for  1885. 

It  is  shown  by  this  table  that  since  1868,  when  the  statistics  commence,  the  freight  on 
wheat  from  Chicago  to  New  York  has  declined  to  one-fourth  its  original  value  in  six- 
teen years. 

Example  Z).— The  subjugation  of  the  Confederate  rebellion  by  the  Union  arms  was 
financially,  perhaps,  the  most  remarkable  triumph  ever  witnessed  of  the  substitution  of 
credit  for  cash  values.  At  the  outset  the  Federal  Government  had  no  money,  and  not 
more  than  $50,000,000  in  gold,  all  told,  existed  in  the  country,  and  hardly  any  of  this 
was  in  the  hands  of  the  government.  Secretary  Chase  met  the  bankers  of  New  York, 
by  appointment,  to  obtain  a  loan.  They  offered  him  $50,000,000  at  a  high  rate,  and 
said  "that  must  be  their  ultimatum."  "Gentlemen,"  said  Mr.  Chase,  "it  is  for  the 
government  of  the  United  States  to  propose  ultimatums.  Since  you  can  not  lend  me 
the  money  on  which  to  run  the  government,  I  will  compel  you  to  run  your  banks  on  my 
money,  if  I  have  to  issue  government  notes  until  it  takes  a  bushel  of  notes  to  buy  one 
breakfast."  The  war  was  fought  through  almost  wholly  without  any  other  than 
credit  money,  the  only  tie  connecting  it  with  gold  being  that  it  was,  for  a  time,  fundable 
into  gold-interest  paying  bonds,  the  gold  interest  on  which  was  secured  by  collecting 
the  customs  duties  in  gold  only.  For  every  other  use  in  the  United  States,  except  that 
of  paying  customs  duties  and  interest  on  the  public  debt,  the  credit  of  the  government 
was  substituted.  This  substitution  of  government  credit,  in  the  form  of  greenback 
notes  and  bonds,  for  the  previous  attempt  to  use  gold,  became  a  reality,  since  very 
little  gold  had  been  in  fact  used,  in  substitution  of  public  for  individual  credit,  or  of 
government  notes  for  book  accounts,  which  had  the  effect  of  bringing  business  over 
from  a  private  credit  basis  to  a  private  cash  basis,  through  the  use  of  government 
credit,  as  the  equivalent  of  cash,  in  all  domestic  trade. 

Goods  which  had  previously  been  sold  on  long  time,  j.«.,  on  the  buyer's  promise  to 
pay  in  60  or  90  days,  were  now  sold  for  government  notes.  These  became  fo  abundant 
and  so  cheap,  relatively  to  gold,  that  debts  which  prior  to  their  issue  could  only  be 
paid  with  $100  in  gold  could  now  be  paid  in  notes,  the  gold  value  of  which  was  only 
$70,  $eo,  or,  at  least  for  a  few  weeks,  $45.  As  every  body  who  had  money  preferred 
something  else  to  it,  cash  payments  were  jjromptly  made  on  every  side,  and  prompt- 
ness in  meeting  liabilities  had  almont  ceased  to  be  a  virtue.  The  bankruptcy  of  the 
government  made  every  body  flush.  The  business  failures  shrunk  in  the  United 
States  from  6,993  in  1861  to  495  in  186.5,  from  a  total  liabilities  involved  in  1861  of 
of  $207,210,001  to  a  total  liabilities  involved  in  1863  of  only  $7,890,000.  Crimes  against 
persouaand  property  fell  oil  in  like  proporliou,  jaiis  were  empty,  and  the  courts  de- 


222  ECOjSOMIC  PIULOSOPUY. 

among  many  holders.  A  newsboy  with  fifty  cents  capital  will 
buy  fifty  i^apers  at  one  cent  and  sell  them  for  two  cents  each  in  a 
day.  Although  he  combines  a  good  deal  of  labor  of  running  and 
shouting,  yet  no  part  of  the  fifty  cents  is  wages  of  labor,  because 
no  person  employs  him,  and  he  places  his  whole  capital  at  risk. 
If  he  should  happen  to  lose  his  papers,  or  they  should  be  destroyed, 
or  remain  unsold  until  the  next  day,  he  would  have  lost  his  entire 
capital.  Hence  no  part  of  his  gain  is  wages,  but  all  of  it  is 
profit ;  for  profit  may,  as  well  as  wages,  be  an  inducement  to  labor. 
The  profit  on  the  fifty  cents  is  100  per  cent,  a  day. 
When  he  has  made  a  dollar  he  can  employ  a  comrade  who  has 
no  fifty  cents  to  heli)  him,  giving  him  half  the  profits ;  and  at  the 
end  of  the  next  day,  if  successful,  he  will  have  seventy-five  cents 
as  the  gain  of  that  day,  fifty  cents  on  his  own  work,  and  twenty- 
five  cents  on  that  of  his  comrade.  His  return  on  his  second  fifty, 
cents  is  only  50  per  cent,  a  day.  When  he  has  $10  his  income 
would  rise  to  $2. 50,  if  he  could  get  25  per  cent,  a  day  on  the 
whole,  and  he  would  be  a  bright  financier  if  he  could  do  better ; 
for  the  quantity  of  leg- work  and  shouting  which  he  can  do  in 
connection  with  each  dollar  of  the  ten  is  only  one-tenth  as  much 
as  he  could  do  for  the  first  dollar.  As  capital  increases,  the  amount 
of  labor  the  owner  can  give  to  a  given  sum  of  it  declines,  and 
therewith  his  profit  declines.  When  the  capital  rises  to  |100,  the 
newsboy  or  peddler  of  any  kind  who  can  make  it  earn  him  $10, 
or  10  per  cent. ,  a  day  would  be  a  genius.  When  it  becomes 
$2,000,  and  the  newsboy  has  graduated  into  a  merchant  selling 
books  or  groceries,  he  could  not  hope,  still  with  the  utmost  aid  of 
his  own  labor  and  that  of  two  assistants,  to  come  out  of  the  year 
with  a  gross  profit  of  more  than  $2,000,  so  that  the  rate  per  cent. 

serted.  Shortly  after  the  cIobc  of  the  war  the  former  average  of  failures  and  crime 
again  returned. 

The  substitution  of  credit  for  money,  which  the  nation  as  a  whole  then  underwent, 
has  sometimes  been  imitated  on  a  small  eciUe  by  private  firms  and  corporatioBs,  but 
the  stringency  in  means,  which  usually  suggests  it,  is  not  favorable  to  success,  except 
in  the  cases  of  such  notable  tradiug  firms  as  the  Hudson's  Bay  Company,  the  Alaska  Fur 
Company,  the  East  India  Company,  whose  promises  or  accepted  orders  would  circulate 
among  large  populations  in  lieu  of  money. 

Example  E.— Of  the  use  oj  large  capitaU  to  pass  securely  through  reverses  which  would 
wreck  the  same  industries  if  owned  by  small  capitals.— \i\  the  shrinkage  of  railway  stocks 
in  the  United  States  1882-4,  shares  which  had  been  worth  $6,000,000,000  in  1881  became 
worth  less  by  $2,000,000,000  in  1884.  All  this  loss  occurred  without  the  suspension  of 
traffic  on  any  road  cr  any  interruption  to  business.  Had  all  the  roads  been  owned  by 
small  stockholders  the  ruin  to  individuals  would  have  been  widespread  and  the  suffer- 
ing very  great,  as  one  will  readily  see  by  assuming  a  similar  shrinkage  in  the  values  of 
farms  or  other  private  properties.  , 


GREAT  CAPITALS  AND  SMALL  PROFITS.  223 

has  declined  from  10  per  cent,  a  day  to  100  per  cent,  per  annum. 
With  1100,000  he  is  fortunate  if  lie  makes  $10,000  by  safe  and 
regular  business,  without  speculative  investments,  a  still  further 
decline  of  nine-tenths.  When  a  man's  fortune  rises  over  a  million 
he  begins  to  invest  at  5,  4,  and  3  per  cent.,  because  he  can  there- 
by put  his  money  where  it  needs  no  watching,  and  he  is  sure  of 
his  interest. 

It  is,  therefore,  a  law  of  economics  that  the  rate  of  interest,  at 
which  capital  lends  its  services  to  society,  declines  as  the  volume 
of  capital  held  by  one  owner  increases.  Large  capitals  also  serve 
the  public  more  cheaply  than  small  ones.  A  merchant,  having 
$1,000,000  capital,  can  and  will  sell  goods  cheaper  than  one  having 
$10,000.  A  bank  having  a  very  large  loanable  capital  can,  and 
will,  lend  cheaiJer.  The  railways,  repi'esenting  $50,000,000  capital, 
•each,  in  the  Northern  States,  carry  passengers  at  two  cents  per 
mile  and  freight  at  one-third  to  one-half  a  cent  per  ton  per  mile. 
Southern  and  frontier  railways,  having  smaller  capitals  and  less 
traffic,  charge  twice  or  thrice  higher  rates.  The  large  factories 
manufacture  cheaper  than  the  small.  Instance  the  great  cheapen- 
ing of  goods  everywhere,  when  the  system  of  spinning  and  weav- 
ing in  every  house  merged  into  the  large  factory  system.  Even 
the  large  landlords  rent  cheaper.  Under  the  great  landlords  of 
England  rents  are  far  lower  than  in  the  United  States  or  France, 
and,  in  the  city  of  New  York,  those  who  can  rent  of  the  Astors  or 
Ti'inity  Church  are  estimated  to  fare  about  15  per  cent,  better  than 
those  who  rent  of  the  small  landlords. 

The  concentration  of  productive  capitals,  into  few  hands,  pro- 
motes the  most  far-reaching  and  equal  diffusion  of  enjoyable  prod- 
ucts or  commodities  for  consumption,  over  the  widest  area,  to 
the  greatest  2iumber,  and  in  the  shortest  time.  Reproductive 
capital,  not  being  itself  en joyable  wealth,  can  be  used  for  no  other 
purpose  than  to  forward  enjoyable  wealth  to  its  consumer. 

The  banker  does  this  when  he  cashes  the  check  of  a  traveler 
making  the  tour  of  Europe,  or  a  merchant  buying  goods.  The 
merchant  does  the  same  when  he  sells  goods  and  buys  again. 
The  manufactui'er  does  this  when  he  weaves  carpets.  Since  all 
these  men  can,  as  we  have  seen,  and  do  render  this  service  more 
cheaply,  the  larger  the  capitals  they  have  to  work  with,  it  follows 
that  consumers  must  secure  an  increase  of  enjoyable  wealth,  by 
reason  of  the  existence  of  the  large  concentrations  of  capital, 
which  they  could  not  get  if  those  concentrations  of  capital  were 
smaller.     lie  gets   his  goods  carried   four  times  as  far,  for  the 


224  ECONOMIC  PHILOSOPHY. 

same  sum,   by  reason  of  these  concentrations  of  capital  and 
control.* 

89.  Large  Capitals  Lessen  Consimiptiou. — The  control 
or  custody  of  a  large  amount  of  reproductive  capital  into  the 
hands  of  one  owner  increases  very  little,  if  at  all,  the  quantity  of 
enjoyable  wealth  he  can,  or  will,  consume.  On  the  contrary,  it 
may  in  many  ways  diminish  his  capacity  to  consume  wealth.f 


*  That  the  actual  distribution  of  all  enjoyable  and  coneumable  commodities  is  af- 
fected with  marvelous  equality  among  all  the  members  of  society  is  shown,  by  com- 
paring the  total  amount  produced  in  the  country  with  the  amount  each  one  gets.  Mr. 
Edward  Atkinson*  says  "that  the  total  value  of  the  annual  product  of  all  industries  in 
the  United  States  by  the  census  of  1880,  including  the  part  that  is  sold  and  the  domes- 
tic consumption  upon  farms  and  In  families,  would  not  exceed  $10,000,000,000  in  the 
census  year  at  the  retail  prices  for  final  consumption."  He  then  says:  "  If  the  census  esti- 
mate be  divided  by  the  population  of  substantially  50,000,000  people,  we  reach  $160  to 
$170per  year  as  the  sum  representing  the  average  annual  product  for  each  person,  or  a 
fraction  less  than  forty-four  to  forty-seven  cents  per  day  for  365  days." 

Mr.  Atkinson  believes  from  other  datatheanuual  product  is  fifty-five  cents  per  capita, 
or  a  little  under  $200  for  each  person. 

The  census,  however,  it  must  be  remembered,  only  enumerates  principal  agricultural 
products  and  principal  manufacturing  products.  In  the  matter  of  meats  it  fails  to 
enumerate  the  annual  growth  and  slaughter  of  meat  for  food,  confining  itself  to  the 
meats  which  pass  through  the  the  packinghouses,  viz.,  $303,000,000.  It  enumerates 
the  total  quantity  of  food-animals  existing,  but  not  the  annual  increase  or  consump- 
tion, not  any  of  the  meats  killed  by  our  76,241  butchers  throughout  the  country,  nor 
by  farmers  on  farms,  nor  the  poultry,  game,  geese,  ducks,  etc.,  which  are  killed  and 
consumed  at  home.  These  and  other  omissions  in  the  census,  amount,  in  the  judgment 
of  the  present  writer,  to  an  error  of  50  per  cent,  in  the  entire  computation;  for  it  is  not 
probable  that  the  meat-bill  of  the  American  people  is  less  than  $1  per  head  per  week, 
or  ten  times  the  sum  named  in  the  census.  If  so,  this  error  alone  would  bring  the  an- 
nual production  up  to  $2,700,000,000  more  than  that  stated  by  Mr.  Atkinson.  Whatever 
the  total  production  may  be,  the  whole  force  of  reproductive  capital  is  expended  in 
speeding  it  to  the  point  of  greatest  demand.  Very  little  actual  loss  or  waste  occurs  ex- 
cept in  the  unsaved  sewage  of  the  large  cities.  As  Mr.  Atkinson  says ,  "  if  no  more  is 
produced  no  more  can  be  had." 

+  The  hoarders  of  small  sums  of  money,  eay  from  $200  to  $2,000,  have  in  most  coun- 
tries 80  great  a  distrust  of  banks  that  they  prefer  to  keep  their  hoard  in  gold,  buried  in 
the  ground,  or  locked  up  in  chests,  or,  as  the  phrase  goes,  in  old  stockings.  This 
operates  as  a  withdrawal  of  the  hoard  from  circulation,  and,  in  France  particularly,  the 
amount  so  withdrawn  is  an  important  and  nearly  constant  quantity.  As  a  rule,  the 
large  capitalists  withdraw  nothing  from  actual  use  by  society  in  the  form  of  a  treasured 
hoard.  Being  well  acquainted  with  banks,  they  deposit  their  entire  hoard  with  them, 
and  thus  place  it  where,  through  the  loans  made  by  the  banks,  it  will  have  all  the  cir- 
culation that  can  be  given  to  it.  Their  stocks,  bonds,  shares,  and  other  evidences  of 
debt  are  not  actual  reproductive  capital,  but  only  claims  upon  reproductive  capital. 
The  railway  shares  represent  engines,  cars,  tracks,  and  depots,  in  actual  use  by  the  em- 
ployes of  the  company  in  serving  the  public.  So  of  their  shares  in  factories  or  other 
stock  concerns.  The  rich,  therefore,  have  no  hoard,  and  withdraw  a  smaller  idle 
capital  from  active  use  than  the  poor. 

*  "  The  Distribution  of  Products,"  p.  70. 


LIMITS  ON  CONSUMPTION.  225 

The  poor  usually  have  more  healthy  labor  and  less  harassing 
care  than  the  rich,  and  physical  labor  has  a  better  effect  on  the 
health,  ordinarily,  than  mental  solicitude.  The  plain,  substau- 
tial  food  of  the  toiling  classes  promotes  digestion  better  than  that 
of  the  rich.  As  the  poor  man  is  not  ashamed  to  select  an  expert 
cook  for  his  wife,  while  the  rich  man  would  usually  marry  one 
who  knew  little  about  cooking,  the  poor  man,  at  least  throughout 
the  United  States,  is  rather  more  likely  to  eat  well-cooked  food 
than  the  rich.  He  therefore  eats  better,  sleeps  better,  digests  bet- 
ter, and  consumes  more  food  per  day  at  the  average,  than  one 
who  has  more  money  to  buy  food  with.  Nature  has  so  limited 
the  capacity  of  all  men  to  consume  wealth  that  it  is  difficult  to 
pass  its  barriers.  No  man  can  eat  more  than  three  meals  a  day, 
and  this  all  poor  men  get,  with  exceptions  that  are  as  rare  as  rail- 
road accidents.  No  man  can  wear  at  once  more  than  that  limited 
supply  of  clothing  which  all  poor  men  wear.  If  he  buys  more, 
he  must,  sooner  or  later,  give  it  away  unworn. 

No  man  can  sleep  in  more  than  one  room  at  a  time.  If  he 
build  an  extensive  palace,  he  must  either  leave  it  vacant  and 
gloomy,  or  he  must  fill  it  with  his  guests  and  fi'iends,  or  his  ser- 
vants. If  with  the  first,  he  makes  his  palace  a  temple  of  hospi- 
tality and  sociability  rather  than  a  i^rivate  residence,  and  the 
maintainance  of  such  a  palace  becomes  a  most  rapid  and  effective 
means  of  dispersing  his  wealth.  If  with  the  second,  his  palace 
becomes  a  comfortable  asylum  for  the  many  poor — who  will  gladly 
render  him  the  slight  services  they  may  be  able  to,  in  return  for 
home — and  a  means  of  ostentatious,  though  somewhat  lonesome, 
splendor  to  him. 

Adam  Smith  regards  an  expenditure  upon  a  costly  retinue  of 
servants  and  retainers  as  at  all  times  an  unprofitable  expenditure. 
But  it  may  be  doubted  if,  all  things  considered,  those  who  main- 
tain the  servants  may  not  ordinarily  be  better  judges  than  a  dis- 
tant observer,  both  of  the  cost  of  maintaining  them  and  the 
profit.  In  the  feudal  and  old  baronial  organization  of  society,  in 
the  patrician  families  of  the  Romans,  and  on  the  Southern  slave 
plantations,  there  was  a  system  of  maintaining  many  dependants, 
each  of  whom  would  seem,  to  an  observer,  to  do  very  little  toward 
the  common  support.  Yet  this  was  a  system,  in  effect,  of  indus- 
trial co-operation  and  reciprocal  exchange,  organized  on  the  basis 
of  rank  instead  of  capital.  But,  where  rank  and  authority  have 
the  effect  to  cause  each  to  do  toward  the  common  support  the 
thing  he  is  best  able  to  do,  the  effect  may  be  as  productive  ecou- 


226  ECONOMTG  PHILOSOPnY. 

omically,  and  somewhat  more  stable,  dignified,  and  honorable 
socially,  than  if  the  designed  object  of  the  general  employer  were 
to  make  money,  and  the  sole  motive  of  the  employe  were  wages. 
Many  of  the  Roman  patricians.  Southern  slave-holders,  and  feu- 
dal barons  contrived,  notwithstanding  the  large  force  of  servants 
they  had  to  feed,  to  grow  rich  out  of  the  profit  made  from  their 
aggregated  laboi".  If  in  patricianisra  the  command  of  the  supe- 
rior insures  the  obedience  of  the  inferior,  it  becomes  a  substitute 
for  wages.  Those  who  are  supposed  to  keep  a  large  number  of 
servants,  for  display,  will  usually  plead  that  they  can  not  accom- 
plish the  results  they  desire,  with  fewer.  There  may  be  an  econ- 
omy of  time,  an  economy  of  patience,  or  an  economy  of  social 
pi'estige  and  respect,  connected  with  living  at  a  given  rate  of  ex- 
penditure, which  may  make  it  pay  the  person  who  indulges  in  it, 
better,  pecuniarily,  than  the  more  stringent  mode  of  living  which 
a  parsimonious  adviser  would  recommend.  "  There  be  that  scat- 
tereth  and  yet  increaseth,  and  there  be  that  withholdeth  and  yet 
it  tendeth  to  poverty."  Parsimony  is  not  always  economy,  and 
costly  expenditure  is  not  necessarily  waste. 

If  a  Stewart  or  Vanderbilt  expend  $1,000,000  on  a  residence 
which  will  continue  to  hold  at  the  average,  including  family,  ser- 
vants, and  guests,  thirty  pei'sons,  every  year  for  500  years,  the 
consumption  of  wealth  incurred  in  its  cost  when  distributed  over 
all  persons  accommodated  is  reduced  to  the  very  moderate  sum.  of 
166  per  year,  or  but  little  over  $1  per  week  to  each  person,  which 
is  as  low  a  rate  as  newsboys  can  hire  their  lodgings  for  by  the 
night.  So,  when  a  poor  sewing-girl  purchases  a  jiiece  of  cheap 
jewelry  for  a  dollar,  which  in  one  year  she  will  throw  away  as 
worthless,  the  amount  of  wealth  stored  by  her  in  the  commodity 
is  very  small,  relatively  to  the  amount  stored  in  a  diamond,  for 
w^hich  a  duchess  pays  a  thousand  guineas.  But  the  amount  of 
wealth  consumed  by  the  sewing  girl  is  the  greater,  since  the 
diamond,  unless  burned  \i\),  will  incur  no  waste  of  wealth  in  a 
thousand  years,  while  the  bauble  wastes  its  value  in  one  year. 
The  greater  permanence,  durability,  and  fixity  in  the  purchases 
and  possessions  of  the  rich,  makes  them  as  a  class,  therefore,  the 
means  of  consuming  little,  if  any,  more  ^je;'  capita^  and  possi- 
bly less,  than  the  poor  who  have  the  custody  of  very  little,  but 
actually  consume  a  large  part  of  what  comes  into  their  cus- 
tody. 

90.  Effect  of  Large  Capitals  on  Kates  of  Wages.— What 
effect  does  the  conceiitration  of  capitals,  so  as  to  bring  the  control 


m  CAPITALISTS,  NO  WAGES.  227 

of  large  masses  into  one  hand,  have  upon  the  rates  of  wages  of 
labor  ? 

Eeproductive  capital  may  be  used  to  obtain  a  profit,  either  in 
the  employment  of  labor  and  sale  of  its  products,  or  in  erecting' 
and  letting  buildings,  for  the  shelter  of  so  many  of  the  laboring' 
class  as  must  rent  homes,  or  in  effecting  exchanges  of  tlie  prod- 
ucts of  labor.  So  far  as  it  is  used  to  make  a  profit  by  directing 
and  employing  labor,  its  concentration  in  large  masses  increases 
the  fund  from  which  labor  is  to  be  paid,  and  increases  the  steadi- 
ness and  certainty  of  tlie  demand  for  labor. 

In  all  countries  where  one  man  is  worth  about  as  much  as  an- 
other, labor  does  not  admit  of  being  organized  and  made  effective 
for  large  undertakings,  society  is  nomadic  and  isolated,  distrust, 
suspicion,  falsehood,  and  deception,  reign  in  place  of  confidence 
and  co-operation,  the  trader  and  usui'er  bordei'S  on  the  i-obber, 
and  the  rate  of  production  is  low.  Such  are  Arabia,  Tartary, 
Negroland,  and  all  tribal  life.  Hence,  wages  must  be  proportion- 
ately low,  since  they  depend  on  rate  of  production. 

In  India  the  large  native  capitalists  were  effectively  stripped 
of  their  wealth  under  the  rule  of  Clive  and  Hastings,  in  the 
manner  set  forth  by  Burke  and  Sheridan  on  the  great  occasion  of 
Warren  Hastings'  trial.  But  since  India  was  thus  stripped  of 
her  capitalists  by  foreign  oppression,  rates  of  wages  have  been 
lower  there  than  in  any  otlier  country  in  the  world,  being  for  a 
good  worker,  in  provinces  distant  from  railroads  and  large  towns, 
as  low  as  $10  per  year,  or  4  to  10  cents  per  day.  If  India  could 
be  filled  with  capitalists  wages  would  go  up.  Mr.  Brassey*  says 
of  the  Indian  laborers  :  "In  many  districts  black  bread  and 
water  are  the  only  food  of  the  people,  and  the  cost  of  this  meager 
dietary  varies  from  5s.  to  6.s.  per  month"  ($1.25  to  $1.50).  In 
Russia  rates  of  wages  are  lowest  where  the  people  rely  for  a  sub- 
sistence on  the  communal  ownership  of  the  land. 

The  payment  of  the  wages  of  labor  with  steadiness,  perma- 
nence, and  amplitude  being  the  chief  function  of  capital,  and 
payment  of  wages  being  the  function  for  i)erf()rmiiig  which  c;i])- 
ital  is  the  implement,  the  larger  and  better  handled  the  imple- 
ment the  more  perfectly  it  must  perform  its  function. 

*  In  America,  during  our  Colonial  period,  though  Adam  Smith  speaks  of  rates  of 
wages  as  higher  than  in  England,  they  were  but  a  third  or  fourth  of  their  present  rates. 
Working  men  and  women  would  think  it  no  improper  thing,  if  possessed  of  a  pair  of 
shoes,  to  carry  the  shoes  in  their  hands  on  Sunday  until  they  approaclnd  the  church 
door,  there  put  them  on  and  wear  them  during  the  service,  remove  them  again  on  going 
out.  and  walk  home  barefoot  to  save  the  shoes.     . 


228  ECONOMIC  PHIL  OSOPIIY. 

Payment  of  wages  can  never  cease  to  be,  in  effect,  a  division  be- 
tween the  entire  capital  invested  in  an  enterpi'ise,  and  the  entire 
labor  employed  by  it,  of  the  fund  which  remains  out  of  the  price 
received  for  the  joint  product  of  the  two  co-workers,  after  paying 
the  cost  of  raw  materials.  It  is,  therefore,  in  a  permanent  sense, 
a  division  between  partners,  the  whole  capital  being  one  partner, 
and  the  whole  labor  another.  Carey,  Bastiat,  and  Atkinson 
have  agreed  upon  the  formula  which  is  true  when  apjilied  to  the 
history  of  any  one  enterprise — a  cotton  factory,  for  instance- 
that  as  the  capital  and  labor  invested  in  a  permanent,  successful, 
and  pi'ofitable  enterprise  go  on  increasing  ' '  the  absolute  share  of 
the  value  of  the  annual  product  falling  to  capital  increases,  but 
its  relative  share  diminishes,  while  the  share  that  falls  to  labor 
increases,  both  absolutely  and  relatively." 

When  the  aggregate  of  enterprises  in  a  prosperous  country,  or 
indeed,  j)ei'haps,  in  an  unprosperous  one,  though  of  this  we  have 
fewer  opportunities  to  observe,  is  taken  into  view,  the  principle 
of  division  employed  is  a  perpetually  recurring  return  toward 
that  of  equal  division  between  the  aggregated  capital  and  aggre- 
gated labor  employed. 

91.  Constancy  of  Returns. — Capital  tends,  on  the  first  in- 
auguration of  new  enterprises  and  the  first  introduction  of  labor- 
saving  machinery,  to  get,  as  profits,  a  return  graduated  accord- 
ing to  the  cost  of  attaining  the  same  result  by  manual  labor,  by 
the  pi'evious  processes  in  use,  or  by  the  actual  competition  that 
exists.  It  is  not  until  many  capitalists  compete  in  producing  the 
same  thing  that  it  is  brought  down  to  the  standard  of  interest  on 
the  capital  required  ;  and,  anterior  to  such  reduction,  it  gets  as 
profit  a  continually  reducing  sum  based  on  the  value  of  the 
wages  saved,  or  the  rate  at  which  the  same  service  could  be  ren- 
dered by  hand  labor.  Also,  in  carrying  on  enterprises  under  more 
fav^orable  conditions,  capital  gets  at  first,  as  profit,  the  difference  be- 
tween cost  of  pi'oduction  under  anterior  conditions  and  under  these 
new  ones.  This  is  shown  in  the  high  rate  of  jirofit  obtained  by 
the  first  great  bonanza  farmers  of  Dakota,  which  was  upwards  of 
300  per  cent.,  while  farmers  might  be  found  in  the  older  States 
whose  profits  had  declined  to  even  3  per  cent.  So,  on  the  first 
introduction  of  a  new  railroad,  the  road  will  charge  the  rate 
which  will  secure  the  freight  as  against  the  overland  team,  thus 
obtaining  for  steam  cari'iage  only  a  trifle  less  per  ton  per  mile 
than  would  be  cliai'ged  for  carriage  by  animal  power. 

It  is  this  choice  of  new  fields  for  the  investment  of  ca.^iia\, 


PROFITS  MIGRATE.  229 

which  keeps  capital  migrating,  from  old  investments  to  new  ones, 
and  hence  retiring  from  points  whei*e  rates  of  return  have  de- 
clmed,  in  the  manner  pointed  out  by  the  law  of  declining  returns 
contended  for  by  Carey,  Bastiat,  and  Atkinson,  and  passing 
into  new  forms  of  enterprise  where  it  will  either  be  sunk  alto- 
gether, or  laj'gely,  or  will  reap  a  much  larger  profit.  The  law, 
therefore,  must  not  be  interpreted  to  mean  that  tlie  aggregate  of 
capital  in  the  world  reaps  a  declining  rate  of  profit.  Such  a  con- 
dition of  tilings  would  lead  to  a  final  paralysis  of  industry.  It  is 
essential  to  high  wages  that  there  shall  somewhere  be  industries 
in  which,  and  points  at  which,  capital  and  enterprise  ai'e  reaping 
high  profits. 

It  is  only  by  the  division  of  a  high  rate  of  difference,  between 
cost  of  production  and  price  of  product,  that  high  wages  can  be 
maintained,  and  as  this  division  will  be  made  by  capital,  it  will 
make  sure  first  of  its  own  high  profits.  Hence,  high  wages  can 
not  be  permanently  had,  except  as  high  profits  precede  and  cause 
them. 

92.  What  Makes  High  Profits  ?— High  rates  of  profit  are 
due  to  the  advance  of  a  large  body  of  consumers  to  a  higher 
standard  of  living,  at  a  lower  cost  of  effort  and  exertion  on  their 
part,  either  through  an  expansion  in  the  area,  or  cheapening  in 
the  processes,  of  production,  or  an  increasing  perfection  in  the 
distribution  of  wealth. 

This  may  be  due  to  discovery  of  new  and  more  fertile  areas  for 
tillage,  of  new  plants  or  animals  for  food,  of  new  processes  in 
manufacture  or  transportation,  of  new  sources  of  money,  new 
modes  of  exchange,  and  even  of  new  institutions  and  laws  better 
adapted  to  secure  a  large  development  of  industry.  It  may  be 
due  also  to  new  forms  of  government,  great  wars,  or  great  migra- 
tions of  populations.  Hence  high  rates  of  profit  are  a  mark,  or 
sign,  that  industry  and  progress  are  making  a  successful  advent 
into  new  fields  or  modes  of  industry.  They  can  not  be  expected  to 
continue,  in  any  industry,  after  it  has  become  of  long  standing, 
except  as  it  may  be  made  a  new  industry,  by  new  processes,  new 
conditions,  or  a  new  demand.  Nor  is  the  earth,  by  past  advance- 
ment in  art,  or  by  increase  of  population,  approaching  the  period 
when  large  or  liigh  profits  can  no  longer  be  made  in  industries  of 
any  kind,  or  when  migrations  of  populations  to  new  regions,  and 
transitions  of  old  ])opulations  to  new  industries,  can  not  take 
place.  Such  a  period  is,  practically,  as  far  removed  as  ever.  The 
world's  entire   population,    estimated  at   1,400,000,000    persons, 


230  ECONOMIC  PHILOSOPHY. 

could  stand  on  an  area  tea  miles  square,  and  could  be  fed  on  tlie 
products  of  an  area  much  less  than  that  of  the  United  States. 
Less  than  one-twentieth  of  the  land  of  the  United  States  capable 
of  producing  wheat  has  been  improved. 

Although  the  United  States  heads  the  list  of  agricultural  and 
pastoral  producers  with  an  annual  valuation  of  $3,020,000,000, 
Germany,  which  is  not  so  large  as  Texas,  yields  in  farm  and  pas- 
ture products  more  than  two-thirds  as  much  in  value  as  the  whole 
United  States,  viz.,  $2,280,000,000.  France  yields  $2,220,000,000. 
Russia,  with  her  immense  superficies  and  90,000,000  inhabitants, 
produces  of  food  pi^oducts  only  $2,545,000,000,  which  is  barely 
twice  as  much  as  is  produced  by  less  than  half  her  population  in 
Great  Britain,  viz.,  $1,280,000,000,  though  Great  Britain  has  an 
area  about  equal  only  to  the  two  States  of  Illinois  and  Indiaua. 

The  whole  present  cotton  crop  of  the  world  could  be  produced 
on  one-fourteenth  of  the  soil  of  Texas.  No  man  yet  knows  the 
capacity  of  an  acre  of  land  for  production.  Although  China  is 
reported  to  be  overcrowded,  the  absence  of  beasts  of  burden  and 
means  of  transportation  leaves  vast  and  fertile  steppes  in  her  in- 
terior without  habitation  or  tillage.  Many  centuries  must  pass 
before  the  question  whether  ' '  population  can  press  on  means  of 
subsistence  "*  will  become  a  practical  one. 

Indeed,  it  seems  to  be  rendered  untenable,  even  as  a  hypothesis, 
by  the  law  that  the  lower  the  organization  the  greater  the 
fecundity,  or  capacity  for  reproducing  its  species.  As  the  lower 
organizations  constitute  the  food  of  the  higher,  and  possess  the 
greater  fecundity,  it  is  not  possible  to  conceive  of  the  less  prolific 
outrunning  the  means  of  subsistence  furnished  by  the  more 
fruitful. 

93.  Malthiis'  So-called  Law.— Prof.  Bonamy  Price,  of  Ox- 
ford, speaking  of  the  Malthusian  law,  so  called,  says  :  "  What  is 
the  essence  of  this  theory  but  the  well  known  fact  that  human 
beings,  like  all  other  animals,  have  a  power  of  multiplying  faster 
than  their  food?  "     Is  this  a  well  known  fact  ? 


*  A  mere  numerical  calculation  of  the  rate  at  which  a  person's  descendants  may  mul- 
tiply, in  successive  generations  of  posterity,  is  of  no  more  value  to  prove  that  the  world 
will  at  any  future  date  be  more  crowded  than  it  now  is,  than  a  like  calculation  of  the 
rate  at  which  the  same  person's  ancestors  multiply  as  we  go  backvyard,  would  be  to 
prove  that  the  earth  must  formerly  have  held  a  greater  population  than  now .  Each  ex- 
isting inhabitant  of  the  earth  has  but  to  go  back  a  few  centuries  to  find  that  his  an- 
cestors number  by  millions.  Such  calculations  omit  the  crossings,  or  the  degree  in 
which  the  descendants,  and  ancestors,  of  each  unit,  count  again  and  again  as  descend- 
ants and  ancestors  of  the  others. 


MAN  AND  HIS  FOOD. 


231 


Since,  as  human  beings  are  the  food  of  all  other  animals,  and 
all  other  animals  are,  or  may  be,  the  food  of  human  beings,  and 
as  the  power  of  multiplying  faster  than  their  food  pertains  both 
to  human  beings  and  to  all  other  animals,  it  follows  that  Prof. 
Price  has  affirmed  both  that  human  beings  have  a  power  of 
multiplying  greater  than  that  of  other  animals,  and  that  other 
animals  have  a  power  of  multiplying  gi'eater  than  that  of  human 
beings.  Each  being  alternately  the  food  of  the  other,  if  each 
multiplies  faster  than  its  food,  each  must  multiply  faster  than  the 
other.  The  greater  multiplying  power  of  food,  compared  with 
that  of  man,  may  be  seen  in  the  case  of  a  married  couple  and 
a  grain  of  wheat.  In  the  colonial  period  of  the  United  States,  it 
is  said  that,  one  woman  has  i^roduced  as  many  as  twenty-fiv^e 
children,  though  at  present  the  production  of  from  eleven  to 
fifteen  is  extraordinary.  Calling  the  age  of  man  seventy-live  years, 
a  birth  of  twenty-five  children  to  two  parents  would  be  thirty-thi'ee 
per  cent,  per  annum  to  the  two,  or  sixteen  and  a  half  per  cent, 
to  each  unit  of  poj)ulation.  The  highest  actual  increase  in 
the  United  States  is,  with  immigration,  three  per  cent.,  and 
without  immigration  two  and  a  half  per  cent,  per  annum. 
American  wheat-growers  sow  50,000,000  bushels  of  wheat  an- 
nually to  produce  500,000,000  bushels  of  wheat,  being  only 
ten-fold.  But  this  is  sixty  times  the  highest  alleged  rate  of 
increase  in  the  human  species  in  our  colonial  period,  and  is  300 
times  the  present  actual  rate  of  increase.  But  this  is  far  short  of 
the  potentiality  of  wheat  under  higher  pi'ocesses  of  production. 

Major  Hallett,  of  Brighton,  England,  in  1857-61,  by  planting 
wheat  in  rows  a  foot  apart,  and  selecting  best  grains  from  best 
ears,  and  best  ears  from  most  abundant  stools,  attained  the  follow- 
ing result,  beginning  with  best  gi-ains  selected  from  best  ears, 
four  and  three-eighths  inches  long,  and  containing  forty-seven 
grains  per  ear,  which  he  found  in  a  common  field  : — 


Containinfj 

No-  of  Ears  on 

Year. 

Ears  Selected. 

Height,  Indies. 

Grains. 

Finest  Stool. 

1858 

Finest  Ears 

6^ 

79 

10 

1859 

..        li 

VM 

91 

22 

I860 

Ears  Imperfect  from  Wet 

Season 

«» 

39 

1861 

Finest  Ears 

89i 

123 

52 

In  an  ordinary  wheat  field,  tliickly  sown,  only  one  and  a  half 
ears  grow  from  one  stool.  Here  is  an  increase  in  fecundity  from 
one  ear  having  forty-seven  grains  (forty -seven  fold)  to  fifty-two 


232  ECONOMIC  rillLO^OrilY. 

ears,  carrying  in  the  best  ear  123  grains,  or  0,390  fold  per  annum. 
Such  a  hypothetical  rate  of  increase  would  produce  in  the  second 
year  from  a  grain  of  wheat  40,908,810  grains,  or  seven tj'^  bushels, 
supposing  the  grains  to  retain  only  their  pi-evious  size  under  im- 
proved planting.  In  fact,  however,  Major  Hallett's  processes  very 
largely  increased  the  size  of  the  grain,  causing  4G0.000  grains  to 
make  a  bushel,  instead  of  700,000.  Adding  this  quality,  the  pos- 
sible productive  power  of  a  single  gi'ain  of  wheat,  in  two  years, 
would  be  about  130  bushels. 

And  yet  the  fecundity  of  wheat  is  small  compared  with  that  of 
maize  or  potatoes.  A  single  potato,  planted  on  newly  cleared 
ground  in  Northern  New  York,  on  which,  in  clearing,  the 
resinous  forest  trees  liave  been  burned  to  ashes,  will  produce 
seventy-five  potatoes  in  a  single  hill,  one  bushel  in  two  hills,  or 
500  bushels  per  acre,  and  if  cut  up  so  that  each  "  eye  "  becomes 
a  hill  will  produce  probably  several  times  as  many.  In  Dakota 
the  small  number  of  potatoes  required  to  plant  one  acre  have  pro- 
duced 1,000  bushels. 

The  fruitfulness  of  the  lower  animals  is  as  much  greater  than 
that  of  man,  as  that  of  plants  is  greater  than  that  of  the  lower 
animals. 

Beside  the  fact,  that  the  lower  organizations  and  forms  of  life 
are  more  prolific  than  the  upper,  other  causes  tend  to  increase  the 
means  of  support  for  man,  as  population  increases.  The  utilities  of 
things  increase  with  their  use,  human  progress  being  an  evolution 
from  the  less  perfect  to  more  perfect  means  of  production.  Things,  at 
first  noxious,  come  to  have  great  value.  New  varieties  of  food  and 
medicine  become  known.  A  continually  increasing  regularity  of 
diet  promotes  health,  while  a  wider  diversity  of  diet  increases  the 
nerve  force  and  promotes  intellectual  labor.  Beginning  at  the 
zero  point  where,  jjerhaps,  man  first  attempted  to  outwit  the 
gorilla  by  sharpening  his  long  club  into  a  siDcar,  and  we  must 
perceive  that,  to  this  savage,  nothing  has  utility — still  less  value. 
The  forests  are  useless,  for  he  cannot  fell  orhew^the  trees  for  want 
of  the  ax,  saw,  chisel,  and  auger.  Iron  is  useless,  for  he  can  not 
distinguish  it  from  the  red  clay,  and  he  knows  nothing  of  fire, 
except  as  he  trembles  before  it  in  the  volcano,  or  worships  its 
counterfeit  in  the  lightning.  Glass  does  not  exist,  nor  does 
nature  furnish  any  model  which  would  suggest  it.  The  beasts 
are  all  armed,  while  man  is  not.  Even  the  mountain  goat  and 
the  ram  master  him,  while  the  w^ild  boar  is  a  terror.  He  flees  for 
J) is  life  from  the  very  patrimony  which  his  children  are  to  inherit 


FEW  MEN,  LESS  FOOD.  233 

—from  the  cattle  on  a  thousand  hills,  and  the  flocks  and  herds 
which  are  one  day  to  be  his  own.  The  apple,  known  only  in 
Siberia,  is  not  yet  a  fruit,  but  a  mere  berry,  and  stings  the  mouth 
with  its  acrid  flavor.  The  potato,  known  only  in  Brazil,  is  poison. 
Indian  corn,  unknown  to  Europe,  Asia,  or  Africa,  is  an  unnoticed 
Mexican  weed,  dwindling  beside  the  spindling  dahlia,  "in  whose 
sinofle  whorl  of  colored  leaves  no  botanist  would  foresee  the 
present  beautiful  flower.  Wheat  was,  perhaps,  a  bold  and  confident 
style  of  grass,  which  a  few  thousand  yeai'S  of  culture  in  Egypt 
would  develop  into  a  valuable  grain.*  Even  if  it  were  fully  equal 
to  modern  wheat  it  would  be  useless  to  our  nomad,  as  he  would 
not  know  how  to  grind  or  cook  it.  All  things  are  so  void  of 
utility  that  only  among  the  date  groves,  and  naturally  fruited 
jungles  of  Africa,  could  he  survive  long  enough  to  learn  the 
utilities  of  any  thing. 

94.  Fewer  Producers— Less  Production. — But  in  this 
wretched  nomad  state,  how  are  all  values  magnified  !  A  bead, 
or  an  inch  of  cloth,  would  be  worn  around  his  neck  to  charm 
away  evil  spirits.  A  master,  who  would  promise  him  protection 
from  hourly  danger,  and  furnish  him  a  daily  brisket  of  raw  beef, 
would  be  hailed  with  the  gratitude  due  to  a  descended  god,  loved 
as  Friday  loved  Crusoe,  adored  as  a  dog  adores  his  master.  The 
richest  boon  he  could  desire  would  be  well-fed  slavery.  He  would 
kiss,  as  ornaments,  those  iron  chains  in  which  the  philanthropy  of 
later  epochs,  when  money  had  become  abundant,  would  see  only 
degradation.  In  slavery  begins  his  slow  upward  march,  for  at 
last  he  is  a  part  of  organized  labor.  Each  day  teaches  him  some 
new  utility  in  metal,  plant,  flower,  fruit,  or  animal.  A  million 
things  become  useful  which  either  did  not  exist  or  were  useless  to 
him  of  old.  The  labor,  that  he  would  gladly  have  expended  for  a 
bead,  would  buy  his  successor  a  house.  At  first  even  labor  is  use- 
less, for  it  has  nothing  to  work  with  (tools),  nothing  to  work  for 
(motive),  nothing  to  work  upon  (job  or  employment),  and  lacks 
the  knowledge  how  to  work  (skill),  except  as  snatching  the 
things  he  would  consume  (appropriation)  is  work.  Hence, 
though  tlie  world  at  no  time  needs  so  much  labor  as  when  man  is 
in  his  savage  state,  yet  there  is  no  stage  in  which  it  is  so  little 
worth  one's  while  to  woi'k,  or  when  so  large  a  proportion  of  men 


*  The  student  will  emphasize  the  "  pcrhnps."  It  is  not  meant  here  to  nfflrm  that  any 
traces  of  an  evolution  from  a  less  perfect  form  have  yet  been  observed  in  wheat.  On 
the  contrary,  history  opens  with  wheat  as  perfect  as  to-day. 


^34  ECONOMIC  PIIILOSOPUT. 

are  idle,  and  despise  work.  Mr.  Carey  points  out  that,  security 
being  so  much  more  important  than  fertility,  cultivation  begins 
in  the  high  easily  defensible  positions,  among  tiie  rocky  cliffs, 
and  on  the  poor  soils.  It  is  a  sort  of  adjunct  to  the  chief  business, 
viz.,  intrenchment,  fortification,  and  war.  All  arts  begin  with  the 
poorest  implements.  Grain  is  pounded  between  two  stones  to 
make  floiir.  Wool  is  siDun  first  with  the  hand  alone,  then  with  a 
wheel.  Sewing  skins  develops  into  weaving  cloth,  and  the  nee- 
dle becomes  a  shuttle.  Soon  the  canoe  hoists  a  sail.  Iron  arrow- 
heads, tempered  toward  steel,  supersede  flint.  As  machinery  takes 
the  place  of  muscle,  more  men  are  willing  to  work,  and  tlie  rewards 
of  industry  slowly  begin  to  exceed  the  rewai-ds  of  crime.  Virtue, 
conscience,  honor  are  born.  As  new  and  better  soils,  new  and 
better  implements,  new  and  better  sciences  develop,  man  becomes 
free  in  body — in  government — in  social  action.  Steam  engines  are 
set  to  work  printing  books  and  drawing  railway  trains,  and  man 
the  victor  rides  and  reads  by  the  toil  of  those  same  elements  which 
at  first  he  dreaded.  The  supply  of  the  means  of  subsistence  is  on 
the  whole  greater  in  large  and  compact  populations  than  in  small 
and  sparse,  and  greater  in  each  country  when  its  jiopulation  is 
many  than  when  it  is  few.  In  short,  everywhere  profits  and 
wages  depend  on  the  activity  and  success  with  which  human  in- 
dustry supplies  all  human  wants.  While  in  each  individual 
enterprise,  wages  tends  to  obtain  a  continually  increasing  share  of 
the  joint  product,  in  the  aggregate  of  enterprises  at  any  time 
existing,  the  division  is  made  proximately  even  by  the  fact  that 
capital  and  enterprise  are  continually  on  the  lookout  for  new 
fields,  in  which,  or  new  modes  by  which,  the  share  of  labor  shall 
be  relatively  less,  and  that  of  ijrofit  more. 

95.  Wages  Are  also  Capital. — Is  the  ascendency  of  capital 
over  labor  an  accident  of  a  particular  period  ?  '  Can  it,  by  pi'oper 
arrangements,  be  dispensed  with  ?  Or  is  it  inherent  in  the  nature 
of  things,  and  therefore  indispensable,  except  as  the  laborer  may 
buy  the  capital  tliat  hires  him.* 

*Bastiat*  says  truly:  "Sentimental  philanthropists,  who  see  in  this  a  frightful  ine- 
quality which  they  desire  to  get  rid  of  by  artificial,  sometimes  by  unjust  and  violent 
means,  do  not  consider  that  after  all  we  can  not  change  the  nature  of  things.  An- 
terior labor  (capital)  must  necessarily  have  more  security  than  present  labor,  simply 
for  this  reason,  that  products  already  created,  must  always  present  more  certain 
resources  than  products  which  are  as  yet  to  be  created;  that  services  already  rendered, 
received,  and  estimated,  present  a  more  solid  foundation  for  the  future  than  services 
which  are  still  in  the  state  of  supply.  If  you  are  not  surprised  that  of  two  flsher- 
*  "Harmonies  of  Political  Economy,"  377. 


WAGES  ABE  SMALL  CAPITALS.  235 

The  instant  that  capital  loses  its  power  over  labor,  wages  must 
lose  their  power  over  means  of  subsistence.  Money,  and  wealth 
of  every  kind,  in  any  form  or  quantity  in  which  the  laborei*  now 
seeks  to  possess  them,  must  lose  their  power  to  command  whatever 
comforts  the  laborer  now  commands  by  means  of  his  wages.  Cap- 
ital and  money  being  one  thing,  can  only  lose  its  power  in  the  hands 
of  him  who  has  much  of  it,  by  simultaneously  losing  its  power  in 
the  hands  of  him  who  has  but  little  of  it.     The  twenty-five  cents, 

men  the  one  who,  having  long  labored  and  saved,  possesses  lines,  nets,  boats,  and 
some  previous  supply  of  flsh,  is  more  at  ease  as  regards  his  future  than  the  other, 
who  has  nothing  but  his  willingness  to  take  part  in  the  work,  why  should  you  be 
astonished  that  the  social  order  presents,  to  a  certain  extent,  the  same  differences  ? 
Jn  order  to  justify  the  envy,  the  jealousy,  the  absolute  spitefuhiess,  with  which  the 
laborer  regards  the  capitalist,  it  would  be  necessary  to  conclude  that  the  relative 
stability  of  the  one  is  caused  by  the  inability  of  the  other.  But  it  is  the  reverse 
which  is  true.  It  is  precisely  the  capital  which  pre-exists  in  the  hands  of  one  man 
which  is  the  guarantee  of  the  wages  of  another,  however  insufficient  that  guarantee 
may  appear.  But  for  that  capital  the  uncertainty  of  the  laborer  would  be  still  greater 
and  more  striking.  Would  the  increase,  and  the  extension  to  all,  of  that 
uncertainty  be  any  advantage  to  the  laborer  ?  .  .  .  The  questions  which  the  work- 
man ought  to  ask  himself  are  not,  '  Does  my  labor  give  me  much  ?  Does  it  give  me 
little  ?  Does  it  give  me  as  much  as  it  gives  to  another  ?  Does  it  give  me  what  I  desire?' 
The  questions  he  should  ask  himself  are  these  :  '  Does  my  labor  give  me  less  because 
I  employ  it  in  the  service  of  the  capitalist  ?  Would  it  give  me  more  if  I  worked  in  a 
state  of  isolation,  or  if  I  associated  my  labor  with  that  of  other  men  as  destitute  as 
myself  ?  I  am  ill  situated,  but  would  I  be  better  oil  were  there  no  such  thing  as  capital 
in  the  world  ?  If  the  part  which  I  obtam  in  consequence  of  my  arrangement  with 
capital  is  greater  than  that  which  I  would  obtain  without  that  arrangement,  what  reason 
have  I  to  complain  ?  If  it  be  indisputably  established  that  the  presence  of  capital  is 
favorable  to  my  interests,  and  that  its  absence  would  be  death  to  me,  am  I  very  prudent 
or  well  advised  in  calumniating  it,  frightening  it  away,  and  forcing  its  dissipation  or 
flight  ?'  .  .  .  Take  the  first  workman  you  meet  with  on  the  streets  of  Paris— and  thus 
address  him.  "  We  are  about  to  annihilate  capital  and  all  its  works  ;  and  I  am  going  to 
place  you  in  the  midst  of  a  hundred  thousand  acres  of  the  most  fertile  land,  which  I  sliall 
give  you  in  full  property  and  possession,with  every  thing  above  and  below  ground.  You 
will  not  be  elbowed  by  any  capitalists.  You  will  have  the  full  enjoyment  of  the  four 
natural  rights  of  hunting,  fishing,  reaping  the  fruits,  and  pasturing  the  land.  True,  you 
will  have  no  capital;  for  if  you  had  you  would  be  in  precisely  the  situation  you  censure 
in  the  case  of  others.  But  you  will  no  longer  have  reason  to  complain  of  landlordism, 
capitalism,  individualism,  usurers,  stockjobbers,  bankers,  monopolists.  The  land 
will  be  absolutely  and  entirely  yours.  Think  if  you  would  like  to  accept  this  posi- 
tion.' 

"  This  workman  would  no  doubt  imagine  at  first  that  he  had  obtained  the  fortune  of 
a  monarch.  On  reflection,  however,  he  would  probably  say  :  'Well,  let  us  calculate. 
Even  when  a  man  possesses  a  hundred  thousand  acres  of  land,  he  must  live.  Now, 
how  does  the  bread  account  stand  in  the  two  situations?  At  present  I  earn  half  a 
crown  a  day.  At  the  present  price  of  corn  (wheat)  I  can  have  three  bushels  a  week, 
just  as  if  I  myself  sowed  and  reaped.  Were  I  the  proprietor  of  a  hundred  thousand 
acres  of  land,  at  the  utmost  I  could  not,  without  capital,  produce  three  bushels  of  corn 
in  two  years,  and  in  the  interim  I  might  die  of  famine.  I  shall  therefore  stick  to  my 
wages." 


'23G  ECONOMIC  PHILOSOPIIY. 

with  which  a  laborer  buys  a  meal,  must  lose  its  potency  to  induce 
the  restaurant-keeper  to  sell  the  meal,  at  the  same  instant  as  the 
$25,000,000  with  which  a  syndicate  proposes  to  build  a  railway 
will  lose  its  potency  to  induce  laborers  to  work  at  the  railway. 
The  poor  live  by  capital  and  wealth  as  well  as  the  rich.  To  abol- 
ish the  power  of  capital  is  to  abolish  the  power  of  wages  and  put 
an  end  to  all  human  association  and  co-operation. 


CHAPTER  VII. 

LAND. 

96.  Values  of  Land. — Bef ore  labor  can  be  perforned,  oilman 
can  exist,  there  must  be  space  for  him  to  live  and  work  in.  This 
space  will,  by  reason  of  the  changes  in  the  societary  movement, 
be  left  in  many  places,  as  now  at  Icy  Cape  in  Alaska,  unsought 
for  and  utterly  undesired.  In  those  places  all  efforts  at  profit- 
able production  would,  at  least  at  first,  result  in  loss,  owing 
to  the  commodity  produced  being  too  far  removed  from  the 
demand.  In  others  every  foot  of  available  space  is  eagerly 
bought  up  and  paid  for.  The  title  is  taken  of  whomsoever  will 
show  the  best  chain  of  transfer  from  the  first  appropriator,  accom- 
panied by  possession  in  the  same  chain  of  persons  in  whom  the 
title  has  existed,  from  the  first  appropriator  to  the  present  holder. 
The  rate,  at  which  space  will  be  paid  for,  depends  upon  the  num- 
ber and  value  of  /the  uses  which  compete  for  its  possession,  and 
these  in  turn  depend  upon  its  location,  or  centrality,  with  refer- 
ence to  the  social  plexus,  current,  or  sum  of  activities,  which  we 
call  human  society. 

As  we  have  lieretofore  seen,  in  our  chapter  on  "  Title  and  Use," 
all  working  and  living  space,  or  as  it  is  usually  styled  land,  is,  in 
the  contemplation  of  economic  science,  every  moment  exposed  at 
auction  to  whomsoever  will  pay,  or  forego,  more  than  any  other 
for  its  possession.  If  he  already  possesses  it,  he  foregoes  what  the 
highest  bidder  would  offer  him,  in  order  to  keep  it.  If  he  does 
not  possess  it,  and  desires  it,  he  pays  more  than  any  other  bidder 
to  obtain  it.  All  land,  therefore,  is  at  all  times,  except  in  so  far 
as  law  may  trammel  its  transfer,  economically  in  possession  of 
the  highest  bidder.  The  sum  thus  bid,  for  the  possession  of 
land,  is  called  the  value  of  the  land,  where  land  is  pur- 
chased in  fee,  or  by  a  title'  that  is  absolute  except  against 
the  right  of  eminent  domain  by  the  state,  and  it  is  called  econo- 
mic rent,  in  communities  where  land  is  held  by  large  proprietors, 
and  occupied  chiefiy  by  tenants  for  terms  of  years.  The  value  of 
land  is  the  capitalization  of  its  economic  rent,  or,  in  otlier  words, 
the  price  at  which  it  will  sell  is  the  principal,  on  which  the  sum, 


288  ECONOMIC  nilLOSOrilY 

obtainable  for  its  annual  rental,  would  bear  the  same  ratio  of  per- 
centage as  the  profits  or  interest  obtainable  for  capital  iiivested 
with  equal  security,  and  ease  of  return,  bear  to  the  sum  invested. 
The  reasons  why  land  bears  its  value,  the  causes  which  control 
its  rise  and  fall  in  value  ;  the  proportion  in  which  the  value  of 
products,  produced  upon  land,  is  divided,  between  the  cost  of  the 
labor  expended  upon  them  (wages),  the  cost  of  the  capital  loaned 
for  their  production  (interest),  the  cost  of  occupying  the  working 
space  (rent),  and  the  residue  (profit)  remaining  to  the  undertaker 
of  the  industry  {entrepreneur)  are  supposed,  by  some,  to  consti- 
tute the  very  substance  of  the  science  of  political  economy. 
The  current  of  English  discussion,  from  Eicardo  to  Mill,  has  con- 
nected rent  with  fertility,  or  the  inherent  productiveness  of  the 
soil,  and  has  almost  confined  the  discussion  to  agricultural 
land.*       Rent,     however,    has    almost    nothing    to    do    with 


*Adam  Smith  ("Wealth  of  Nations,"  Bk.  i.  Ch.  xi.,  p.  67)  pays:  "  The  rent  of  land  not 
only  varies  with  its  fertility,  whatever  be  its  prodnce,  but  with  its  situation,  whatever 
be  its  fertility."  Dr.  Smith  seemed  to  hold  that  whatever  the  land  produced  more 
than  was  required  to  replace  the  stock  (capital)  employed  in  working  it  by  a  farmer 
and  the  ordinary  rate  of  profit  o;i  capital,  would  go  in  rent  to  the  landlord.  But  the 
notion  that  there  is  such  a  thini,'  as  an  ordinary  rate  of  profit  on  capital,  is  essentially 
visionary  where  some  farmers  will  be  losing  their  capital  while  others  double  it. 
But  if  there  was  an  ordinary  rate  of  profit  on  capital,  then  the  capital  in- 
vested by  the  landlord  in  the  purchase  of  the  land,  and  the  capital  invested  by  the 
tenant  in  working  it,  oupht  botli  to  produce  the  same  ordinary  rate.  But,  in  fact,  such 
an  "ordinary  rate"  nowhere  exists.  Dr.  Smith  again  says  (ibid.) :  "  Such  parts  only  of 
the  produce  of  land  can  commonly  be  brought  to  market,  of  which  the  ordinary  price  is 
Buflicient  to  replace  the  stock  which  must  be  employed  in  bringing  them,  together 
with  it.*)  ordinary  profits.  If  the  ordinary  price  is  more  than  this,  the  surplus  part  of 
it  w.ll  naturally  go  to  the  rent  of  the  land.  If  it  is  not  more,  though  the  commodity 
may  be  brought  to  nvaket,  it  can  afford  no  rent  to  the  landlord.  Whether  the  price  is 
or  is  not  more  depends  upon  the  demand." 

If  it  was,  in  Dr.  Smith's  mind,  a  satisfactory  solution  of  the  reasons  of  the  price  of 
corn  (wheat)*  to  say  that  it  depends  upon  the  demand,  why  should  it  not  have  been  an 
equally  satisfactory  explanation  of  the  rate  of  rent  of  laud  to  say  that  it  depends 
on  demand,  and  that  the  demand  depends  ou  the  rate  of  profits  on  capital  which  the 
tenant  expects  to  make  by  working  it  ?  The  rent  is  evidently  that  sum  which  the  laiid- 
lord  will  take  for  the  use  of  land  rather  than  run  the  risk  of  getting  a  less  sum,  and 
which  the  tenant  will  pay  rather  than  forego  the  use  of  the  land.  Its  average  rate  may 
depend  on  considerations  connected  with  security  from  enemies  in  war,  its  healthful- 
ness,  its  nearness  to  forts,  mills,  schools,  commons,  churches,  fairs,  factories,  game, 
fish,  stores,  rivers,  towns,  forests,  its  improvements,  its  newness  or  oldness,  its  deposits 
of  guano,  gold  dust,  sea  shells,  coal,  marl,  li:fte,  etc.,  or  its  availability  for  manufac- 
ture or  exchange,  its  salt  licks  for  cattle,  its  nests  for  birds,  its  sightly  view,  or  the 
form  in  which  the  landlord  will  take  his  rent,  whether  in  service,  crops,  or  money,  and 
even  on  the  sentimental  attachment  the  tenant  may  feel  for  it  as  his  home,  and  the 
fact  that  his  ancestors  are  buried  there. 

McCidloch  (noteto  "Wealth  of  Nations  ")  says:  "  The  truth  is  that  rent  is  entirely  a 
consequence  of  the  decreasing  productiveness  of  the  Boils  successively  brought  under 


HOW  BENT  ARISES.  239 

fertility,  even  in  tlie  case  of  agricultural  laud.  lu  the  case  of 
residence,  manufacturing-,  and  commercial  rents,  the  stars  or  the 
tides,  the  weather  or  the  fashions,  might  claim  an  influence 
greater  than  fertility. 

If  a  pageant  will  pass  down  Broadway  at  1  P.  M.,  continuing 
until  five,  a  window  fronting  on  Broadway,  and  previously  of  no 
value,  will  rent  for  perhaps  $5  for  the  brief  period   while  the 


cultivation  as  society  advances,  or  rather  of  the  decreasing  productiveness  of  the  capi- 
tals successively  applied  to  tliem." 

The  last  statement  is  particularly  unfortunate,  as  rent  of  land  diminishes  as  we  ap- 
proach the  frontier  of  civilization  and  of  cultivation,  yet  the  productiveness  of  the  capi- 
tals applied  to  them  increases,  measured  by  the  percentage  along  these  frontiers,  as 
the  fact  is  that  no  one  will  there  apply  capital  to  cultivation  at  all,  except  whore  a  high 
rate  of  return  can  be  obtained  on  the  small  capital  he  usually  applies.  Moreover,  a 
"  decreasing  productivencvs  of  the  soils  euccessively  brou£;ht  under  cultivation"  is  a 
totally  unlike  fact  to  the  "  decreasing  productiveness  of  the  capitals  successively 
brought  to  bear  on  them."  McCuUoch,  therefore,  contradicts  in  the  last  half  of  the 
sentence  the  criterion  laid  down  in  the  first  half. 

liicurdo  says :  "  Rent  is  that  portion  of  the  produce  of  the  earth  which  is 
paid  to  the  landlord  for  the  use  of  the  original  and  indestructible  powers  of 
the  soil.  On  the  first  settling  of  a  country  in  which  there  is  an  abundance  of  rich  and 
fertile  land,  a  very  small  proportion  of  which  is  required  to  be  cultivated  for  the  sup- 
port of  the  actual  population,  or  indeed  can  be  cultivated  with  the  capital  which  the 
population  can  comnian  J,  there  will  be  no  rent ;  for  no  one  would  pay  for  the  use  of  the 
land  where  there  was  an  abundant  quantity  not  yet  apjiropriated,  and  therefore  at  the 
disposal  of  whoever  might  choose  to  cultivate  it."  Ilicardo's  Works,  by  McOuUoch, 
pp.  38-39. 

Even  this  statement  is  not  true  in  principle,  since,  however  small  the  population  might 
be,  if  it  contained  only  two  persons  tliero  would  be  a  liability  that  these  two  might 
both  desire  the  same  spot,  and  if  so  it  would  have  a  value  for  which  the  person  out  of 
possession  might  be  willing  to  pay,  and  this  i)ayn]cnt  would  be  a  price  ]):ud  for  space, 
of  which  rent  is  the  annual  eciiiivalent.  In  the  fairs  held  in  savage  lands  the  booths 
acquire  a  rent  value.  The  fact  th  it  abundance  of  unoccupied  land  exists  docs  not  iire- 
cliide  a  competition  for  the  possession  of  the  occupied,  and  this  gives  rise  to  rent. 
Ricardo  further  says  (ibid.) : 

"  On  the  common  principles  of  supply  and  demand,  no  rent  could  be  i)ai(l  for  such 
land,  for  the  reason  stated  why  nothing  is  given  for  the  use  of  air  and  water,  or  for  any 
other  of  the  gifts  of  nature  which  exist  in  boundless  quantity." 

This  also  is  an  error,  Rinco  land  havinf/  a  jxu-ticidar  location  never  exists  except  in 
one  limited  quantity.  It  can  not  be  duplicated.  Suppose  the  very  simpU?  case  of  two 
savages  fishing  on  adjoining  rocks,  one  of  which  is  only  large  enough  for  one  person 
to  stand  upon.  The  savage  standing  on  this  rock  is  catching  fish  as  fast  as  be  can  take 
them  from  the  hook.  The  other  can  take  none  whatever.  After  enduring  this  several 
hours  and  taking  no  fish,  the  savage  on  the  inferior  location  says  to  the  savage  on  the 
superior  location,  "  If  yon  will  surrender  your  rock  to  me,  I  will  give  you  half  the  fish 
I  catch  while  there."  The  otter  is  accepted  and  fish  are  caught  there  by  the  new  man. 
The  fish  he  pays  for  the  rock  are  rent.  Ihiiice  the  presc^icc  of  a  contincuit  of  unappro- 
priated land  is  utterly  futile  to  i)revent  a  payment  for  appropriated  land. 

Rirnr'do  contUmee  :  "  If  al!  land  had  lhesanieproi)ertie8,  if  it  were  unlimited  in  quan- 
tity and  uniform  in  quality,  no  charges  could  be  made  for  its  use,  unless  where  it  pus- 
tessed peculiar  adiHintaetjH  of  situation.^'' 


240  ECONOMIC  PHILOSOPHY. 

pageant  is  passing.  The  principle  which  governs  the  price  of  the 
window  exactly  defines  all  economic  rent.  It  is  a  payment  for 
space,  which  is  competed  for  actively,  because  of  its  nearness  to 
the  societary  movement,  in  which  the  tenant  desires  to  participate. 
It  is  the  pageant  going  down  Broadway,  and  the  competition 
between  the  many  desirous  to  see  it,  that  puts  a  rent  on  the  win- 
dow.    Fertility  is  like  the  placing  of  chairs  at  the  window.     If 

Prec'scly  as  Karl  Maj'X,  in  treating  of  the  cause  of  value,  sets  out  by 
afflrminsj  that  it  is  labor  only,  and  then  introduces  the  qualification  of  "  socially  neces- 
sary "  labor,  which  changed  the  cause  of  value  from  labor  to  demand,  so  by  a  einiilar 
shift  Ricardo,  in  the  midst  of  his  argument  that  fertility  causes  rent,  qualifies  it  by 
saying,  "  except  where  location  causes  it."  This  really  gives  away  his  whole  point. 
For  if  it  depends  on  location  relatively  to  the  demand  for  its  products,  then  it  can  not 
depend  on  fertility,  since  land  having  the  right  location  can  have  its  fertility  supplied  ; 
but  land,  whatever  its  fertility,  can  not  have  its  location  changed  relatively  to  popula- 
tion, except  by  changing  the  movement  of  population. 

Steal  do  further  says  (p.  36  ibid.): 

"Thus  suppose  land — No.  1,  2,  3— to  yield,  with  an  equal  employment  of  capital  and 
labor,  a  net  produce  of  100,  90,  and  80  quarters  of  corn.  In  a  new  country  where  there 
is  an  abundance  of  fertile  land  compared  with  the  population,  and  where,  therefore,  it 
is  only  necessary  to  cultivate  No.  1,  the  whole  net  produce  will  belong  to  the  cultivator, 
and  will  be  the  profit?  of  the  stock  which  he  advances." 

Wliat  a  bold  assumption!  The  cultivator  may  give  half  his  crop  to  some  man  vpith  a 
lance  or  on  horseback  who  protects  him  from  savages.  The  first  cultivators  were  non- 
flghting  serfs  and  villeins,  who  paid  rent  in  service  chiefly  that  they  might  be  protected 
by  the  military  power  of  their  lord  from  marauders  and  robbers,  or  at  least  might  es- 
cape his  own  power  to  rob.  They  paid  rent  to  power  for  security,  and  may  have  chosen, 
as  Mr.  Carey  points  out,  the  p'lor  anl  thin  lands  near  the  baronial  castle  rather  than 
the  more  fertile  lands  where  less  facilities  would  exist  for  safety.  "  Past,  Present,  and 
Future,"  by  H.  C.  Carey. 

Ricanlo  continues  :  "As  poon  as  population  had  so  far  in  Teased  as  to  make  it  neces- 
sary to  cultivate  No.  2,  from  which  ninety  quarters  ouly  can  be  obtained  after  support- 
ing the  laborers,  rent  would  commence  on  No.  ],  for  either  there  must  be  two  rates  of 
])rofit  o?i  aorio/Ui'ralcjpilat,  or  ien  quarters  or  the  value  of  ten  quarters  must  be 
withdrawn  from  the  produce  of  No.  1  for  some  other  purpose." 

Here  it  will  be  seen  Ricardo  bases  liis  whole  notion  of  rent  on  the  sublimely  stupid 
generalization  that  there  can  not  be  two  rates  of  profit  on  agricultural  capital, whereas  the 
truth  would  be  more  nearly  that  of  the  many  capitals  employed  in  agricultural  produc- 
tion in  any  country  no  two  derive  the  same  rate  of  profit.  Of  course  but  one  average 
rate  can  be  arrived  at  by  striking  an  equation  among  all  the  rates  of  profit  on  agricul- 
tural capitals,  just  as  one  average  height  for  all  men  might  be  reached  by  dividing  the 
aggregated  height  of  all  men  among  the  total  number  of  men.  But  thus  having  arrived 
at  an  average  stature  for  all  men,  how  absurd  would  it  be  to  argue  that  "  either  there 
must  be  two  grades  of  stature  among  men,"  or,  etc.  There  are  as  many  rates  of  profit; 
among  agricultural  capitals  as  there  are  grades  of  stature  among  men,  and  hence 
through  the  vent  furnished  by  Ricardo's  own  exception  to  his  theory  of  rent  the  entire 
theory  escapes. 

Roscher,  like  Adam  Smith,  blends  (he  two  causes  of  rent,  viz.,  fertility  and  favorable 
situation.  lie  says  ("  Political  Economy,"  by  Lawler,  Vol.  ii.  p.  14) :  "  Rent  is  that 
portion  of  the  regular  net  product  of  a  ])iece  of  land  which  remains  after  dedacdng  the 
wages  of  labor,  and  the  interest  on  the  capital  usual  ii.  the  country,  incorporated  into 
it.    Hence  it  is  the  price  paid  for  the  using  of  the  land  itself,  or  what  Ricardo  calls  the 


LOCATION  AND  RENT.  241 

the  location  is  satisfactory,  the  seats  will  be  brought  tliere.  If 
poor  land  has  the  right  location,  relatively  to  large  populations, 
it  will  be  so  tilled  as  to  make  it  fertile.  In  the  hanging  gardens 
of  Babylon,  soil,  subsoil,  and  strata  must  all  have  been  carried 
to  the  suspended  structures.  The  land  itself  was  brought  to  the 
location.  The  indestructible  property  of  the  soil,  on  which 
English  economists  have  laid  so  much  stress,  was  brought  to  the 
pomt  where  it  was  demanded,  and  there  created. 
97.    True  Cause  of  Rent.— MacLeod  well  says  :  "The  only 

original  inexhaustible  forces  of  the  soil,  ■which  are  capable  of  being  ai)propriated. 
This  price  also  depends,  of  course,  on  the  relation  between  demand  and  Bupply ;  the  de- 
mand in  turn  on  the  wants  and  means  of  payment  of  buyers,  but  the  supply  by  no 
means  on  cost  of  production,  which  from  the  definitions  above  given  is  here  unthink- 
able. However,  land  has  this  in  common  with  other  means  of  production,  that  its 
price  (value)  is  mainly  determined  by  that  (aggregate  value  per  acre)  of  its  products." 
Again  (p.  18)  he  says :  "The  favorable  situation  of  a  piece  of  land  operates  in  almost 
every  politico-economical  respect  In  the  same  manner  as  its  fertility.  If  a  market  to 
be  fully  supplied  needs  to  be  fed  from  a  circuit  of  ten  miles,  the  price  must  be  suffi- 
cient to  make  good  not  only  the  other  cost  of  production,  but  the  freiglit  over  ten 
miles.  Hence,  therefore,  all  producers  living  nearer  to  the  market,  who  have  to  obtain 
a  smaller  outlay  for  transportation,  and  yet  obtain  the  same  market  price  for  their  pro- 
duce, make  a  profit  exactly  corresponding  to  the  advantage  of  their  situation." 

The  degree  of  stagnation  in  the  European  land-market,  and  especially  the  infrequency 
of  sales  of  the  estates  of  the  great  land-holders  in  England,  seems  to  have  wholly  ob- 
scured to  the  European  economists  the  view  which  makes  land  an  investment  of  capi- 
tal, as  it  is  so  generally  regarded  in  America.  As  an  investment  of  capital,  rent  is  the 
effort  of  the  owner  to  get  a  return  on  his  investment,  and  it  represents  the  sum  the 
tenant  is  willing  to  pay  for  leave  to  use  it  as  au  implement  of  his  industry. 

.Ba«<ia<  ("Harmonies  Economiques,"  Ch.  9)  considers  rent  as  the  interest  on  the 
capital  laid  out  in  bringing  land  under  cultivation,  and  Hamilton  in  his  rejjort  to  the 
Congress  on  the  manufactures  of  the  United  States,  1793,  treats  rent  as  the  result  of 
the  capital  employed  in  tlie  purchase  of  land  to  produce  an  interest. 

It  is  very  certain  that  in  the  United  States  Hamilton's  view,  though  deemed  a  vulgar 
error  by  Roscher  ("Political  Economy,"  Vol.  ii.  p.  21,  note"),  is  iu  harmony  with  the 
fact  that  rents  of  real  estate,  after  deducting  taxes,  insurance,  and  charges  for  trouble 
of  superintending  real  estate,  conform  very  exactly  to  rates  of  iutere.~t  on  money — so 
exactly  that  there  is  no  substantial  difference  economically  between  being  the  mortga- 
gee to  the  full  or  nearly  the  full  value  of  land,  collecting  interest  on  the  loan,  and  being 
the  landlord  collecting  the  rent.  The  rate  in  both  cases  would  be  the  same— showing 
that  the  principle  which  governs  rents  of  real  estate  is  the  interest  and  profit  which  the 
capital  invested  in  them  would  earn  in  other  modes  of  investment.  So  MacLeod  says 
(Vol.  ii.  "Econ.  Phil."  p.  21)  that  rent  of  land  in  Iiigland  rarely  exceeds  2>^  to  3  per 
cent,  on  the  value  of  land,  whereas  in  the  United  Statts  it  is  usually  from  7  to  10  per 
cent,  in  ne\ver  and  3  to  C  in  older  communities. 

Locke  ("Considerations  on  the  Lowering  of  Interest,"  WorkP,  ii.  17,  II)  maintains  the 
close  parallel  between  rent  and  interest.  This  may  be  truer,  however,  vhere  laud  is 
freely  exchanged  into  money,  and  vice  versa,  as  in  America,  than  where  it  is  not. 

JoA«  S^/a/'^  J/?;/ ("Principles,"  Vol.  i.  p.  510)  says:  "  The  land  is  the  principal  of 
the  natural  agents  which  are  cainible  of  Ix'ing  api)r()priated,  and  the  cousidiaation  paid 
for  its  use  is  called  rent.  Landed  proprietors  are  the  only  class  of  any  numbers  or 
importance  who  have  a  claim  to  a  share  in  the  distribution  of  the  produce,  through 


242  ECONOMIC  PJIILOSOPHT. 

original  and  indestructible  power  the  earth  has  is  that  of  extent."* 
Fertility  is  as  variable  a  property  in  soil,  as  health  is  in  man. 
Soils  in  England  which  once  produced  five  bushels  of  wheat  per 
acre  now  produce  flf  ty-five.  Some  in  Indiana  which  once  produced 
thirty  bushels  produce  but  seven.  Location,  with  reference  to  the 
societary  movement,  is  also  a  variable  quantity,  changing-  with 
every  change  in  the  societary  movement.  When  the  societary 
movement  centred    in  Nineveh  and   Babylon,   real  estate  was 

their  ownership  of  sometliing  which  neither  they  nor  anj'  one  else  have  produced. 
It  is  at  once  evident  that  rent  is  the  eilect  of  a  monopoly— though  the  monopoly  is  a 
natural  one  which  may  be  regulated,  which  may  even  be  held  as  a  trust  for  the  commu- 
nity generally,  but  which  cannot  be  prevented  from  existing.  The  reason  why  land- 
holders are  able  to  require  rent  for  their  land  is  that  it  is  a  commodity  which  many 
want,  and  which  no  one  can  obtain  but  from  them." 

This  is  notgivinga  dcfliiition  of  economic  rent,  but  of  private  title  or  appropriation, 
which  is  the  condition  precedent  to  rent,  as  we  have  seen,  and  which  rests  in  seizure 
or  monopoly,  and  is  not  rent  itself.  To  define  rent,  Mr.  Mill  should  have  explained 
why  men  pay  high  prices  for  the  monopolized  portion  of  land,  when  there  is  always  at 
someplace  ail  unmonopolized  supply  in  vast  quantities  to  be  had  for  nothing.  Evi- 
dently, because  they  want  not  merely  land,  but  land  in  a  certain  location.  But  why  do 
they  want  land  In  this  location?  Because  food  when  there  produced  can  be  sold  at  a 
profit  on  its  cost  of  production.  But  why  could  it  not  in  Patagonia  or  Siberia?  Be- 
cause of  cost  of  transportation.  Men  pay  rent  then  chiefly  to  avoid  transportation  on 
persons,  goods,  or  customers.  Mr.  Mill's  view  of  rent  is  crude  and  tinctured  by  hia 
socialistic  tendencies.  To  him  rent  is  despotism,  which  may  be  mitigated  in  degree  or 
amount,  but  when  mitigated  ever  so  much  what  remains  is  despotism. 

A  French  writer,  M.  de  FonUnay  ("Du  Kevenu  Foncier,"  p.  260)  says :  "  It  may  be  as 
well  to  say  something  liere  of  one  of  the  most  striking  instances  of  the  advantages  of 
position.  I  mean  the  high  price  paid  for  buying  or  hiring  spaces  iu  a  great  city. 
Some  economists  Lave  thought  f  hey  see  in  that  the  rent  of  land.  They  have  let  them- 
selves be  duped  by  a  word,  as  Montaigne  would  say.  To  (hiuk  that  it  is  really  for  a 
piece  of  land  that  one  pays  in  Paris  two  or  three  hundred  francs  the  meter,  is  as  if  one 
were  to  think  that  in  i)uy ing  the  number  of  a  hackney  coach,  it  is  for  three  yellow  num. 
bers  that  he  pays  six  to  eight  thousand  francs— and  that  when  a  notary  sells  his  prac- 
tice, it  is  a  double  knob  of  git  copper,  twenty  paper  cases  or  so,  five  or  six  shabby 
tables,  and  a  bad  earihcnware  etove,  that  he  sells  for  500,000  francs.  The  space  of 
ground,  like  the  number,  the  practice,  is  only  a  representative  sign  of  the  acquired 
rights,  a  title  to  advantages  and  profits,  which  may  be  discounted.  What  one  pays  for, 
in  the  price  of  the  space  of  ground,  is  a  share  in  the  enjoyment  of  innumerable  improve- 
ments of  an  advanced  civilization;  it  is  an  immense  opportunity  to  exert  oneself  and 
to  shine,  to  know  and  be  known.  It  is  a  powerful  agglomeration  of  rich  consumers,  if 
one  is  a  producer;  of  producers  and  products  of  all  kinds,  if  oue  is  more  especially  a 
consumer.  It  is  a  multitude  of  free  enjoyments — the  pavement,  the  trot  loirs,  gas,  water, 
fetes,  theaters,  palaces,  walks,  museuias,  shops,  libraries,  marts  of  all  kinds  of  wealth, 
material  and  intellectual.  The  inhabitant  of  Paris,  who  gives  up  to  a  stranger  his 
share  in  these  advantages,  has  the  perfect  right  to  sell  them  to  him  at  a  good  price. 
For  it  is  lie,  or  they,  whose  right  he  represents,  the  citizens  of  a  great  city  who  have 
gradually  mnde  it  what  it  is.  It  is  they  who  by  their  labor,  their  sacrifices,  their  strug- 
gles of  every  kind,  by  their  gold  as  by  their  blood,  liave  acquired  and  ])aid  for  these 
rights,  this  security,  this  progress,  ttji4  public  luxury,  these  works  of  general  utility, 

*  "  Principles  of  Economical  Philosophy." 


CITY  BEFT8.  243 

high  there;  now  it  is  low.  But  it  is  solely  with  reference  to  this 
element,  that  rent,  or  value  of  land,  rises  or  falls. 

In  point  of  fact,  the  one  law  which  governs  the  value  of  real 
estate,  in  city  or  country,  and  whether  to  sell  or  to  rent,  is  the 
same,  viz. :  Demand  for  it  ;  i.  e. ,  the  numher  of  possible,  and 
IDrofi table,  uses  which  compete  with  each  other  for  its  occupation. 
Land  is  like  an  object  put  up  at  auction— its  i)rice  depends  on  the 
number  and  intensity  of  the  biddei'S,  and  these,  in  turn,  on  the 
variety  and  value  of  its  utilities. 

On  the  leading  corners  of  a  gi'eat  city,  say  of  Wall  Street  and 
Broadway,  in  New  York,  land  attains  its  highest  value,  because 


these  refinements  of  civilization,  this  immense  development  of  intellectual  and  ma- 
terial life." 

Of  the  pretended  distinction  between  profits  of  capital  and  interest  on  money  and 
rent  of  land,  De  Fontenay  says  ("  Du  Revenu  Foncier,"  p.  2):  "  We  propose  here  to 
abolish  these  false  distinctions,  incompatible  with  the  character  of  harmony  and  sim- 
plicity which  the  laws  of  economics  ought  to  have,  and  to  prove  that  there  is  one  and 
only  one  law  of  value,  income,  and  capital,  under  all  its  forms." 

MacLeod  ("  Principles  of  Econ.  Phil.,"  Vol.  ii.  p.  18)  says:  "  Fontenay,  in  his  re- 
markable volume  on  rent,  has  at  least  pointed  out  the  fundamental  fallacy  of  bruakiii g 
up  economic  phenomena  into  separate  classes  and  finding  a  separate  law  of  value  for 
each;  and  he  has  shown  most  irrefragably  that  rent,  profit,  and  interest  all  proceed  from 
the  same  cause— the  excess  of  the  value  above  the  cost  of  production,  which  caa 
only  be  affected  by  the  intensity  of  the  demand  and  the  limitation  of  the  supply." 

Both  Fontenay  and  MacLeod  treat  tlic  Ricardo-Mill  theory  of  rent  as  tending  logically 
to  the  scheme  of  confiscating  the  rent  of  land  by  taxation,  in  whicli  they  preceded 
Henry  George.  Jevons,  Sidgwick,  Fawcett,  and  Bonamy  Price  adopt  essentially  the 
Mill-Ricardo  theory  of  rent,  viz.,  that  it  is  a  price  paid  for  a  choice  of  more  productive 
over  less  productive  lands,  and  that  the  amount  which  will  be  paid  for  the  choice  will 
be  commensurate  with  the  greater  productiveness  of  the  land,  so  that  the  landlord 
will  get  the  entire  value  of  the  greater  productiveness  of  the  land,  never  once  dividing 
the  advantage  of  that  greater  productiveness  with  the  tenant.  But  is  it  fair  towards 
the  tenant  to  suppose  that,  in  looking  for  a  better  situated  or  more  fertile  farm,  his  liope 
of  getting  any  of  the  advantage  of  its  better  situation,  or  fertility,  is  always  a  delu- 
sion? Why  is  it  that  the  economists,  who  strenuously  insist  that  an  exchange  profits 
both  parties,  lose  sight  of  this  principle  wholly  when  they  treat  of  the  exchange  which 
a  tenant  makes  of  money  for  the  use  of  land?  Whatever  may  be  the  advantages  of  its 
occupation  for  a  year,  and  whether  they  arise  from  fertility  or  location,  why  will  not 
the  competition  among  landlords  compel  them  to  divide  the  value  of  this  advantage, 
equally  between  themselves  and  their  tenants,  so  that  one-half  of  it  Bhould  inure  to 
the  tenant  and  take  the  form  of  profits  on  his  capital?  Is  it  true  that  a  tenant  never 
has  any  interest  iu  selecting  a  good,  fertile,  or  well-located  farm,  over  what  he  would 
have  in  selecting  a  poor  one?  lie  could  have  no  such  interest  if  it  were  true,  as  matter 
of  economic  law,  that  the  landlord  would  get  the  entire  difference  in  value  as  rent. 
And  if  there  be  such  a  law,  concerning  the  rent  of  the  one  implement  land,  why  should 
it  not  apply  to  all  other  implements  and  agencies  which  we  hire  and  pay  for?  Does 
the  best  lawyer  absorb,  in  fees,  the  whole  differencebetween  what  his  services  are  worth 
to  his  client  and  what  his  client  could  get  ihose  of  the  poorest  lawyer  in  practice  for? 
Does  the  best  means  of  trane])<)rtation,  say  the  railway,  absorb  in  freights  the  whole 
difference  between  what  the  sliipper  can  get  his  products  carried  by  rail  forover  whatit 


244  ECONOMIC  PniLOSOPHY. 

all  those  kinds  of  business  in  which  most  profit  can  be  earned  by 
the  use  of  the  smallest  space,  such  as  banking,  stock  brokerage, 
insurance,  fu'st-class  law  offices,  bank  note  engravers,  and  man- 
aging offices  of  great  corporations,  compete  with  each  other  for 
its  use,  on  account  of  the  facilities  it  affords  for  dealing  with  a 
large  number  of  people  within  a  few  hours  of  time.  Land  a  lit- 
tle less  valuable  is  taken  for  great  hotels,  newspaper  and  book 
publishing  houses,  importers'  palaces,  restaurants,  and  retailers 
of  all  grades.  Land  still  less  valuable  answers  for  private  resi- 
dences, manufactures,  storage,  etc.,  the  price  of  every  lot,  how- 
would  cost  him  for  the  slowest  and  worst  means  of  transportation  in  nse?  Does  the 
best  equipped  and  most  productive  factory  absorb,  in  its  profits  of  manufacture,  the 
whole  difference  between  the  value  of  the  work  it  will  do,  and  that  which  the  poorest 
means  of  manufacture  in  use  by  man  would  accomplish  ? 

No  one  would  answer  any  of  these  questions  in  the  afHrmative.  As  applied  to  the 
hire  of  lawyers'  services,  of  railways  as  an  implement  of  transportation,  or  of  machin- 
ery as  a  means  of  manufacturing  goods,  the  Ricardian  law  is  not  dreamed  of.  A  law- 
yer can  not  charge  according  to  the  difference  in  the  ^  alue,  to  his  client,  between  his 
services  and  that  of  the  worst  lawyer  in  use,  because  that  difference  is  not  calculable  or 
practicable,  and  because  there  are  so  many  other  competent  lawyers  competing  with 
him,  the  result  of  whose  services  would  have  been  the  same  as  if  he  had  been  employed, 
that  he  is  compelled  to  charge  simply  according  to  the  labor-time,  i.  e.,  the  sum  he 
could  afford  to  take,  rather  than  risk  being  unemployed,  during  the  time  required.  Why 
then  will  not  competition  between  farm  owners  compel  them,  like  competition  between 
lawyers,  to  hire  out  their  farms  solely  with  reference  to  the  number  of  farms  equally 
productive  and  well  located,  out  of  which  a  teaant  can  make  as  good  an  interest  on  his 
capital  as  on  the  farm  iu  question,  and  out  of  which  it  is  reasonably  certain  that  some 
will  not  be  rented?  In  that  case  it  is  not  a  question  between  the  product  of  the  best 
and  worst  lauds  in  use  which  determines  the  rate  of  rent,  but  rivalry  between  the  lands 
equally  fertile  and  well  situated,  which  shall  escape  a  loss  of  return  on  the  capital  it 
represents,  which  is  a  motive  of  the  same  nature  as  the  lawyer's  effort  to  avoid  losing 
his  time,  the  railway's  effort  to  avoid  loss  of  traffic,  the  factory  owner's  competition 
with  other  factories  for  business,  or  the  competition  of  merchants  with  each  other  for 
trade.  No  one  supposes  that  the  purchaser  of  any  other  commodity,  than  the  use  of 
land  for  a  year,  has  no  possible  interest  in  the  question  whether  he  is  buying  a  good  or 
a  poor  commodity,  as  the  difference  in  price  which  he  will  be  charged  will  eo  exactly 
offset  any  difference  in  quality  or  advantage  that  the  merchant  and  manufacturer  will 
getit  all,  and  the  buyer  will  get  none.  Why,  then,  should  this  precise  formula  be  sup- 
posed to  apply  to  the  purchase  of  a  year's  use  of  land  1  In  fact,  it  is  well  known  that  in 
all  classesof  rentals,  whether  of  land  or  city  property,  as  the  quality  of  the  property 
rises,  the  rate  of  return  the  landlord  can  get  for  it  falls,  partly  because  on  high  class 
property  the  preservation  of  the  quality  of  the  property  becomes  a  much  more  important 
consideration  than  the  annual  rent,  and  partly  because  the  number  of  tenants  capable  of 
hiring  first  class  property  is  much  fewer  than  the  number  capable  of  hiring  fifth  class. 
Hence,  a  high  class  country  residence  on  the  Hudson  River  worth  $100,000  would  not 
ordinarily  rent  for  more  than  four  per  cent,  on  its  value.  A  residence  of  equal 
value  in  town  might  rent  for  five.  If  built  in  flats  for  families,  it  would  rise  to 
ten  per  cent.,  and  tenement  houses  for  laborers  rent  for  15  to  29  per  cent. 

Bnt  in  saying  that  rents  are  graded  according  to  the  capital  represented,  it  maybe 
objected  that  we  travel  in  a  circle,  as  the  capital  represented  is  always  based  on  the 
rents  it  yields.    This  is  true,  and  in  this  sense  all  economic  argument  travels  in  a  circle* 


SUBITRBAN  RENTS.  245 

ever,  being  accurately  determined  by  the  number  of  possible  and 
profitable  uses  which  compete  for  its  possession.  Within  a  cir- 
cuit of  ten  miles  of  the  city,  land  has  a  suburban  value  so  great 
that  poor  men  can  hardly  atf ord  to  get  an  acre  of  it  for  floral  and 
hot-house  gardening.  From  ten  to  thirty  miles  from  the  city, 
gardening,  however,  prevails,  and  the  labor  of  two  or  three  men 
will  be  expended  on  from  one  to  five  acres  of  ground,  so  numer- 
ous and  valuable  are  the'crops  it  produces,  under  the  high  state  of 
cultivation  to  which  they  bring  it.  From  a  grape  vine,  which 
occupies  but  two  feet  square  of  space,  they  jjluck  enormous  clus- 


since  all  the  phenomena  of  value  also  travel  in  a  perpetually  varying  circle,  in  ■which 
we  are  always  measuring  varying  quantities,  according  to  standards  which  themselves 
vary  only  a  little  less  than  the  quantities  they  measure.  We  conclude  that  rents,  in 
the  infancy  and  origin  of  the  relation  of  landlord  and  tenant,  are  like  wages,  too  closely 
associated  with  the  reign  of  military  force  to  be  graduated  according  to  fertility  of 
land.  The  land  is  given  to  the  tenant  as  a  reward  for  fighting  for  his  lord  in  battle,  and 
bravery  is  the  thing  his  lord  chiefly  wishes  to  buy,  and  p:iy  for,  in  land,  while  security 
and  the  protection  of  the  clan,  or  baronial  horde,  is  what  the  tenant  seeks.  Hence  he 
takes  land  according  to  his  faith  in  the  prowess  of  his  chief.  As  Fawcett  says*  : 
"Lands  obtained  by  force  had  to  be  held  by  force;  and  before  law  had  asserted 
her  supremacy,  and  property  was  made  secure,  no  baron  was  able  to  retain  his  posses- 
sions unless  those  who  lived  on  his  estates  were  prepared  to  defend  them.  There  thus 
arose  almost  universally  some  personal  relations  between  landlord  and  tenant,  and  the 
personal  services  which  such  a  feudal  tenure  required  formed  a  considerable  part  of 
the  rent  which  was  paid  for  the  land." 

In  this  condition  of  things,  military  security,  as  Carey  says,  would  cause  lands  to 
be  rented  according  to  their  inaccessibility,  nearness  to  the  baronial  castle,  or  to  ores 
from  which  armor  could  be  made,  and  other  elements  of  safety  which  would  involve 
mountainous  or  hilly  situations,  and  poor  land  would  often  first  pay  rent,  not  because 
of  its  poverty,  but  of  its  defeusibility,  and  the  form  of  rent  paid  would  be  per  thrust  and 
per  blow,  and  not  per  acre  or  per  bushel.    Fawcett  continues  : 

"As  property  became  secure,  and  landlords  felt  that  the  power  of  the  state  would 
protect  them  in  all  the  rights  of  property,  every  vestige  of  these  feudal  tenures  was 
abolished,  and  the  relation  between  landlord  and  tenant  Las  become  purely  commer- 
cial." ("Manual  of  Pol.  Econ,,"  p.  115.)  If  so,  why  can  not  the  terms,  on  w^hich 
the  landlord  sells  the  use  of  land,  be  stated  according  to  the  purely  commercial  for- 
mula, which  certainly  is  the  one  applied  when  the  capitalist,  who  desires  to  becomes 
landlord,  attempts  to  buy  the  title  in  fee  to  the  land?  The  landlord  then  pays  for  the 
fee  that  sum  which  the  previous  owner  would  regard  as  calculated  to  procure  for 
him  a  "  larger  quantity  of  the  necessaries,  conveniences,  and  comforts  of  life"  than 
the  title  to  the  land  itself  would.  The  price  is  regulated  according  to  the  quantity  of 
land  about  equally  desirable  then  being  offered  in  the  market,  and  the  immber  of  purchas- 
ers seeking  to  buy.  Land  less  desirable  was  wholly  out  of  thocomi)etition.  It  was  as 
far  removed  from  the  problem  as  stones  are  when  one  wants  to  buy  bread,  or  as  fence- 
rails  are  when  one  is  looking  for  oranges.  All  land,  at  all  times,  depends  for  its  money 
price,  on  the  rates  at  which  capital  will  seek  investment  in  it.  If  capitals  hold  aloof 
from  investment  in  land  it  must  fall  until  they  againbuy.  Hence  the  ultimate  rates 
of  rent  must  be  the  ordinary  rates  of  profit  on  capital  in  business  generally,  at  the  time 
and  place  of  renting  the  land,  allowance  being  made  for  relative  dcirrocs  of  trouble  in- 
volved in  superintending  the  land,  and  jirospectsof  rise  of  value  by  holding  it. 

*  ("  Maniial  of  Political  Economy,"  p.  115.) 


246  ECONOMIC  PHILOSOPHY. 

ters,  whose  price  would  buy  tlae  product  in  wheat  of  an  acre  of 
land  in  Iowa.  The  same  grapes  could  be  raised  in  Iowa,  so  far  as 
the  soil  is  concerned,  but  only  a  large  city  furnishes  a  sufficient 
number  of  luxui'ious  customers  to  create  a  market  for  fruit  re- 
quiring such  rare  skill  in  its  culture.  From  the  next  two  feet 
square  he  plucks  twenty  pears,  which  sell  at  ten  cents  each,  or 
%2.  A  plot  of  half  an  acre  i)roduces  !^500  worth  of  strawberries, 
no  better  than  could  be  raised  in  Iowa,  save  that  in  Iowa  they 
would  have  no  marl^et  near  enough  to  admit  of  transportation. 
So,  within  a  circuit  of  twenty  miles  of  a  great  city,  a  thousand 
crops  compete  with  each  other  for  the  occupation  of  the  soil,  be- 
cause near  at  hand  a  thousand  customers  compete  with  each 
other  for  those  crops  when  raised.  Nevertheless,  the  competition 
between  grapes,  pears,  currants,  sti'awberries,  blackbei*ries,  cran- 
berries, quinces,  plums,  etc.,  for  the  occupation  of  land  is  so  mTich 
less  valuable  than  the  competition  between  bankers,  bi-okers, 
lawyers  and  raiJroad  presidents,  that  a  year's  rental  of  a  room  in 
a  fourth  story  of  a  building  on  the  corner  of  Wall  and  Broadway, 
is  worth  as  much  as  the  fee  of  an  acre  of  land  for  gardejiing  pur- 
poses, both  ranging  at  from  $500  to  $1,000. 

If  we  take  the  map  of  the  United  States,  and  draw  around  each 
large  center  of  population  a  series  of  concentric  rings,  one  series, 
for  instance,  around  New  York,  another  around  Philadelphia, 
another  for  Boston,  Chicago,  New  Orleans,  and  San  Francisco, 
the  successive  areas  bounded  by  these  rings  mark,  as  they  recede 
from  their  centers,  a  rapid  diminution  in  the  number  of  uses  to 
which  the  land  may  be  put,  and,  consequently,  of  tlie  competitors 
for  its  purchase,  and  of  the  value  it  bears.  From  five  to  ten 
miles  from  Chicago  the  land  is  gardening  and  suburban,  and  is 
wortli,  generally,  several  thousand  dollars  per  acre.  From  ten  to 
twenty  it  is  chiefiy  small  farming,  and  falls  to  from  one  to  two 
hundred,  except  as  it  is  raised  by  vicinity  to  new  suburban  centers 
of  population,  like  Evanston,  South  Chicago,  etc  At  forty  miles 
from  Chicago  it  is  available  only  for  ordinary  Western  farming, 
which  consists  of  raising  live  stock,  dairy  ])roducts,  wheat,  rye, 
corn,  and  other  crops  which  put  the  product  of  a  good  many 
acres  of  land  into  small  bulk,  and  small  value  for  transportation 
to  consiimers,  most  of  whom  are  one  thousand  miles  away.  Here 
the  number  of  crops  available,  instead  of  being  several  hundred, 
as  in  gardening  locations,  is  only  four  or  five,  and  the  production 
of  those  must  be  at  the  minimum  of  profit,  because  millions  of 
farmers  equally  distant  from  a  market  are  competing  Avith  each 


REDUCING    BENTS.  247 

other  in  producing  the  same  crops.  Hence,  the  value  of  laud  de- 
pends simply  on  the  number  of  uses  to  ^Yhich  it  can  be  put,  owing 
to  its  nearness  to  the  consumers  of  its  products.  Now,  as  at  all 
times /ar  more  increase  in  icealth  takes  the  form  of  an  increase 
in  the  values  of  lands  than  is  found  in  all  other  modes  of  i^rofit 
combined,  it  follows  that  the  growth  of  men  and  comnmnities  in 
wealth  depends  largely  upon  their  nearness  to,  and  cheapness  of, 
communication  with  the  consumers  of  their  products. 

98.  Rent  and  Transportation. — It  is  singular  that  Mr. 
Mill  should  have  stumbled  upon  the  proposition  that  perfectly 
gratuitous  transportation  would  annihilate  rent,*  without  follow- 
ing it  out  to  its  obvious  corollary  that  it  is  the  cost  of  transporta- 
tion to  and  from  the  lands  that  bear  no  rent,  or  a  lower  rent,  that 
fixes  the  rate  of  rent  that  can  be  asked  for  those  whose  product 
involves  less  transportation  ;  in  short,  that  rent  is  chiefly  a  price 
paid  to  avoid  transportation. 

In  this  point  of  view,  rent  is  the  centrifugal  force,  which  dis- 
perses men  from  the  centers  toward  which  commerce  and  ex- 
change attracts  them,  and  obliges  them  to  form  new  and  smaller 
centers.  As  men  go  from  the  centers  they  avoid  rent  and  land 
values,  but  lose  and  incur  transportation.  As  men  draw  near  the 
centers  they  save  time  and  transportation,  but  increase  rent.  If 
there  be  some  locations  better  adapted  than  others  for  production 
in  any  form,  the  highest  economy  of  society,  as  a  whole,  requires 
that  these  locations  which  admit  of  a  higlier  I'ate  of  production 
should  fall  into  the  possession  and  custody  of  those  who  will  im- 


*  Mill,  "Political  Economy,"  Vol.  1.  p.  538,  says  :  "  The  tendency  of  improved  com- 
munications is  to  lower  existing  rents,  by  trenching  on  the  monopoly  of  the  land  near- 
est to  the  places  where  large  numbers  of  consumers  are  assembled.  Roads  and  canals 
are  not  constructed  to  raise  the  values  of  the  land  which  already  supplies  the  mariiets, 
but  (among  other  purposes)  to  cheapen  the  supply  by  letting  in  the  produce  of  other 
and  more  distant  lands  ;  and  the  more  effectually  this  purpose  is  obtained,  the  lower 
rent  will  be.  If  we  could  imagine  that  the  railways  and  canals  of  the  United  States,  in- 
stead of  only  cheapening  communication,  did  their  business  so  electually  as  to  anni- 
hilate cost  of  carriage  altogether,  and  enable  the  produce  of  Michigan  to  reach  the 
market  of  New  York  as  quickly  and  as  cheaply  as  the  produce  of  Long  Island— the 
whole  value  of  all  the  land  of  the  United  States  (except  such  as  lies  convenient  for 
building),  would  be  annihilated  ;  or  rather  the  best  would  only  sell  for  the  expense  of 
clearing  and  the  government  tax  of  a  dollar  and  a  quarter  per  acre,  since  land  in 
Michigan,  equal  to  the  best  in  the  United  States,  may  be  had  in  unlimited  abutulance  by 
that  amount  of  outlay.  But  it  is  strange  that  Mr.  Carey  should  think  this  fact  incon- 
sistent with  the  Ricardo  theory  of  rent.  Admitting  all  that  he  asseris,  it  is  still  true 
that,  as  long  as  there  is  land  which  yields  no  rent,  the  land  which  does  yield  rent  does 
BO  in  consequence  of  some  advantage  which  it  enjoys,  in  fertility  or  vicinity  to  markets. 
over  the  other,  and  the  measure  of  its  advantage  is  also  the  measure  of  its  rent." 


248  ECONOMIC  PHILOSOPHY. 

part  to  tliem  the  highest  rate  of  production  of  which  they  admit. 
The  economic  force  which  provides  most  room  for  all,  by  obliging 
each  to  economize  and  curtail  in  the  use  of  i*oom,  so  as  to  occupy 
no  more  space  than  he  can  use  to  the  best  advantage,  is  rent.  In 
agriculture,  the  chief  need  of  society  is  that  the  laud  shall  be  used 
for  the  in'oduction  of  those  crops  of  which  there  is  most  economic 
need,  as  shown  by  the  degree  of  effective  demand.  Near  to  great 
centers  of  population,  flowers,  bulky  vegetables,  roots,  fruits, 
and  grass  for  hay,  are  most  needed.  At  the  least,  the  last-named 
item  will  continue  to  be  among  proxi-mural  crops,  as  long  as 
horses  do  most  of  the  intra-mural  transportation  of  large  cities. 
Agricultural  rents,  therefore,  reserve  the  land  near  the  great 
cities  for  the  bulky  crops,  in  which  a  little  ground  worked  over 
with  great  labor  produces  a  more  valuable,  but  less  transporta- 
ble return  than  is  obtained  from  the  great  farms  at  a  distance 
from  the  social  centers.  On  the  other  hand,  as  we  go  out  through 
Ohio,  Illinois,  and  Iowa,  and  still  more,  as  we  reach  Dakota  and 
Wyoming,  with  every  fall  in  the  values  of  land,  there  is  an  in- 
crease in  the  degree  in  which  extensive  crop-raising  takes  the 
place  of  intensive,  or  in  which  that  form  of  agriculture  is  fol- 
lowed, which  derives  products  of  smallest  bulk  from  the  largest 
area  of  land.  Finally,  in  Buenos  Ayres  and  Patagonia  land  is 
sold,  not  by  the  acre,  but  by  the  number  of  heads  of  cattle  it 
contains,  and  these  are  estimated,  not  for  their  meat,  but  only  for 
their  hides  and  tallow. 

Nor  is  there  any  variation  in  the  economic  la^v,  which  thus 
economizes  space  at  the  extremities,  and  that  which  does  the 
same  at  the  center.  Everywhere  it  is  expressed  by  saying  that 
rent  distributes  working  space  according  to  the  number  and 
value  of  the  uses  that  compete  for  its  possession. 

In  the  heart  of  a  great  city,  a  family  occupies  two  rooms  at  a 
cost  for  rent  of  $8  per  week,  when  four  miles  out  toward  the 
suburbs  they  could  hire  a  cottage  of  six  rooms  for  %-i  per  week, 
and  by  going  out  twelve  or  twenty  miles  they  could  liire  an  acre 
of  land,  a  cottage  of  ten  rooms,  and  fruit  garden  for  perhaps  $3 
per  week.  If  asked  why  they  do  not  go  where  they  can  get  more 
room  for  less  rent,  they  answer,  ' '  What  is  economy  to  one  family, 
may  be  waste,  or  loss,  to  another.  Those  of  us  who  think  we 
can  incur  the  loss  of  time,  and  increase  of  transportation  involved, 
and  support  ourselves  in  the  short  hours  left  in  the  day  do  so. 
But  many  of  us  could  not  keep  our  places,  and  lose  the  time  and 
pay  the  fares,  involved  in  so  much  daily  travel  to  and  fro." 


COMPETING    USES.  249 

Reverting  now,  from  the  social  centers  to  the  periphery,  we 
find  the  same  economic  law.  In  Alaska,  at  Icy  Cape,  the  sea-lion 
competes  with  the  bear  only,  for  the  possession  of  land.  This  is 
anterior  to  the  existence,  in  land,  of  any  economic  value.  But 
when  the  fur  and  seal  companies  begin  to  compete  with  eacii 
other,  it  first  attains  a  value,  because  two  possible  uses  compete 
with  each  other,  viz.,  taking  bear  and  taking  seals.  But  as  it 
cannot  be  cultivated,  its  value  is  small.  Coming  down  to  Sas- 
katchawan,  in  Canada,  wheat,  buckwheat,  and  potatoes  can  be  cul- 
tivated, and  with  five  possible  uses  its  value  rises.  In  Minnesota 
ten  grains,  five  grasses,  and  six  root  crops  can  all  be  cultivated, 
and  successfully  carried  to  consumers,  without  the  cost  of  carriage 
consuming  the  entire  price.  Besides,  cattle,  sheep  and  hogs  can 
now  be  grown  upon  it.  Twenty-four  uses  compete  for  the  land, 
and  its  value  rises  to  from  $20  to  $50  per  acre.  Near  St.  Paul  and 
Minneapolis  small  gardening,  dairying,  poultry  raising,  bee  cult- 
ure, fruit  can  be  marketed,  and  thirty  possible  uses  compete, 
and  the  value  rises  to  $250  per  acre.  Then  it  is  sought,  if  within 
two  miles  of  the  town,  for  residence  and  garden  spaces  but  not 
for  trade.  Drawing  nearer,  it  is  sought  for  retail  but  not  for 
wholesale — or  for  manufacturing,  but  not  yet  for  exchanging  or 
banking.  With  these  competitions  it  rises  to  $100  a  front  foot, 
unimproved.  So,  as  the  competitions  increase  in  their  number 
and  value,  the  value  of  the  land  rises,  until,  in  the  heart  of 
the  large  cities,  as  high  a  price  will  be  paid,  for  a  few  cubic 
feet  of  space,  as  would  be  paid  in  remote  districts  for  a  mile 
square. 

99.  Rent  as  a  Balance  to  Transportation.— In  no  other 
way  can  the  situations  or  locations  in  which  most  business  is 
possible,  be  secured  for  those  who  have  tlyj  requisite  means,  skill, 
prudence,  and  ability  to  do  it.  Even  competing  workers,  in  differ- 
ent countries,  find  their  rents  adjusted  by  the  same  economic  law. 
In  Iowa,  farm-land  rents  for  $3  an  acre,  in  England  for  $25  an 
acre.  The  acre  in  Iowa  will  produce  only  twenty  bushels  of 
wheat,  because  its  distance  from  market  makes  a  hasty  and  cheap 
tillage,  without  fertilizers  and  with  little  labor,  yield  the  largest 
return  from  a  given  capital.  Tlio  acre  in  England,  being  nearer 
the  market,  can  be  profitably  brought  up  to  a  higher  state  of  till- 
age, averaging  thirty  bushels  per  acre.  The  wheat  in  Iowa  is 
worth  only  seventy  cents,  because  costs  of  transportation  and 
handling,  amounting  to  sixty  cents,  are  necessary  to  get  it  to  its 
consumer  in  Pennsylvania,  New  England,  or  Manchester,  Eng- 


250  ECONOMIC  PHILOSOPHY. 

laud,  where  it  is  Avortli  $1.30.  Hence  the  Iowa  farmer  gets  from 
his  acre  twenty  busliels  at  seventy  cents,  or  $14,  out  of  which 
he  pays  $3  I'ent,  leaving  him  $11.  The  English  farmer  gets  $1.30 
for  thirty  bushels,  amounting  to  $39,  out  of  which,  if  he  pays  $25 
rent,  he  has  $14.  Supposing  the  English  farmer  to  pay  $3  per 
acre  for  fei'tilizers,  which  the  Iowa  farmer  does  not  use,  the  final 
returns  to  botli  would  present  that  perfect  equalization  of  returns 
from  capital  and  labor,  toward  which  all  investments  and  employ- 
ments are  constantly  tending,  but  which  they  never  exactly  reach. 
On  the  other  hand,  suppose  cost  of  transportation  for  the  Iowa 
farmer  to  be  diminished  by  thirty  cents  per  busliel,  he  makes  an 
advance  in  profits  of  $7  per  acre,  an  event  which  tlie  English  ten- 
ant could  only  meet,  either  by  getting  a  reduction  in  his  rent,  or 
labor,  or  an  improvement  in  his  crop. 

The  transportation  tax  of  the  Iowa  farmer,  by  an  economic  law 
of  unstable  equilibrium,  is  thus  held  in  a  state  of  equality  with 
the  rent  tax  of  the  English  tenant,  allowance  being  made  for  the 
higher  average  rates  of  profit  required  on  capital  in  Iowa  than  is 
necessary  in  England.  Suppose  the  English  farmer  to  pay  $3 
per  acre  for  fertilizers,  and  that  the  Iowa  farmer  would  manure 
his  lands  as  highly,  and  raise  their  j^roductive  power  to  the  same 
standard  as  that  of  the  English  farmer,  if  he  got  as  good  a  price 
for  his  wheat,  it  would  then  follow  that  the  tax  of  transporta- 
tion which  the  Iowa  farmer  now  pays  is  as  follows  : 

Diminished  product  of  10  bu.  per  acre  at  $1.30  per  bu.     $13.00 
Diminished  price  of  freight  on  20  bu.  60c 12.00 


Total, $25.00  ; 

while  the  English  fanner's  tax  on  the  production  of   the  same 
value  in  corn  is 

Rent  £5  per  acre, $25.00  ; 

or  the  equivalent  of  the  Iowa  farmer's  tax  for  transportation. 

Of  course  it  is  the  fact  that  capital  and  labor,  invested  in  wheat, 
growing  in  the  Western  States,  do  reap  a  larger  profit-  and-wage 
fund,  than  in  the  Eastern  States  and  in  England,  that  causes  the 
line  of  cultivation  to  push  further  westward  each  year.  But  that 
this  tends  toward  equalization,  between  English  capital  invested 
in  wheat-raising,  and  American,  is  shown  by  the  "  Report  of  Read 
and  Pell  on  American  Agriculture,"  in  w^hich  they  assume  that 
the  Western  wheat-growler  gets  his  land  gratis.     They  say; 


WHAT  RENT  SAVES.  251 

£  g.  d. 
Cost  of  growing  a  quarter  of  wheat  (480  lbs.)  in  the  West  includiiig 

delivery  to  local  depot IS  0 

Freight  to  Chicago 0  8 

Thence  to  Kew  York 5  2 

New  York  to  Liverpool  4  9% 

Handling  in  America  (which  may  be  avoided  on  through  rates) 1  1 

Liverpool  charges 2  1 

The  estimate  may  possibly,  ere  long,  be  affected  by  a  reduction  in  the  freights  from 
the  farms  to  Chicago  to  the  extent  of  one-half.  Allowing  a  deduction  on  this  head  of 
3»'.  Of/.,  or  about  M.  a  bushel,  the  estimate  would  be  brought  down  to  44s.,  or,  without 
Liverpool  charges,  to43i\  the  quarter. 

This  report  shows  a  clear  cost,  of  $10.50  per  quarter  of  eiglit 
bushels,  to  the  American  wheat-raiser,  against  which  the  English 
grower  has  to  offset  his  rent  of  land  and  wages.  If  the  English 
grower  raises  thirty-two  bushels  per  acre,  the  local  protection 
which  he  derives,  on  his  thirty-two  bushels,  from  the  transportation 
tax  on  his  American  competitor,  amounts  to  $43  per  acre,  less  the 
wages  he  pa3's  per  acre  for  cultivation.  If  he  pays  £5  per  acre 
rent,  and  $17  per  acre  wages,  he  is  even  with  his  American  rival 
in  his  chances  of  profit. 

The  first  merchants,  in  all  countries,  are  peddlers.  In  this  early 
period  the  value  in  the  peddler's  j)ack  exceeds,  perhaps,  that  in 
the  land  over  which  he  travels,* 

The  peddler  pays  no  rent,  but  takes  all  -goods  to  his  customers. 
When  he  opens  his  store,  so  that  his  customers  may  come  to  him, 
his  rent  rises  pretty  nearly  in  proportion  to  the  amount  of  trans- 
portation he  avoids,  relatively  to  the  number  of  sales  made.  The 
degree,  in  which  it  falls  short  of  so  rising,  measures  the  profit  he 
makes  by  the  change  fi*om  traveling  to  jjaying  rent.  The  first 
manufacturers  and  artisans  were  traveling  shoemakers,  tailors, 
blacksmiths,  tinners,  spinners,  and  weavers,  who  went  from  house 
to  house  doing  woi-k  for,  or  carrying  it  to"  their  patrons.  When 
they  open  a  shop  or  factory,  they  save  a  large  cost  of  transporta- 
tion on  their  goods,  machinery,  and  persons,  and,  as  there  are 
many  competitors,  all  trying  to  make  the  same  saving,  the  com- 
petition between  them,  for  the  possession  of  land,  enables  the  land- 
lord to  charge  them  as  rent  a  sum  about  equal  to  the  average 
profits  on  capital  when  invested  in  land,  and  the  remainder  of  his 
saving  by  transportation  accrues  to  the  manufacturer  as  his 
profit  of  substituting  rent  for  transportation. 

*  In  1624,  the  site  of  the  present  city  of  New  York  and  its  suburbs  was  sold  for  $5. 
("  Condition  of  Nations,"  by  Kolb,  tr.  by  Streater,  p.  803.)  In  1815,  Chicago  was  sold 
for  .tu  10«.  About  1810,  Ciuciunuti  was  sold  for  a  horse.  ("  English  Laud  and  EuglieU 
Landlords,"  p.  283.) 


252 


ECONOMIC  PHILOSOPHY. 


100.  Rent  as  a  Dispersive  Force  on  Population.—Esseii- 

tially,  therefore,  rent  is  a  natural  social  force  operating  to  dis- 
perse population,  and  economize  working  space,  by  imposing  a  tax 
upon  the  occupation  of  the  more  valuable  localities,  proportionate 
to  their  value  for  working  purposes.  This  tax  is  prevented  from 
being  a  monopoly,  in  favor  of  the  land-owning  class,  by  the  fact 
that  the  profits  of  capital  invested  inland-owning  tend  constantly 
toward  equality  with  the  profits  on  capital  invested  in  other 
kinds  of  business.  It  is  prevented  also  from  oppressing  the  labor, 
or  wages,  of  one  part  of  the  world,  at  the  expense  of  another,  by 
the  fact  that  it  is  equably  balanced,  by  an  equivalent  tax  for 
transportation  of  pei-sons  and  commodities,  against  those  who  seek 
to  escape  the  rent-tax  by  locating  at  a  distance  from  the  social 
centers,  but  where  the  products  of  their  industry  are  not  in  local 
demand.  This  tax  of  transportation  is  recorded  in  the  reduced 
prices  of  products  requiring  transportation,  at  points  distant  froin 
the  centers  of  consumption  or  demand,  as  shown  in  the  foUowino" 
table  prepared  by  the  Department  of  Agriculture.  It  shows  the 
average  production  of  corn  per  acre,  and  its  cash  value  per  acre, 
and  average  price  per  bushel  at  the  place  where  grown,  in  eighteen 
Northern  States,  for  1865  : 


State. 


Bushel  perlCash   value 
acre.       j     per  bu. 


New  Jersey.     . 
Connecticut.    . 
Rliode  Island  . 
Massachusetts     . 
Vermont     .     . 
Maine      .     . 
New  Hampshire 
New  York 
Pennsylvania 
Ohio      .       .     . 
Michigan     .     . 
Indiana        .     . 
Illinois    ... 
Wisconsin  .     . 
Iowa  .... 
Minnesota   .     . 
Nebraska     .     . 
Kansas    .     .     . 


Value  per 
acre. 


$48.89 
38.28 
38.58 
36.83 
50.42 
41.14 
40.10 
22.80 
32.00 
18.43 
23.14 
15.63 
10.32 
19.09 
12.78 
19.57 
27.43 
21.82 


Illinois  was  in  1865  a  corn-growing  State,  dependent  largely  on 
consumers  east  of  the  Alleghanies  for  the  disposal  of  her  surplus. 
Fi'om  the  value  of  her  corn,  therefore,  was  deducted  the  cost  of 


THE    TRANSPORTATION   TAX.  253 

shipping  from  800  to  1,200  miles,  so  much  of  it  as  was  con- 
sumed in  this  country,  while,  from  the  portion  consumed  in 
Europe,  there  was  deducted,  relatively  to  its  price  in  Europe,  the 
cost  of  transporting  it  3,000  miles.  Hence  her  product  in  1865,  of 
117,095,852  bushels  averaged  but  29V'4  cents  per  bushel.  Had  her 
consumers  been  in  the  Northwest,  she  would  have  received  the 
average  price  paid  for  New  England  corn,  $1.20  per  bushel.  Her 
tax  for  transportation,  therefore,  was  90^4  cents  per  bushel, 
amounting  on  her  entire  crop  to  $105,473,856.06,  or  four  times  her 
actual  returns  for  the  crop.  This  tax  is  the  all-controlling  in- 
fluence in  determining  the  values  of  products  in  all  parts  of 
the  United  States,  and,  through  its  influence  on  the  values  of  prod- 
ucts, it  determines  the  mode  of  tillage  which  will  be  pursued, 
and  especially  whether  it  will  be  such  as  to  exhaust  or  enrich  the 
soil. 

101.  Exhaustion  of  SoiLs. — Prof.  Henry,  the  late  eminent 
Secretary  of  the  Smithsonian  Institution,  estimated  "that  more 
wealth  was  invested  in  our  soil,  in  fertilizing  matter,  at  the 
moment  this  continent  was  discovei'ed  by  Columbus,  than  there  is  at 
present  above  the  surface  in  improvements  and  all  other  invest- 
ments. The  fertility,  which  ages  had  accumulated  upon  its  surface, 
has  been  the  capital  upon  which  the  fai'mer  has  been  drawing,  with 
reckless  prodigality,  from  the  first  settlement  of  the  country." 

The  wastefulness  of  the  chief  part  of  Southern  agriculture, 
deserted  houses  standing  in  the  midst  of  exhausted  i^lantations, 
which  were  once  fertile,  were  formerly  attributed  to  slavery. 
Both  it  and  slavery  were  in  harmony  with  the  waste  consisting 
in  the  export  of  the  soil  in  the  form  of  cotton,  molasses,  and 
tobacco.  This,  by  keeping  the  country  constantly  burdened  by 
an  increasing  iwverty  and  debt,  made  the  enslavement  of  the 
laborer  seem  a  consequent  necessity,  since  the  work  was  too  hard 
and  the  net  returns  too  small  to  enable  the  planter  voluntarily  to 
pay  wages.  He  was  generally  eighteen  months  in  debt  for  the 
means  to  feed  and  clothe  his  family  and  sez'vants,  and  had  often 
hardly  more  purchased  luxuries  than  many  mechanics  at  the 
North  earning  three  dollars  a  day. 

But  it  is  not  so  generally  known  that  the  Southern  system  of 
agnculture  was  only  more  wasteful  of  the  soil  than  the  Northern, 
in  the  degi-ee  that  it  was  further  removed  from  its  markets.  Wheat 
near  Albany,  New  York,  declined  from  an  average  yield  of  from 
20  to  40  busliels  per  acre  in  1775  to  16  to  20  bushels  in  1785,  to  12 
to  15  bushels  in  1815,  while,  by  the  State  census  of  1845,  Albany 


254  ECONOMIC  PmLOSOPTIY. 

County  gave  T'A  bushels  per  acre,  Dutchess  5,  Columbia  6,  and 
Westchester  7.  Wheat  declined  in  Ohio,  in  the  50  years  preceding 
1860,  from  30  to  15  bushels  per  acre,  and  five  years  later  to  an 
average  of  13.  Indian  corn,  in  the  same  State,  in  the  five  years 
from  1850  to  1854,  both  inclusive,  averaged  38.81  bushels  to  the 
acre,  while  in  the  next  five  it  fell  to  32.95  bushels,  and  in  1862  to 
28.96  bushels. 

That  the.se  are  no  necessary  results  of  cultivation,  is  shown  by 
the  fact  that  Massachusetts,  whose  soil  was  originally  as  poor 
as  that  of  any  State,  has  so  advanced  in  avet-age  fertility  that  it 
appears  in  the  census  of  1860  as  producing  the  largest  average  croj) 
of  wheat  to  the  acre— 16  bushels— while  Georgia  produced  the 
smallest  average  crop— 5  bushels.  Connecticut,  originally  a  poor 
sandy  State,  but  full  of  manufactures,  must  have  greatly  im- 
proved her  soil  to  appear,  in  the  same  census,  as  producing  the 
largest  average  crop  of  corn  per  acre— 40  bushels— while  South 
Carolina  produced  the  smallest.  The  Ohio  Agricultural  Report 
of  1862,  referring  to  the  decline  in  the  wheat-product  in  Ohio,  and 
its  advance  in  other  countries,  says  :  " The  lowest  average  of 
wheat  in  any  county  in  England  is  Sl'/s,  and  from  that  up  to  50 
bushels  per  acre.  It  is  a  historical  fact  that,  within  the  past  two 
hundred  years,  the  best  soils  in  England  did  not  produce  to  exceed 
six  bushels  of  wheat  per  acre."  A  like  improvement  is  going  on 
in  the  soils  of  France,  Belgium,  Holland,  Prussia,  and  Northei^n 
Germany,  and  in  much  of  China  and  Japan  ;  a  waste  and  decay  in 
the  soils  of  Mexico,  most  of  the  West  India  Islands,  Brazil,  India, 
since  its  possession  by  the  English,  Ireland,  Portugal  and  Turkey. 
All  of  these  are  engaged  in  exporting  the  i-aw  product  of  their 
soils  for  foreign  consumption,  while  the  countries  in  which  soils 
are  advancing  in  fertility,  are  those  which  export  nothing  until  it 
is  finished  ready  for  the  consumer. 

The  same  improvement  is  occurring,  for  the  same  reason,  in  the 
horses,  sheep,  cattle,  hogs,  poultry,  and  other  domestic  animals 
in  the  manufacturing  States,  and  the  same  deterioration  in  the 
breeds  in  the  States  purely  agricultural. 

Formerly  the  Illinois  farmer  went  to  England  for  improved 
breeds  of  cattle,  horses,  and  hogs,  and  prized  his  Durhams, 
Devons,  and  Berkshires  for  their  blood,  while  he  passed  heavy 
penal  statutes  and  made  it  a  crime  to  even  drive  cattle  across  the 
State  from  Texas.  The  latter  spread  contagion  and  death  in  his 
dreaded  path  ;  the  former  imparted  beauty,  growth,  weight,  and 
health    to  all    the  flocks  with  which  his  blood  might    mingle, 


ROTATION  OF  CROPS.  255 

until  at  last  it  faded  out  among  the  inferior  stocks  of  the 
prairies. 

The  order  of  agriculture  rises  in  proportion  to  its  nearness  to  its 
market  of  consumption,  and  declines  as  it  is  removed  therefrom, 
and  hence,  soils  increase  in  fertility  as  the  producer  and 
consumer  take  their  place  side  by  side,  and  decline  as  they  are 
distant  from  each  other.  But  the  reason  of  this  is,  not  so  mucli, 
the  withdrawal  of  the  nutritive  matters  contained  in  the  crop  ex- 
ported, as  the  fact  tliat  the  farmer  who  is  far  removed  from  his 
market  can  not  sell  all  the  crops  which  he  ought  to  raise  in  order 
to  pi'actice  that  fair  rotation  of  the  crops  which  would  renovate, 
manure,  and  enrich  the  soil.  Some  plants  grow  principally  from 
the  atmosphere,  and  these  enrich  and  restore  soils.  Otliers  draw 
from  the  soil  peculiar  elements,  as  wheat  drains  it  of  silica  and 
potassium.* 

If,  therefore,  the  preservation  of  the  fertility  of  soils  depends 
on  the  rotation  of  crops,  and  if  a  farmer  distant  from  a  market  can 
find  sale  for  only  a  few  of  the  crops  needed  in  practicing  such  rota- 
tion, here  is  a  source  of  decline  in  fei'tility  analogous  to,  but  not  en- 
tirely identical  Avith,  the  deportation  of  the  constituent  elements 
of  his  soil  in  the  crops  he  exports.  For,  if  he  sent  his  crops  but 
ten  miles,  their  elements  might  never  return  dii'ectly  to  his  lands. 
But  at  a  distance  of  ten  miles  from  an  adequate  market  of  con- 
sumption he  could  raise  clover  on  lands  exhausted  by  wheat, 
and  sell  his  hay,  unbaled,  for  more  than  he  could  have  sold  the 
product  of  the  same  land  in  wheat.  But  the  farmer  fifty  miles 
from  his  consumer  of  hay  nuist  bale  it  before  he  can  send  it,  and 
if  100  miles  distant  he  can  only  send  it  by  water,  baled,  while  if 
250  miles  distant  he  can  not  send  it  at  all,  the  freights  consuming 
the  whole  value.  The  gras.ses  which  ripen  slowly  through  long 
periods  are  the  best  renovators.  But  if  no  return  can  be  got  for 
them  they  are  merely  pastured,  i.  e.,  trodden  underfoot  and 
wasted.  Besides  these,  a  farmer  whose  market  is  near  may  raise 
root  croi^s — the  beet,  turnip,  and  carrot  which  derive  nearly 
tlieir  whole  growth  from  the  air,  and  hence  restore  ten-fold  more 
to  the  soil  in  their  tops  than  they  extract  from  it  for  their  tubers. 
By  the  fact  that  he  can  utilize  his  entire  land,  and  need  let  none 
lie  fallow  or  waste,  such  a  farmer  economizes  his  manures,  and 
makes  it  a  part  of  his  system  to  restore  to  the  soil,  in  manui-es,  every 
part  of  its  produce  wliich  is  not  sent  to  market  in  the  form  of 
butter,  cheese,  poultry,  pork,  and  the  like.  The  farmer  of  New 
♦  See  American  Encyclopedia,  Art.  Agricultural  ChemiBtry. 


256  ECONOMIC  PIIILOSOPIIT. 

Jersey,  with  Philadelphia  on  his  right  and  New  York  on  his  left, 
takes  his  choice  of  a  thousand  crops.  The  herder  of  South 
American  pampas  can  not  sell  any  grain,  corn,  or  potatoes,  and 
rarely  even  the  flesh  of  his  herds.  He  kills  them,  therefore,  for 
their  pelts  and  tallow,  and  leaves  the  meat  for  carrion.  Of  the 
price  of  his  pelts  and  tallow  in  Liverpool,  five  thousand  miles 
away,  he  pays  nine-tenths  as  a  transportation  tax,  and  the  other 
tenth  supplies  him  with  a  plug  of  tobacco  and  a  few  pounds  of 
sailor's  hai'd  tack  each  year,  together  with  the  satisfaction  such 
a  jjerson  will  sometimes  feel,  in  the  thought  that  though  he 
gets  but  little  worth  enjoying,  what  little  he  does  get  is  imported, 
and  must  be,  therefore,  of  the  very  best  quality. 

102.  Value.s  of  Land  Due  to  the  Coiisiiiners  of 
Laiicl  Products. — Demand  being  the  cause  of  all  value, 
it  follows  that  the  value  of  the  farm  lands,  farm  in- 
comes, farm  products,  and  wages  for  farm  labor,  must  depend 
upon  the  immediate  presence  of  a  population  engaged  in  other 
pursuits  than  farming,  and  chiefly  in  manufactures  and  who 
are,  therefore,  consumers  of  farm  products.  This  has  been  well 
shown  by  Mr.  J.  R.  Dodge,  statistician  of  the  American  Depart- 
ment of  Agriculture.  He  divides  the  States  into  four  classes,  with 
reference  to  their  proportions  of  consumers  to  producers  of  farm 
pi'oducts.  All  States  having  less  than  30  per  cent,  of  agricultural 
workers,  and  seven-tenths  of  whose  population  are  in  other  in- 
dustries, are  placed  in  the  first  class.  These  are  necessarily  distrib- 
uted among  the  most  diverse  kinds  of  industries,  and  are  sub- 
jected to  the  greatest  activity  of  the  societary  movement. 

All  States  having  less  than  50  per  cent,  of  agriculturists  and 
more  than  30  are  put  in  the  second  class.  Those  having  more 
than  50  and  less  than  70  per  cent,  are  placed  in  the  third  class  ; 
and  those  having  70  per  cent,  and  upwards  of  farmers  are  in  the 
fourth. 

For  instance,  Virginia  and  Pennsylvania  have  nearly  equal 
natural  fertility,  and  essentially  the  same  natural  characteristics, 
stretching  in  the  same  way  across  the  same  chain  of  mountains 
from  the  Atlantic  to  the  Great  Valley  of  the  Ohio  River. 
Virginia  in  1880  had  51.41  per  cent.,  or  a  trifle  more  than  half  of 
her  people  engaged  in  agriculture.  The  value  of  her  farm  lands 
was  $10.89  per  acre.  Pennsylvaiiia,  owing  to  her  large  mining 
and  manufacturing,  banknig,  and  railroading,  populations  had 
only  21  per  cent. of  her  workers  employed  in  farming, and  her  farm- 
lands were  worth  $19. .30  per  aci'e.      Qi  course,   her  lands  not  de- 


WORKERS  IN  jamCULTURE. 


257 


voted  to  farming,  but  to  uses  with  which  farming  could  not  com- 
pete, were  worth  very  much  more.  Even  her  mountain  and  timber 
lands,  whicli  in  Virginia  would  be  abandoned  as  waste,  were 
made  valuable  by  great  populations  seeking  to  utilize  their  ores, 
rocks,  streams,  and  timber. 

Illinois  had  43.65  per  cent,  of  her  workers  in  agriculture,  and 
her  farm  lands  were  valued  at  $31.87  per  acre.  Iowa  had  57.46 
per  cent,  of  farmers,  and  her  farm  lands  were  worth  $22.92  per 
acre.    In  the  whole  United  States  the  result  is  as  follows  : 

TABLE  NO.  1. 


Classes. 

No  States  and 
Territories. 

Acres. 

Value. 

Value 

I.er 
Acre. 

138  05 

30  r5 

13  53 

5  18 

Per  cent, 
of  work- 
ers iu  ag- 
riculture. 

1st  Class 

2d  Class 

3d  Class  

4th  Class 

15 

13 

13 

6 

77,250,742 
112.321,257 
237.873,040 
108,636,796 

12,985,641,197 

3,430,915,677 

3,212,108,970 

562,434,843 

18 
42 

58 

77 

In  the  diagram,  page  259,  Mr.  Dodge  exhibits  the  value  per 
acre,  of  each  class,  as  four  pyramids  combined  upon  one  base,  that 
stands  for  the  entire  volume  of  American  industi*y. 

The  diagram  page  2G0  exhibits,  in  like  manner,  the  relative 
values  of  farm  incomes,  in  States  where  consumers  of  farmers' 
products  preponderate  over  competitors  in  their  production,  as 
represented  in  the  second  table. 

That  the  values  of  space,  in  which  to  produce  crops,  are  gauged 
accurately,  according  to  the  market  value  producible  within  such 
space,  appears  from  the  following,  showing  the  value  of  the  prod- 
ucts in   the  aggregate  and   per  capita  which  gives  rise  to  this 


higher  value  in  the  land. 


TABLE  NO.  2. 


Proportion 

Classes. 

No.  engaged  in 

Value  of  Products 

Value  per 

Workers  in  ag- 

Agriculture. 

of  Agriculture. 

Capita. 

riculture,  per 

cent. 

First  Class 

1,060,081 

$184,770,707 

$1.57 

18 

Second  Class.   ... 

1,506,875 

016,850,9,59 

394 

42 

Third  Class 

3.017,071 

780,flKl,420 

261 

58 

Fourth  Class. .. 

2,024,960 

324.237,751 

160 

77 

That  the  value,  both  of  the  land,  and  its  prcxlucts,  is  determined 
by  the  demand  for  them,  is  shown  by  the  fact  that,  though  the 
land  of  Illinois  and  Iowa  averages  far  better  and  more  fertile  by 
nature  than  that  of  New  York,  Pennsylvania,  and  New  Jersey, 
yet  the  farming  land,  which  iu  Iowa  is  wortli  only  $22  per  acre, 
rises  in  New  York  to  $44.41   per 


acre,  in  Pennsylvania  to  $49.30 


258  ECONOMIQ  nilLOSOPIlY. 

per  acre,  and  in  New  Jersey,  a  country  of  primeval  rocks  and  sand, 
to  $65.16  per  acre.  New  Jersey  lies  between  the  two  great  cities 
of  New  York,  embracing,  witli  its  suburbs,  4,000,000  people,  and 
Pliiladelphia  and  suburbs,  embracing  more  than  a  million  more. 
This  focuses  upon  New  Jersey  a  demand  for  food  nearly  as  intense 
as  is  felt  in  any  part  of  Europe,  and  affords  an  inducement  to  the 
most  intense  cultivation  of  the  soil.  One  hundred  feet  square  of 
land,  devoted  to  the  culture  of  Gen.  Jaqueminot  or  Princess  Alice 
roses,  may  produce  roses  to  the  value  of  $8,000  per  year,  or  at  the 
rate  of  $32,000  per  acre.  These,  however,  could  only  find  market 
near  a  center  of  population  so  large  as  to  contain  some  persons 
who  would  think  it  not  wasteful  to  expend  $10,000  on  the  flowers 
for  a  single  ball.  Strawberries  also  can  be  produced  in  a  manner 
to  reap  from  a  quarter  acre  of  land  a  larger  return,  and  expend 
upon  it  more  labor  and  capital,  also,  than  would  often  be  ex 
jiended  upon  or  gathered  from  a  quarter  section  in  the  Western 
States.  Owing  to  the  intensive  system  of  agriculture  thus 
practiced,  land  rises  in  fertility  in  the  States  where  markets  are 
near  and  high,  instead  of  declining  by  exhaustion,  as  it 
usually  does  when  farming  spreads  a  little  labor  over  large 
areas. 

The  States  of  the  fourtli  class  include  North  Carolina,  South 
Carolina,  Georgia,  Alabama  and  Mississij^pi,  and  have  in  all 
108,637,796  acres  of  farm  lands.  The  proportion  engaged  in  agri- 
culture is  77'*Vioo  percent.,  the  balance  being  chiefly  in  tran- 
sportation, professional  service,  and  trade,  with  very  little  manu- 
factures, mechanics,  banking,  or  commerce. 

The  social  movement  here  is  slow  and  stagnant.  No  large 
cities,  capable  of  diversified  or  intense  demand,  exist.  Indus- 
try, until  twenty  years  ago,  had  been  mostly  carried  on  by  forced 
labor,  instead  of  under  the  inducement,  to  the  workers,  of  either 
wages  or  profits.  Through  all  these  causes  the  average  value  of 
the  fai'm  lands  is  only  $5.28  per  acre.  The  low  price  of  farm 
lands  indicates  that  they  are  near  to  the  margin  of  cultiv\ition, 
and,  in  fact,  vast  quantities  of  land  in  these  States  lie  unculti- 
vated, because  they  are  far  away  from  that  demand  which  alone 
could  give  value  to  their  products.  And  except  as  their  products 
have  value,  no  values  can  be  reflected  from  their  products  upon 
their  labor  and  land. 

In  the  second  table  we  see  that  the  product  of  agriculture  per 
man  falls  as  the  percentage  of  persons  engaged  in  agriculture 
rises.     This  is  another  way  of  saying  that  the  product  falls  as  the 


DISTANT  MARKETS.  26 1 

demand  falls,  for  one  who  produces  agricultural  products,  can  not 
form  any  part  of  the  demand  for  the  products  he  produces.  An 
exti'emely  slight  demand  may  arise  on  the  part  of  those  who  con- 
fine themselves  to  pi'oducing  one  crop,  for  a  crop  which  they  do 
not  produce,  as  the  cotton  planters  of  the  South  formerly  thought 
it  cheaper  to  buy  the  "hog  and  hominy  ■'  on  which  they  fed  their 
slaves,  in  Illinois.  But  the  true  market  of  the  farmer  is  not 
reached  except  in  the  manufacturer,  as  the  manufacturer's  chief 
market  is  the  farming  population.  Hence,  the  demand  for  the 
products  of  States  of  the  fourth  class  is  chiefly  from  1,000  to  3,000 
miles  from  the  point  of  pi'oduction. 

In  the  manufacturing  States,  1,060,000  farm  Avorkers  get  $484,- 
770,797  per  annum  for  their  products,  while  in  the  agricultural 
States  2,024,866  farm  woi'kers  get  for  their  products  only  $325,- 
099,388.  Comparing-  the  States  which  make  up  these  four  classes, 
we  find  the  average  value  of  i)roduction  for  each  farmer  and  farm 
laborer  is  $431  for  Pennsylvania,  $501  in  New  Jersey,  $467  iii 
Illinois,  $394  in  Ohio,  $376  in  Minnesota,  $199  in  Kentucky,  $180 
in  Virginia,  and  $178  in  Mississippi.  If  returns  upon  capital  in- 
vested were  considered,  as  a  rule,  those  making  the  smallest  re- 
turn to  each  worker  would  be  found  returning  the  largest  per- 
centage on  the  capital  invested.  For  where  population  is  sparse, 
capital  scarce,  and  the  returns  precarious,  there  capital  is  slow  in 
being  "turned  over,"  but  exacts  a  high  rate  of  profit  on  each 
"turn  over,"  or  investment  it  gets,  as  labor  also  exacts  a  high 
wage  in  proportion  to  the  value  of  its  product.  Hence,  rates  of 
interest  are  high,  the  nominal  rate  of  profit  on  capital  is  high, 
and  wages  are  high  in  the  sparse  districts,  relatively  to  the  value 
of  the  product,  but  as  production  is  slow,  when  these  rates  of 
capital,  interest,  and  wages  are  spread  over  a  given  period  of  time, 
instead  of  over  a  given  value  of  pi'oduct,  they  become  low,  rela- 
tively to  those  prevailing  in  a  country  of  more  diversified  activi- 
ties, where  capital  can  be  turned  over  oftener,  where  loans  are 
better  secured  and  more  promptly  paid,  and  where  labor  can  be 
more  continuously  employed,  and  the  value  of  its  product,  per 
year,  is  greater. 

The  average  rates  of  wages  in  the  period  of  depression  in  1879, 
and  the  normal  rates  of  1882,  for  the  groups  of  States  as  hereto- 
fore classified,  not  only  show  the  effect  of  unemployed  labor  in 
i-educing  prices,  but  present  fairly  the  differences  in  the  several 
groups,  the  distinctively  agricultural  class  showing  the  lowe.st 
rate  : 


2G2 


ECONOMIC  PHILOSOPHY. 


1882. 

1879. 

CLASSES. 

With  Board. 

Without  Board. 

With  Board.       Without  Board. 

1st. 
Slid. 

3d. 
4th. 

$24.14 
23.51 
19.51 
13.67 

$15.10 

16.03 

13.04 

9.24 

$21.31 
21.13 
16  84 
12.01 

$13.10 

13.45 

11.03 

8.15 

The  diagram  opposite  exhibits  the  relative  rates  of  wages  paid 
for  farm  labor  in  States  having  many  consumers  and  few  pro- 
ducers of  farm  products,  compared  with  i^ates  of  wages  in  the 
same  capacity  in  States  where  these  conditions  are  reversed.* 

103.  Machinery  in  Farming. — Intensive  farming,  as  car- 
ried on  near  great  markets,  tends  toward  small  farms  fenced  into 
small  lots,  and  the  expenditure  of  much  labor  over  small  areas, 
the  use  of  many  fertilizers,  and  the  increase  in  the  fertility  of  the 
land.  Extensive  farming,  as  canned  on  at  a  great  distance  from 
markets  of  consumption,  tends  toward  the  greater  substitution  of 
machinery  for  hand  labor,  and  the  cultivation  of  large  tracts  of 
land  to  one  crop  and  under  one  ownership,  and  of  fewer  crops 
by  one  farmer.  Finally,  in  Dakota,  Wyoming,  New  Mexico,  and 
parts  of  California,  this  system  culminates  in  the  gi'eat  bonanza 
fai'ms,  where  a  life  more  like  that  of  the  factory,  the  mine,  the 
fur-station,  or  the  whale-ship,  supersedes  the  home  life  of  the 
fai-m.  A  large  force  of  men  are  temporarily  hired  during  the 
busy  season,  who,  when  that  is  over,  leave  the  vast  estate  in  the 
hands  of  a  few  resident  keepers  for  the  winter.  Whether  this 
feature  of  the  bonanza  farms  is  permanent  or  temporary  it  may 
yet  be  too  early  to  pi*edict. 

The  chief  method  in  all  extensive  farming  is  to  till  the  largest 
area,  at  the  greatest  saving  of  labor,  for  the  crop  that  will  bear 
greatest  transportation  with  least  deduction  from  its  value.  This 
necessity  has  given  rise  to  the  two  classes  of  machinery  in  which 
the  American  inventors  have  won  special  eminence,  viz.,  means 
of  transportation  and  of  rapid  cultivation. 

The  introduction  of  this  new  machinery  in  agriculture,  has  had 
the  same  economic  effect  in  superseding  hand  labor,  as  it  has 
had  in  the  factories  of  Europe.  In  the  census  report  of  1860, 
under  the  head  of  agriculture,  attention  was  called  to  the  fact 
that  the  introduction  of  locomotives  on  railways  had  greatly  in- 
creased the  demand  for  horses,  since  in  taking  possession  of  the 


*  Mr.  Dodge  has  carried  out  the  same  comparison  to  the  agricultural  and  manufac- 
turing counties  in  each  State  with  like  results.  See  "Farm  and  Factory,"  byJ.R. 
Dodge. 


THE  FARM  LABORER'S  WAGES. 

Lowest  in  non-Industrial  DistrictSi 

$S5 

\ 

825 

x'4 
23 

$.2lflh-pcr.. 

$:2o,Sl.per.. 

month 

2h 
29 

nwn.th                         1 

22 

l\ 

22 

21 

/    \ 

SI 

yj 

20 

19 

-      .^I9.5i  per  7no.nth           ^         J        \_ 

19 

18 

1\\ 

18 

n 

i    \ 

11 

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Workers  in  all  Indi\xtries. 

.?     in  if,  2p  2p  .ip  :ir,  lip  Cf,  rk)   55  do  4r>  ip  if,  4p  hs  up  ;/f, 

2G4  ECONOMIC  PHILOSOPHY. 

larger  routes  of  travel,  on  which  it  superseded  the  horse,  it  greatly 
multiplied  the  number  of  shorter  routes  on  which  horses  are  still 
necessary.  But  Mr.  Moody  is  of  the  opinion  *  that  should  steam 
be  successfully  applied  to  common  roads,  and  sti'eets,  and  general 
farm  work,  it  may  yet  supersede  the  horse  instead  of  increasing 
the  demand  for  him. 

The  first  patent  issued  in  the  United  States  after  the  organiza- 
tion of  the  patent  office  was  in  June  1797,  to  Charles  Newbold,  of 
Burlington,  New  Jersey,  for  a  cast-iron  plow  which  combined  the 
mold-board  share  and  land-side  all  in  one  casting.  During  the 
early  part  of  the  present  century,  however,  the  plow  most  in  use 
was  of  wood,  iron-shod,  large,  ill-shaped  and  cumbersome,  drawn 
by  from  one  to  six  yoke  of  oxen,  requiring  one  and  often  two 
men  at  the  handles,  another  to  ride  on  the  beam  to  keep  it  in  the 
ground,  another  to  keep  it  clear,  and  several  drivers  for  the  oxen, 
often  four  and  six,  but  never  less  than  two,  to  turn  one  acre  a  day.f 
Successive  improvements  in  the  cast-iron  plow  were  made  in  1810 
by  Josiah  Duclier,  of  New  York,  in  1814  by  Jethro  Wood,  of 
Scipio,  New  York,  and  in  1836  the  implement  was  brought  to  a 
degree  of  perfection  by  Joel  Nourse,  of  Worcester,  Massachusetts. 
One  man  with  a  single  horse  will  now  plow  two  and  a  half  acres 
in  light  soils,  and  with  two  horses,  by  means  of  the  sulky  attach- 
ment, will  ride  while  driving,  breakirig  two-and-a-half  acres  of 
prairie  i)er  day.  With  a  gang  plow  oiie  man  and  two  horses  will 
plow  five  acres  a  day,  a  saving  as  compared  with  our  first  example 
of  ten  men  plowing  one  acre,  amounting  to  forty-nine  men  out 
of  fifty  required  to  do  the  same  woi'k.  One  man,  wdth  a  cultivator 
and  a  pair  of  horses,  works  one  acre  of  corn  per  hour,  whereas  he 
would  formerly,  with  a  hoe,  work  half  an  acre  in  a  long  and  hard 
day,  thus  saving  the  labor  of  nineteen-twentieths  of  the  men  form- 
erly required  to  cultivate  corn. 

The  first  American  patent  for  harvesting  grain  issued  in  May 
1803,  to  French  and  Hawkins,  of  New  Jersey,  was  followed  by 
mowers,  cutters  and  threshers  in  endless  number.  In  1828, 
Samuel  Lane,  of  Hallo  well,  Maine,  patented  a  machine  for  cutting, 
gathering  and  threshing  grain  in  one  operation.  The  Hussey 
Machine,!  in  1833,  cut  as  fast  as  eight  men  could  bind.  In  1834, 
Cyrus  H.  McCormick,  of  Vii-ginia,  patented  his  first  reaper  for 
cutting  grain  of  all  kinds.     In  1836,   Moore  &  Haskell  provided 

*  "  Land  and  Labor,"  by  Wm.  Godwin  Moody,  p.  17.  +  ibid.  p.  20. 

X  Obed  Hussey,  Cincinnati,  Ohio. 


FABMU'G  BY  MACIIINERT.  265 

one  which  would  cut,  thresh  and  winnow  the  grain  at  once.  In 
1860  one  man  with  four  horses  would  cut  twenty  acres  a  day.  Now 
machines  are  used  whereby  one  man  and  team,  travelling  three 
miles  per  hour,  will  cut  eighty  acres  in  ten  hours,  or  as  much  as 
could  be  done  by  320  men  with  sickles.  Formerly  threshing  out 
a  few  hundred  bushels  of  grain,  with  a  flail,  would  fill  up  a  farmei''s 
leisure  days  throughout  the  wnuter.  Now  the  steam  thresher 
threshes,  winnows  and  sacks  the  grain  as  fast  as  twelve  or 
fifteen  men  can  feed  the  machines  and  clear  away  the  straw — 
turning  out  1,000  to  1,500  bushels  a  day.  In  California,  machines 
are  used  which  find  the  grain  standing,  and  leave  it  in  sacks,  com- 
bining the  cutting,  threshing  and  winnowing  in  one  operation, 
and  putting  it  in  sacks  in  another.  Formerly  men  took  the 
ripened  ear  of  Indian  corn  from  the  stalk  hj  hand  and  husked. 
Now  a  machine  drawn  by  two  horses  picks  off  the  ear,  gathering 
all  the  ears  whether  the  stalks  stand  up  or  are  bent  down,  husks 
as  fast  as  eight  men,  leaves  all  the  husks  on  the  stalk,  and  does 
not  pull  up  or  cut  up  or  break  down  the  stalks.  Forty  years  ago, 
by  scraping  an  ear  of  Indian  corn  across  the  end  of  a  shovel,  on 
which  the  worker  was  sitting,  he  would  shell  from  five  to  twenty 
bushels  a  day.  Now  two  men,  with  a  cornsheller,  shell  twenty- 
four  bushels  an  hour,  or  with  the  three  classes  of  horse-power 
shellers,  four  men  will  shell  1,500,  2,000  and  3,000  bushels  per  day 
respectively  ;  one  man  doing  the  work  of  75,  100  or  150  men. 
Formerly  the  farmer  ])aid  a  toll  of  an  eighth  or  a  tenth  to  get  his 
grain  ground.  Now  the  mills  run  so  automatically,  that  little 
more  than  a  watcher  at  night  with  his  lantern  is  needed,  and 
the  cost  per  bushel  is  hardly  appreciable. 

104.  Effects  of  Releasing  Labor  by  Machinery. — A  vast 
force  of  persons  are  thus  released  from  the  labor  of  producing 
food,  for  one  is  enabled  to  produce  as  much  as  scores  can  consume. 
Some  persons  see,  in  these  facts,  a  reason  for  alleged  stagnations 
in  industry  and  increased  difficulty  in  obtaining  employment.* 
But  before  rushing  passionately  to  such  a  conclusion,  there  should 
be  a  very  careful  analysis  of  the  fact  that  formerly  neai'ly  every 
person's  occupation  had  to  do  almost  directly  with  the  visible 
creation  of  food,  clothing  or  shelter.  Now  vast  numbcirs  of  indus- 
tries, employing  millions  of  persons  in  all,  are  not  directly,  and 
many  are  not  even  indirectly,  connected  with  either  of  these.  In 
the  United  States  half  a  million  persons  are  creating  transporta- 

*  Jloody  on  "  Land  and  Labor,"  p.  30. 


266  ECONOMIC  PIIILOSOniT. 

tion  by  railway,  an  employment  which  sixty  years  ago  did  not 
exist.  A  vast  number  more  ai'e  creating  intelligence  through 
books  and  newspapers,  a  large  daily  newspaper  involving  each 
day  some  part  of  the  time  of  1,000  persons.  Hardly  did  such  an 
occupation  then  exist.  Others  by  thousands  are  creating  pianos, 
organs  and  other  musical  instruments,  an  occupation  which  did 
not  then  exist.  Others  are  making  works  of  art,  especially  photo- 
graphs, electrotypes,  chromos  and  cartoons — furnishing  people 
with  insurance  against  every  known  calamity,  and  indemnifying 
widows  and  orphans  against  pecimiary  loss  by  the  death  of  those 
on  whom  they  are  dependent.  Others  are  transmitting  intelli- 
gence by  electricity,  tending  power  looms,  constructing  public 
parks,  making  matches.  India-rubber  articles,  gutta  percha,  cellu- 
loid, and  a  thousand  things  then  unknown,  from  materials  not 
then  discovered.  Others  are  obtaining  peti'oleum  and  refining  it, 
or  collecting  and  transmitting  instantaneously  to  Washington 
the  data  from  which  the  weather  bureau  determines  what  the 
weather  will  be,  forty-eight  hours  ahead,  in  all  parts  of  the 
country. 

With  such  a  vast  and  complicated  army  of  new  employments, 
and  with  the  visible  spectacle  before  us  hourly  of  almost  our 
entire  population,  young  and  old,  poor  and  rich,  able  and  infirm, 
working  steadily  all  the  time,  and  at  least  as  industi'iously  as  be- 
fore these  labor-saving  appliances  were  introduced,  it  would  be  a 
rash  generalization  to  say  that  the  means  of  employment  had  in 
any  degree  lessened.  In  fact  it  accords  far  more  consistently 
with  the  incessant  industry  we  continue  to  see  among  all  classes 
and  conditions  of  men,  to  revert  to  the  Avell-known  law,  heretofore 
referred  to,  that  the  satisfaction  of  a  lower  want  only  begets  the 
desire  for  not  merely  one,  but  for  many,  higher  wants.  If  the 
wants  of  mankind  multiply  in  geometrical  ratio,  in  j)roportion 
as  they  are  satisfied  in  arithmetical  ratio,  if  as  our  wants  are 
met,  our  ambitions  expand,  how  is  it  possible  to  base  a  theory 
of  the  suspension  of  employment,  for  any  human  being,  on  an 
increase,  however  great,  in  the  multiplication  of  the  means  of 
satisfaction  ? 

It  is  supposed  that  the  quantity  of  sewing,  which  ladies  now  put 
upon  their  gowns  and  other  apparel,  has  been  multiplied  in  a 
degree  fully  equal  to  the  increased  economy  with  which  the  same 
amount  of  sewing  can  now  be  done  by  the  machine.  Meanwhile, 
however,  millions  of  i^ersons  have  found  emi)loyment  in  the  new 
industries  connected  with  the  manufacture  and  trade  in  sewing 


WOIiK  FOB  ALL.  261 

macliiiies.  So,  relatively  to  the  absence  of  all  means  of  transport 
tation  formerly  existing-,  tlie  manufacture  of  iron  and  steel  for 
railways,  of  cars  and  locomotives,  is  anew  industry. 

So  the  vast  increase  in  the  quantities  of  paper,  furs,  silks,  plate 
glass,  watches,  jewelry,  bijouterie,  books,  furniture,  capacious 
residences,  oil  paintings  and  higher  engravings,  standard  libraries, 
and  the  like,  involve  an  immeasurable  increase  in  the  need  for 
human  labor.  Moreover  they  minister  to  enjoyments  of  a  kind 
to  which  few  could  then  aspire,  but  which  are  now  oj^en  to  the 
millions  without  reserve. 

By  reason  of  the  cheapness,  with  which  this  extensive  introduc- 
tion of  machinery  has  enabled  American  farmers  to  produce  agri- 
cultural products,  the  sophistry  is  sometimes  indulged  in,  by  i)oli- 
ticians,  that  dear  human  labor  can  underwork  cheap  human 
labor.  American  agricultural  products,  in  the  production  of 
which  dear  human  labor  pai'ticii^ates,  do  undersell  European 
agricultural  j)roducts,  which  are  almost  wholly  produced  by 
cheap  human  labor,  unaided  by  machinery.  In  many  parts  of 
Europe,  and  even  in  parts  of  Great  Britain,  wheat  is  still  planted 
by  hand-sowing  and  reaped  with  a  sickle.  Tliis  comjiotition  is 
not  however  between  dear  and  cheap  human  labor,  but  between 
human  labor  kept  dear  by  the  utilization  of  machinery,  or  per- 
haps between  machinery  itself,  and  cheap  labor. 

105.  Tenant  Farms  and  Large  Holdings  in  America. 
— The  census  of  1880  shoAved  that  of  a  total  of  4,008,907  farms  in 
the  United  States,  1,024,701,  or  more  than  one  m  four,  were  ten- 
ant farms.  Estimating  the  number  to  have  inci'eased  with  the 
subsequent  growth  of  population  to  one  and  one-quarter  millions, 
it  far  outnumbers  the  total  number  of  holdings  in  Great  Britain 
and  Ireland,  wdiich  now  amount  to  1,069,827.  From  1870  to  1880 
also  the  number  of  farms  containing  over  500  and  less  than  1,000 
acres  grew  from  15,873  to  75,972,  and  the  number  containing 
more  than  1,000  acres  rose  from  3,720  to  28,578.  Simultaneously 
with  this  tendency  toward  large  farming,  and  as  a  part  of  it, 
there  has  been  an  application  of  very  large  capitals  to  farming, 
not  merely  in  the  purchase  of  agricultural  implements  adapted  to 
extensive  tillage,  but  in  a  general  elevation  of  the  breeds  of  sheep, 
horses,  and  cows  by  the  sul)stitution  of  the  best  Englisli  blooded 
stock  for  the  mongrel  breeds.  The  tendency  during  tliis  decade 
was  to  make  blooded  stocks  vory  general,  whereas,  previously, 
they  had  been  the  hobby  of  a  few  only  of  the  more  aristocratic 
farmers,  who  were  looked  upon  as  farming  more  for  taste  and 


268  ECONOMIC  PHILOSOPHY. 

pleasure  than  for  profits.  Farmers  generally  have  awakened  to  a 
keen  sense  of  the  fact  that  the  blooded  stocks  are  by  far  the  more 
profitable,  and  that  large  capitals  can  nowhere  be  used  more 
profitably  than  in  their  dissemination. 

Mr.  Moody  has  written  a  fervid  and  denunciatory  book  ;  *  re- 
sembling in  its  rlietorical  intemperance  Mr.  George's  attacks 
upon  land  tenure,!  Mr.  Hudson's  assault  on  railways,!  Mr.  Lock- 
wood's  indictment  against  the  office  of  President,!  and  similar 
zealous  pi'oductions.  All  these  serve  to  mark  that  crude  state  of 
economic  and  political  incandescence,  in  which  our  intellectual 
fuel  expends  itself  with  more  of  heat  and  smoke  than  of  illumi- 
nation. Mr.  Moody  would  have  us  believe  that  the  tendency 
towards  large  farms  and  tenant  farming  indicates  a  revival  of 
villeinage,  serfdom,  and  slavery,  a  view  that  is  in  harmony  with 
his  previously  enunciated  doctx'ines  concerning  the  effect  of  the 
factory  system  and  of  machineiy.  The  working  of  land,  and  the 
stock  and  capital  necessary  to  run  it,  upon  equal  shares  by  labor 
is,  however,  usually  a  contract  that  is  equitable  to  both  parties. 
Mr.  Moody,  like  many  philanthropic  men  who  treat  economic 
subjects  emotionally,  mistakes  the  poverty,  from  which  this  form 
of  contract  is  the  tenant's  best  avenue  of  escape,  for  a  poverty 
which  the  contract  produces  and  perpetuates.  §  Permission,  to  a 
man  wholly  without  any  fruits  of  past  labor  in  his  possession,  to 
enter  into  possession  of  all  the  fruits  of  another's  labor,  of  land 
which  he  has  cleared,  fenced,  drained,  ditched,  sui)plied  with 
orchards,  implements,  seeds,  cattle,  and  herds,  and  by  his  labor 
to  earn  a  title  to  half  the  j)i'ofits  which  result,  cannot  be  con- 
strued into  cruelty  successfully,  so  long  as  men  retain  the  facul- 
ties essential  to  common  sense.  The  fact,  that  in  America  tenants 
pay  half  the  crop  (or  from  one  to  two  thirds),  while  in  England 
rent  is  based  on  the  proportion  of  a  fourth  of  the  crop,  instead  of 
establishing  the  case  of  hardship  against  tlie  American  tenant 
which  Mr.  Moody  contends,  shows  simply  that  in  countries  of 
large  capitals  the  value  of  cai^ital  declines  relatively  to  that  of 
labor,  and  that  large  landholders,  holding  many  farms  or  estates 
for  rental,  are  under  the  same  economic  necessity  to  rent  them 


*  "Land  and  Labor,"  by  Wm.  Godwin  Moody. 
+  "  Progress  and  Poverty— Social  Problems— The  Land  Question." 
X  "The  Railways  and  the  Republic,"  by  James  T.  Hudson. 
I!  "Abolition  of  the  Presidency,"  Ijy  Henry  C.  Lockwood. 

§  "The  Displacement  of  Labor  by  Improvements  in  Machinery,"  by  Wm.  Godwin 
Moody. 


BONANZA  FARMING. 


269 


low,  as  large  money  lenders  are  to  lend  at  a  lower  rate  of  interest 
than  small  money  lenders,  as  large  manufacturers  are  to  manu- 
facture at  a  lower  cost,  as  large  carriers,  by  land  or  sea,  are  to 
carry  at  lower  rates  per  ton  jjer  mile,  etc.  * 

At  the  Cass,  Cheney,  and  Alton  farms  near  Fargo  in  Dakota, 
290  men  at  the  highest  in  summer,  and  six  or  eight  in  winter, 
working  with  thirteen  seeders,  tliirty  self-binding  harvesters,  and 
five  straw-burning  steam  threshers  for  the  Cass  farm  (6,355  acres), 
and  with  nineteen  seeders,  twenty-six  self -binding  harvesters,  and 
four  straw-burning  steam  threshers  for  the  Cheney  farm  (5,300 
acres),  and  with  the  same  ratio  of  implements  for  the  Alton  farm 
(4,000  acres),  are  able  to  till,  in  wheat,  10,477  acres,  lying  contigu- 
ously, and  to  produce  therefrom  twenty -two  bushels  per  acre,  at  a 
cost  of  about  sixteen  cents  per  bushel,  and  for  a  return  of  from 
seventy  to  ninety  cents  per  bushel.  The  croj)  brings  $161,065.80, 
of  which  four-fifths  are  profit,  It  is  contrary  to  every  sound 
principle  of  political  economy  to  weep,  wail,  or  indulge  in  de- 
nunciatory epithets,  over  the  substitution  of  economies  like  tliese 
for  the  old  methods   of  producing   wheat,  which  maintain   its 


*  NUMBER  OP  TENANT  FARMS  IN  THK  UNITED  STATES  Br  CENSUS  Or  1880. 


Money  Share 

Bent.  Bent. 

Alabama 22,888  40,761 

Arkansas 9,916  19,272 

Arizona 42  59 

California 3,209  3,915 

Colorado 165  419 

Connecticut ..     1,920  1,206 

Dakota 72  006 

Delaware 511  3,197 

District  of  Columbia 150  60 

Florida 3,548  3,093 

Georgia 18,557  43,018 

Idaho 32  57 

Illinois 20,620  59,621 

Indiana 8,582  37,408 

Iowa...   8,421  35,753 

Kansas 4,438  18,213 

Kentucky 16,824  27,203 

Louisiana 6,069  10,337 

Maine 1,028  1,153 

Maryland 3,878  8,061 

Massachusetts 2,292  848 

Michigan 5,015  10,390 

Minnesota 1,251  7,202 

Mississippi 17,440  27,118 


Money 
Bent. 

Missouri  19,843 

Montana 17 

Nebraska 1,943 

Nevada 63 

New  Hampshire 1,237 

New  Jersey 3,008 

New  Mexico 22 

New  York 18,124 

North  Carolina    8,041 

Ohio 14,834 

Oregon 748 

Pennsylvania 17,049 

Rhode  Island 989 

South  Carolina 21,974 

Tennessee 19,206 

Texas 12,089 

Utah 60 

Vermont 2,104 

Virginia 13,392 

Washington 209 

West  Virginia 4,292 

Wisconsin..       3,719 

Wyoming 5 


Share 

Bent. 

39,029 

63 

9,476 

73 

1,378 

4,830 

386 

21,748 

44,078 

32,793 

1,538 

28,273 

247 

25,245 

37,930 

53,379 

373 

2,598 

21,594 

262 

7,709 

8,440 

8 


United  States. 


.322,357   702,244 


270  ECONOMIC  PHIL  OSOPIIY. 

average  cost  at  seventy  cents.  These  farms  are  small  compared 
with  those  of  Dr.  Glenn  of  California,  who  annually  shipped  to 
Liverpool  wheat  worth  $1,000,000  a  year  in  his  own  ships.  On 
the  Thompson  and  Kendall  farm  (Dakota),  1,600  acres  of  wheat, 
accurately  estimated,  involved  a  cost  for  production  per  acre  of 
$8.69,  and  left  a  profit  (in  a  selling  price  of  seventy  cents  per 
bushel)  of  forty-nine  cents  per  bushel,  or  $7.84  per  acre,  or  $12,- 
544  for  the  1,600  acres,  producing  only  sixteen  bushels  per  aero. 

The  economic  value  of  these  instances  consists  in  the  emphatic 
denial  they  afford  to  any  general  theories  that  the  rate  of  profits 
on  all  industries  are  at  any  time  lower  than  in  previous  epochs, 
or  that  they  evince  any  general  and  universal  tendency  to  de- 
cline. All  such  theories  must  be  confined  to  specific  cases  or  to 
single  industries  ;  but  it  must  always  be  implied  that,  at  other 
places,  or  in  other  industries,  new  wells  of  profit  are  gushing 
forth  at  the  old  rate  of  several  hundred  or  several  thousand  per 
cent.,  so  that  the  average  inducement  to  the  human  family,  as  a 
whole,  to  move  forward  to  new  fields  of  endeavor  and  of  fortune- 
making,  remains  an  essentially  constant  quantity.  The  Grandin, 
Dalrymple,  and  Glenn  farms  will,  in  a  few  years,  have  sunk  to 
seven  per  cent,  profits  per  annum,  but  the  same  rate  per  cent. 
will  have  broken  out  afresh,  perhaps,  in  Borneo  or  in  Tartary, 

Measured  merely  by  aci*es,  the  great  land-holdings  in  the 
United  States  far  exceed  those  in  Great  Britain,*  and  while  some 
of  our  own  large  holdings  t  will  be  broken  up,  yet,  so  long  as  lai'ge 

*  SIZE  OF  ALL  ENGLISH  LAND-HOLDINGS  OP  MORE  THAN  50,000  ACRES. 

Names  of  Owners.  Natnes  of  Owners. 

Marquis  of  Ailesbiiry 55,051  Lord  Londesborough 52,655 

Duke  of  Beaufort 51,085  Earl  of  Lonsdale 67,950 

"       Bedford 87,507  Duke  of  Northumberland 191,480 

Earl  of  Brownlow 57,799  Duke  of  Portland 55,259 

"     Carlisle .    78,540  Earl  of  Powia 64,095 

"      Cawdor 51.538  Duke  of  Rutland 70.039 

Duke  of  Cleveland 106  650  Lady  Willoughby 59,912 

Earl  of  Derby 56,598  Sir  W.  W.  Wynn 91,032 

Duke  of  Devonshire 148,629  Earl  of  Yarborough 55,.3V0 

Lord  Leconfleld 66,101 

t  Says  Moody,  "Land  and  Labor  in  United  States,"  p.  88:  "But  in  the  United 
States  we  have  a  saw  maker,  in  Philadelphia,  with  his  four  million  acres  ;  two  butch- 
ers in  California  with  their  eight  hundred  thousand  and  more  acres  ;  a  cattle  raiser  in 
New  Mexico  with  his  seven  hundred  and  fifty  thousand  acres  ;  and  numbers  of  them 
in  Texas  whose  acres  are  counted  by  hundreds  of  thousands.  In  the  great  Northwest 
the  land-holdings  for  agricultural  purposes— for  grain,  grass,  and  vegetables— by  hun- 
dreds, range  to  fifty  thousand  acres  and  upwards,  occupied  by  tenants  or  machinery,  or 
by  both.    The  whole  coimtry,  from  the  Mississippi  to  the  Pacific,  is  dotted— no,  they 


FARM  LABORERS.  ^Vl 

capitals  can  make  the  large  rates  of  profit  incident  to  "  bonanza  " 
farming  which  is  above  pointed  out,  the  tendency  to  large  hold- 
ings will  increase.  The  objection  urged  to  these  lai-ge  holdings 
is  that  they  tend  to  differentiate  society  into  capitalistic  and 
proletariat  grades,  to  "make  the  rich  richer  and  the  poor  poorer '' 
to  create  dominant  or  master  classes  on  the  one  side  and  servile, 
landless,  and  dependent  classes  on  the  other.  This  objection  ap- 
plies, however,  in  the  same  sense  to  the  advance  from  the  hunter 
life  to  that  of  the  herdsman.  For,  in  hunting,  there  is  no  aristoc- 
racy of  noble  lords,  who  own  the  bows  and  arrows,  and  servile 
slaves  who  carry  them.  But,  the  instant  herding  begins,  there 
are  those  who  own  the  flocks  and  those  who  tend  them.  Still 
herding  is  less  unequalizing  than  tilling  the  soil,  for  with  this 
comes  in  the  wide  distinction  between  those  who  own  the  soil  and 
those  who  do  not.  Most  usually,  in  early  periods,  the  former  own 
the  latter.  Yet  the  inequalities  created  by  agriculture  are  less 
than  those  created  by  trade  and  manufactures— for  now  society 
grades  from  millionaii-es  to  beggars.  Thus,  with  each  advance 
of  society  in  activity,  there  is  a  continually  increasing  differentia- 
tion in  ranks  and  gi'ades  of  power,  but  it  does  not  follow  that  the 
poor  grow  poorer  at  either  of  these  advances,  for  it  may  happen 
that  this  increasing  inequality  is  only  an  inequality  in  the  degree 
in  which  all  rise,  but  that  none  actually  descend.  This  depends 
on  whether  the  pauper  and  criminal,  confessedly  the  lowest  ranks 
in  civilized  life,  ai'e  below  or  above  what  they  would  be  in  savage 
life.  The  I'eal  question  is  not  whether  the  hired  worker  on  a 
bonanza  farm  is  better  off  than  an  independent  fai*mer  on  a  New 
England  farm,  for  he  may  have  neither  the  training  nor  capacity 
to  be  the  latter.  Men  can  be  used,  on  the  bonanza  farms,  of  a 
training  and  capacity  in  farming  far  inferior  to  those  which  would 
be  essential  in  a  good  Middle  State  farmer.  But  inferior  men 
need  a  race  in  life,  and  an  opportunity  to  live,  as  well  as  superior 
men.  The  real  question  is,  whether  the  class  of  men  who  now 
hire  on  the  bonanza  farms,  would  be  doing  better  if  this  employ- 
ment were  denied  them.  They  are  not  profit-sliarers,  they  do 
not  bring  their  families — do  not  make  permanent  homes  on  the 
farms,  and  are  less  permanent  than  factory  hands,  as  these  are 
usually  induced  to  stay  if  they  will.    But  the  fact  that  they  seek 


aro  not  dots— is  patched  witli  tlicse  liiige  holdings.  In  comparison  with  the  monopoly 
of  the  lands  here  shown,  that  of  the  Kntjlish  iimdlords  appears  quite  insiguilicuul.  And 
yet  we  are  only  in  the  third  decade  of  our  movement." 


272  ECONOMIC  PHILOSOPHY. 

this  employment,  at  the  wages  offered,  indicates  that,  relatively  to 
any  other  field  of  labor  open  to  them,  it  is  the  best.* 

100.  Large  and  Small  Liaiid-Holding-  in  Englaud. — The 

"  Democi'atic  Federation  "  of  England,  a  leading  socialist  organi- 
zation, says,  in  its  manifesto  :  ' '  Thirty  thousand  persons  own 
the  land  of  Great  Britain  against  the  thirty  millions  that  ai'e 
suffered  to  exist  therein."  Like  erroneous  statements  on  this 
point  are  frequently  made.  The  census  of  1883  shows  in  England 
958,800  owners  of  land  distributed  as  follows. t  The  landed  aris- 
tocracy, all  told,  number  5,000  owners,  and  have  a  rent-roll  of 
£30,000,000  annually  out  of  a  total  rent-roll  for  all  the  land 
owners  of  England  of  £99,000,000,  thus  making  the  aristocracy 
the  owners  of  less  than  a  third  of  the  rent-roll  of  England.  Next 
to  the  aristocracy  come  133,800  smaller  rural  proprietors,  made 
up  as  follows,  viz. :  4,800  owners  with  estates  that  average  700 
acres,  then  come  32,000  with  estates  that  average  200  acres,  then 
25,000  with  estates  that  average  70  acres,  and  then  72,000  with 
estates  that  average  20  acres.  All  of  these  133,800  rural  proprie- 
tors enjoy  a  i-ent-roll  amounting  to  £33,000,000,  or  one-tenth  more 
than  that  of  the  aristocracy.  Finally  there  come  the  urban  pro- 
prietors, owning  less  than  a  fourth  of  an  acre  (four  city  lots)  and 
suburban  proprietors  owning  less  than  four  acres,  which  two 
classes  combined  number  820,000  owners,  and  have  an  aggi'egate 
rent-roll  of  £36,000,000,  or  one-fifth  more  than  the  aristocracy. 
The  landed  proprietors  are  thus  seen  to  have  two  classes  of  owners 
below  the  aristocracy,  either  of  which,  if  property  were  repre- 
sented m  the  House  of  Lords  exactly  according  to  its  value,  could 
outvote  that  aristocracy,  which  is  now  exclusively  represented  in 
the  House  of  Lords.  Rather  the  House  of  Lords  consists  of  mem- 
bers of  a  class,  comprising  one-third  of  the  land-owners  in  value, 
assuming  to  represent  the  other  two-thirds. 

While  the  total  annual  income  of  all  the  people  of  England  is 
£1,300,000, 000,  the  amount  distributed  in  wages  to  the  "  woi'kers  " 
in  the  proper  sense  is,  according  to  Mr.  Giffin,  £800,000,000.  To 
workers  who  had  less  than  £150  per  year  per  family,  according 
to  Mr.  Giffin,  £620,000,000,  according  to  Prof.  Leoni  Levi  £450,- 


*  On  the  Grandin  farm  (Dakota),  besides  board,  the  wages  are,  from  November  Ist  to 
March  31st,  $15  per  month;  from  April  Ist  to  April  30th,  $18;  from  May  1st  to  July  31  <t, 
$16 ;  from  August  Ist  to  August  15th,  $3  per  day ;  from  August  16th  to  September  151  h, 
$1.50  per  day;  from  September  16th  to  October  31st,  $18per  month.  (Moody  on  "Laud 
and  Labor,"  p.  47.) 

t  Mallock,  "  Property  and  Progress,"  p.  215. 


WAGES  AND  INCOME.  2V3 

000,000,  and  according  to  Mr.  Hyndman,  socialist,  £300,000,000. 
Taking  the  estimate  made  by  Mr.  Giffin,  £800,000,000,  as  cor- 
rect, and  we  see  a  division  between  wages-workers  on  the  one 
hand  and  all  other  classes  combined  on  the  other  nearly  equal. 
This  is  strikingly  in  harmony  with  the  facts  indicated  in  our  chap- 
ters on  Profits,  and  on  Capital,  as  to  the  rates  of  division  between 
capital  and  labor  in  the  United  States.  It  may  yet  be  found  to 
be  a  general  law  that  labor  and  capital  never  effect  so  even  a 
division  of  their  joint'product,  between  the  owners  of  all  the  capi- 
tal and  the  workers,  or  that  labor  never  works  so  neai'ly  "at  the 
halves,"  as  when  the  division  is  wholly  unintentional. 

The  custody  of  the  reproductive  capital  is  so  distributed  that, 
according  to  Mulhall,  2,046,900  families  of  the  upper  and  middle 
classes  possess  together  property  to  the  value  of  £7,502,000,000; 
but  of  these  222, 500  families  own  £5,728,000,000.  Averaging  the 
first  total  over  the  larger  number  and  they  have  £3,700  per 
family.  Averaged  over  the  smaller  number  they  have  £26,000 
per  family.  Meanwhile  there  are  4,029,000  families  which  own 
only  £398,000,000,  or  less  than  £90  per  family.  But  while  the 
average  amount  of  capital  owned  by  a  working  class  family  in 
England  is  only  £86,  the  average  income  of  the  family  is  £100, 
or  about  112  per  cent,  on  its  capital,  the  average  income  of  those 
who  have  a  thousand  pounds  is  £260,  or  twenty-six  i}er  cent,  on 
their  total  capital,  and  the  average  income  of  those  who  have 
£20,000  is  £1,500,  or  about  five  per  cent,  on  their  capital.  Thus 
the  annual  income  of  the  rich  is  one-seventeenth  of  their  wealth, 
the  income  of  the  middle  class  is  one-quarter,  and  that  of  the 
working  poor  is  ten  or  twelve  per  cent,  more  than  the  value  of 
what  they  own. 

Mr.  Mallock  *  presents  the  following  curious  fact  :  In  1851  the 
gross  income  of  the  country  was  £620,000,000,  of  which  the  in- 
comes of  the  rich  (those  having  incomes  of  more  than  £150)  were 
£200,000,000.  To-day  the  gross  amount  of  incomes  under  £100  is 
£620,000,000,  whereas  in  1843  they  were  £235,000,000,  showing 
an  increase  of  £385,000,000,  or  of  £185,000,000  more  than  the 
total  income  of  the  richer  classes  in  1843.  In  other  words,  says 
Mallock,  "  the  i)oorer  classes  to-day,  are  as  a  body,  in  precisely 
the  same  situation  as  they  would  have  been  in  if  at  the  time  of  the 


*  "  Property  and  Progrcse,"  by  W.  H.  Mallock,  p.  179. 

*  "  Proijcrty  ami  Progress,"  p.  219. 


274  ECONOMIC  PHILOSOPHY. 

first  exliibition  ilie  income  of  every  rich  man  then  in  the  country 
had  been  made  over  to  them  in  perpetuity." 

These  figures,  of  Mr.  Mallock,  may  grow  partly  out  of  a  more 
perfect  or  diff'erent  mode  of  taking  the  census  in  later  than  in 
earlier  years,  or  out  of  an  expansion  in  the  volume  of  currency 
whereby  the  same  values  are  measured  by  larger  numbers.  The 
fact  that  the  population  of  England  has  remained  so  nearly  sta- 
tionaiy,  and  that,  notwithstanding  the  immense  efforts  made  by 
its  government,  bankers,  merchants,  manufactui'ers,  and  in  some 
cases  its  armies,  to  hold  its  foreign  trade,  the  migration  nearly 
equals  the  difference  between  its  birth  and  death  rate,  does  not 
quite  bear  out  Mr.  Mallock's  argument.*  Still,  as  it  seems  to  be 
based  on  statistics  honestly  and  intelligently  handled,  the  student 
is  entitled  to  the  result  and  will  make  his  own  allowance  for 
Mr.  Mallock's  supposed  optimism. 

107.  Land  in  Ireland. — The  causes  of  the  depopulation  of 
Ireland  need  a  more  careful  analysis  than  can  here  be  given,  but 
the  effects  of  that  event  upon  land  tenure  and  cultivation  are  ap- 
propriate in  this  chapter.  In  1846  the  population  of  Ireland  was 
over  9, 000, 000,  t  and  in  1883  it  is  slightly  more  than  4, 500, 000.  t  In 
1841  there  were  310,375  cotter  lioldings  (tenancies)  of  under  five 
acres ;  in  1861  there  were  88,  083 ;  and  in  1880  there  were  but  64,292. 
Here  were  246,083  small  farms  extinguished  as  homes,  which  must 
have  contained  at  least  one  million,  and  probably  nearer  two  mill- 
ions, of  people,  whose  labor  had,  in  the  main,  reclaimed  them 
from  moor  and  waste.  That  neither  the  tenant  system,  nor  the 
absentee  landlords,  were  the  cause  of  the  depopulation  of  Ireland 
seems  indicated  by  the  fact  that  in  the  period  from  1780  to  1810 
Ireland  had  both,  and  yet  grew  in  population  from  5,000,000  to 
8,000,000.  In  1851,  in  a  return  which  purported  to  distinguish 
"arable"  land  from  "uncultivated,"  there  were  returned  as 
"  arable  "  14,803,581  acres.  In  1871  and  1881  the  returns  were  as 
follows  : 

1871.  1881. 

Under  crops,   including  meadow  and      Acres.  Acres. 

grass, 10,071,285  10,075,424 

Grass  or  pasture,     ....           5,621,437  5,195,375 

Bog,  waste  and  water,        .        .        .      4,289,433  4,708,047 


*  The  population  in  1846  was  28,002,094,  and  in  1851  it  was  27,393,  337. 
t  A  M.  Sullivan  in  Nineteenth  Centut'y  for  July,  1883. 
X  Mr.  Sullivan  says  about  5,000,000. 


DECLINE  OF  IRELAND.  275 

The  average  yearly  acreage  under  oats,  between  1851  and  1860, 
had  been  2,074,381  acres.  In  1881  it  had  fallen  to  1,392,365. 
Wheat  acreage,  in  the  like  period,  fell  from  460,802  acres  to  154,- 
009  ;  barley  from  221,150  to  210,152  ;  turnips  from  378,482  to  340,- 
097  ;  potatoes  from  1 ,  039, 921  to  854, 294.  Cabbage,  alone,  increased 
by  318  acres,  and  flax  by  20,969.  Cattle  increased  from  3,480, 623, 
in  1851-60,  to  3,954,479,  an  increase  of  473,856.  Sheep  decreased 
from  3,297,971  to  3,258,588,  a  decrease  of  29,388.  Pigs  fell  oflP  from 
1,194,303  to  1,088,041,  a  decrease  of  106,262.  Horses  decreased 
from  572,219  to  547,662,  a  decline  of  24,557.  The  value  of  stock, 
in  the  hands  of  farmers  holding  less  than  five  acres,  had,  in  1841, 
been  £14,771,483  ;  by  1846  it  was  probably  £6,000,000,  and  in  1851 
it  had  fallen  to  £1,002,156.  Between  1871  and  1881,  418,615  acres 
went  back,  from  pasture  and  tillage  combined,  to  moor  and  waste, 
and  yet  these  were  regarded  as  the  fat  years  of  Irish  husbandry, 
owing  to  the  relief  afforded  by  the  Land  Act  of  1871.  Had  the 
census  afforded  careful  returns  of  the  land  remitted  to  bog  and 
waste  in  previous  years,  there  is  no  doubt  that  it  would  have 
been  quite  as  large,  and  we  think  it  would  prove  to  be  lai'gest  in 
the  years  when  the  decline  in  population  was  largest,  viz.,  from 
1846  to  1857.  The  depopulation  of  Ireland  has  not  been  arrested, 
or  even  checked.  And  there  is  no  reason  to  believe  that  the 
pressure  upon  the  means  of  subsistence  diminishes  as  the  popula- 
tion lessens,  since  the  means  of  subsistence  are  all  the  product  of 
land  and  labor  conjointly.  As  the  quantity  of  labor  declines,  the 
quantity  of  labor  available  for  cultivation  of  the  land  declines,  by 
means  of  which  the  quantity  of  cultivated  land,  and  of  consumers, 
also  declines.  The  fertility  of  the  land,  declining  with  the  supply 
of  labor,  points  to  no  relief  from  the  mere  jjolicy  of  depopulation. 

108.  Evolution  of  CultivatcdPlaiitsas  Sources  of  Food. 
— A  large  part  of  the  increase  in  the  fruitfulness  of  the  earth  in 
modern,  as  compared  with  ancient  epochs,  arises  from  the  greater 
number  of  plants  and  animals  made  available  for  human  food, 
and  for  the  manufacture  of  clothing  and  habitations,  in  the  later 
periods.  Nor  does  it  yet  ajjpear  that  the  end  of  this  source  of  in- 
creased production  has  been  reached.  China,  Egypt,  and  the 
table  lands  of  Mexico,  Central  America,  and  Peru,  are  known  to 
have  been  the  three  independent  centres  of  cultivation  from 
whence  many,  or  most,  cultivated  plants  and  flowers  have  origi- 
nated.*    Of  these,  the  wonderful  vegetable  resources  of  China 

*  "  Origin  of  Cultivated  Plants,"  De  Candollc,  p.  19. 


276  ECONOMIC  PIIILOSOPIIT. 

remain  almost  unknown  to  us,  though  our  ambassadors  there 
are  served  with  dinners  in  thirty  courses,  consisting  of  grains  and 
fruits,  many  of  which  have  never  been  brought  to  our  Western 
world. 

In  China,  2,700  years  before  Christ,  the  Emperor  Chen  Ming 
instituted  a  ceremony  at  which,  every  year,  five  species  of  useful 
plants  are  sown — rice,  sweet  potatoes,  wheat,  and  two  kinds  of 
millet.  In  Egypt,  in  the  Pyramid  of  Gizeh,  which  dates  from 
1,500  to  4,200  years  before  the  Christian  Era,  figs  are  cut  in  stone. 
In  Mexico  and  Peru  maize,  tobacco,  potato,  and  the  sweet  potato, 
date  back  probably  2,000  yeai-s.  In  China  the  records,  known  as 
Pent-sao,  written  in  our  Middle  Ages,  state  that  Chang-Kien, 
during  the  reign  of  the  Emperor  Wu-Ti,  in  the  second  century 
before  the  Christian  Era,  returned  from  a  mission  to  the  nations 
of  Western  Asia,  bi'inging  with  him  to  China  the  bean,  the 
cucumber,  the  lucern,  the  saffron,  the  sesame,  the  walnut,  the 
pea,  spinach,  water-melon,  and  other  Western  plants  previously 
unknown  to  the  Chinese.  Wheat  precedes  civilization,  or  his- 
tory, from  Japan  to  the  Canai*y  Islands,  throughout  Asia,  Africa, 
and  Europe,  and  is  shown  to  be  older  than  all  existing  languages, 
by  having  a  different  name  in  each  of  the  very  oldest.  The  com- 
mon notion,  however,  that  a  species  of  modern  wheat  called 
mummy  wheat  is  derived  from  seeds  of  wheat  found  in  the  sar- 
cophagi of  the  mummies  is  denied  by  De  Candolle.  Barley  was 
neai'ly  as  widely  known  as  wheat.  Cotton  originated  in  India, 
though  a  species  is  also  believed  to  have  been  native  in  Mexico. 
It  was  brought  by  Alexander  from  India,  but  its  cultivation  was  so 
neglected  by  the  ancients  as  to  be  again  brought  into  Europe  by 
the  Arabs,  and  in  the  tenth  century  it  passed  into  China,  and  its 
extensive  cultivation  in  China  and  India  preceded  its  use  or  cul- 
tivation in  Western  Asia  or  Eui'ope. 

The  peanut  is  believed  to  have  been  native  of  Bi-azil,  and  to 
have  been  carried  thence,  in  the  fifteenth  century,  into  India. 
Neither  the  ancients  nor  the  Crusaders  knew  of  coffee  or  tea, 
though  coffee  was  native  in  Abyssinia  and  Arabia  from  the  eai-li- 
est  periods,  and  tea  was  abundant  in  China  from  2, 700  B.  C.  It 
was  hardly  known  in  Europe  two  centuries  ago.  Its  utility  in 
superseding  wine  and  strong  drmks  is  strongly  indicated  by  the 
fact  that,  though  the  vine  and  grains  flourish  in  China,  wines  and 


'  Origin  of  Cultivated  Plants,"  p.  362. 


GROWTH  OF  FOOD  SUPPLY.  277 

liquoi's  are  almost  unknown  and  unused.  Flax  was  cultivated 
by  the  ancient  Egyptians  and  Hebrews,  and  hence  flax  and  its 
product  (linen)  are  frequently  mentioned  in  the  Old  Testament 
and  on  the  monuments.  The  sumac  is  native  throughout  the 
Mediterranean  and  Caspian  region,  whence  it  has  been  imported 
into  Amei'ica.  Indigo  was  native,  px'obably,  in  India,  but  seems 
to  grow  wild  in  many  parts  of  Asia.  It  dates  back,  in  Egypt, 
only  to  the  Middle  Ages,  and  is  believed  not  to  have  been  iden- 
tical with  the  plant  from  which  the  Mexicans  extracted  their  blue 
dyes.  Throughout  North  America,  to  the  Isthmus,  the  Indians 
smoked  tobacco  in  pipes,  and  in  most  parts  of  South  America 
they  chewed  and  took  snuff  before  the  arrival  of  the  Europeans 
made  this  plant  known  to  the  latter.  Hemp,  known  in  China 
and  India  500  years  before  Christ,  was  not  known  to  the  ancient 
Egyptians  or  Hebrews,  and  yet  was  known  to  the  early  Scyth- 
ians, v^ho  brought  it  w^ith  them  from  Asia  aiid  Russia  about  1,500 
B.  C,  and  before  the  Trojan  War.  It  is  wild  in  Siberia,  Southern 
and  Central  Russia,  and  the  Caucasus.  Sugar  w-as  unknown  to 
the  Hebrews  of  the  Bible  period,  as  well  as  to  the  Egyptians, 
Greeks,  and  Romans,  as  a  commercial  product,  though  it  was 
first  cultivated  in  Southern  Asia,  and  was  brought  by  the  Arabs 
into  Egypt,  Sicily,  and  the  South  of  Spain.  The  hop  extends 
from  Germany  to  the  Caspian,  and  Eastern  Siberia,  as  a  wild 
and  native  plant,  but  the  Greeks  and  Latins  were  almost  entirely 
ignorant  of  the  use  of  beer  as  a  beverage,  and  it  appeared  in  En- 
gland only  in  the  reign  of  Heni^y  VIII.  The  orange  originated 
in  China  and  Cochin,  with  a  probable  extension  by  seed  into 
India,  but  was  only  brought  into  Europe,  by  the  Portuguese,  in 
the  fifteenth  century.  Citrons,  lemons,  shaddocks,  and  manda- 
rins, have  the  same  origin.  The  vine  grows  wild  in  all  the  coun- 
tries contiguous  to  the  Mediterranean,  Black,  and  Caspian  seas, 
whence  it  passed  into  China  about  122  B.  C.  The  strawberry  was 
not  known  as  a  cultivated  plant  to  the  Greeks,  Romans,  Egyp- 
tians, or  Hebrews,  though  as  a  casual  wild  berry  its  habitat  prob- 
ably covei'ed  most  of  Europe  and  America.  Cherries  and  plums 
were  known  to  the  ancients,  and  cherry-stones  were  found  in  the 
lake  dwellings  of  Bourget.  Ai^ricots  have  their  home  in  Western 
Asia,  and  China,  where  they  were  known  two  or  three  thousand 
years  before  the  Christian  Era.  The  almond  grows  from  Persia 
to  the  Mediterranean,  and  was  known  to  the  Hebrews,  Greeks, 
and  Romans,  the  latter  calling  it  the  Greek  nut.  The  peach  was 
cultivated  in  China  from  the  remotest  antiquity,  and  appeared  in 


278  ECONOMIC  PniLOSOPnT. 

Eui'ope  at  about  the  date  of  the  Christian  Era.  The  pear  is  men- 
tioned by  Homer,  and  has  its  habitat  throughout  Europe,  and 
eastward  to  Persia.  Tlie  lake  dwellers  of  Switzerland  and  Italy 
gathered  wild  apples  abundantly,  and  with  them  some  pears.  The 
pre-historic  area  of  the  wild  ap^Dle  extends  from  the  Caspian  Sea 
nearly  to  Europe,  and  forests  of  sweet  wild  apples  have  been 
seen  in  the  region  between  Trebizond  and  Ghilan.  It  is  not 
known  in  Siberia.  The  quince  has  the  same  habitat  as  the  apple. 
The  Greeks  regarded  the  quince  as  a  sacred  fruit,  which  would 
preserve  from  evil  spirits,  and  Solon  prescribed  its  use  in  connec- 
tion with  the  marriage  rite.  The  pomegranate  has  its  home  in 
Persia,  and  was  familiar  to  all  the  cultured  I'aces.  Wliile  wheat, 
barley,  rice  and  millet  are  very  ancient  grains,  rye  and  oats  are 
very  modern,  originating  among  the  Thracians,  Germans,  and 
Russians.  Pumpkins  originated  in  Mexico,  Brazil,  and  South 
America.  Melons  originated  in  Central  Africa,  and  on  the  Nile 
and  Niger  ;  water-melons  were  known  to  tlie  ancient  Egyptians. 
They  were  also  independently  cultivated  in  Asia.  Cucumbers 
have  been  cultivated  in  India  for  three  thousand  years,  in  China 
from  the  second  century  before  Christ,  and  by  the  ancient 
Greeks.  The  olive  grows  from  the  Punjaub  in  India  to  the  Ma- 
deira Islands,  and  was  one  of  the  fruits  best  known  to  the 
Hebrews.  It  has,  however,  no  Sanscrit  name,  and  hence  has 
reached  India  at  a  recent  date  from  Western  Asia.  Peppers,  cap- 
sicum, tomatoes,  and  cactus  are  all  American.  The  fig  is  native 
in  the  Mediten-anean  basin,  from  Syria  to  the  Canaries,  and  was, 
of  course,  familiar  to  the  ancients,  and  only  recently  known  in 
Eastern  Asia.  The  date-palm  exists,  from  pre-historic  times, 
from  Senegal  to  the  Indus. 

The  banana  is  native  in  India  and  Southern  Asia,  though  Hum- 
boldt contended  that  it  was  native  also  in  America.  Pliny  men- 
tions it,  but  the  ancient  Egyptians  and  Hebrews  did  not  know  of 
it.  Certain  varieties  of  peas,  beans,  soy,  lentils,  carrot,  ground- 
nut, or  similar  leguminous  plants,  are  pre-historical  in  the  Medi- 
terranean basin,  where  the  garden  pea  was  cultivated  by  the  lake 
dwellei's  of  Switzerland,  while  other  varieties  extend  over  Africa, 
and  still  others  originate  in  China  and  Japan.  The  garden  pea 
was  not,  however,  known  in  ancient  Egypt  or  India,  though  the 
chick  pea  was  common  to  ancient  Egypt,  Greece,  and  India. 
Buckwheat  is  native  in  tlie  Himalayas,  and  came  into  Europe  in  the 
Middle  Ages  through  Tartary  and  Russia,  and  is  first  mentioned  iu 
Germany  in  1436.     Chestnuts,  of  the  Italian  varieties,  form  occa- 


FOODS  MULTIPLY.  279 

sional  natural  forests  from  the  Caspian  Sea  to  Portugal,  while  the 
American  and  Japanese  varieties  have  each  its  independent  liabi- 
tat.  Millet,  rice,  and  sorghum  are  of  Chinese  and  Indian  origin ,  and 
were  not  known  to  the  Hebrews,  ancient  Egyptians,  and  Ron»ans, 
though  millet  reached  the  cave-dwellers  of  Switzerland  probably 
by  way  of  Thrace  and  the  Caspian,  while  rice  became  known  to 
the  Greeks  through  Alexander's  expedition,  and  began  to  be  cul- 
tivated in  Egypt  about  100  B.  C.  Maize,  Indian  corn,  though 
called  "  Turkish  wheat"  in  most  of  the  European  languages,  is 
purely  American,  as  is  also  the  bird  which  is  graced  with  a 
Turkish  name  throughout  America  and  Europe.  Maize  was  a 
leading  staple  of  native  agriculture,  at  the  period  of  the  discovery, 
from  the  Valley  of  the  La  Plata  to  Canada.  The  poppy  is  native 
around  the  Mediterranean,  and  was  familiar  as  a  medicament  to 
the  early  Greeks  and  Egyptians,  though  the  latter  did  not  culti- 
vate it,  nor  is  it  mentioned  in  the  Bible.  Recently  its  cultivation 
has  become  extensive  in  India  and  China.  The  castor-oil  bean  is 
found  in  the  Egyptian  tombs,  was  of  course  known  from  an 
early  period,  and  grows  wild  in  Tropical  Africa.  The  cocoanut- 
palm,  now  extensively  growing  in  Africa,  was  brought  there 
from  Western  South  America,  and  the  islands  of  the  Pacific,  and 
the  Indian  Archipelago.  The  beet  root  was  used  as  a  vegetable, 
from  the  Canary  Islands  to  the  Caspian,  three  or  four  centuries 
before  the  Christian  Era,  but  is  not  mentioned  by  the  Hebrews, 
and  was  of  slight  importance,  until  made  a  means  of  obtaining 
sugar  in  France,  in  1815-35.  Clover,  red,  white,  and  yellow, 
grows  wild  from  Spain  to  the  Caspian,  and  was  known  to  the 
ancients,  but  was  not  cultivated  until  the  fifteenth  and  sixteenth 
centuries,  when  the  Protestants  expelled  from  Spain  carried  it 
into  Germany. 

Out  of  247  species  classified  as  to  their  origin  by  Candolle,  the 
old  world  has  furnished  199,  America  45,  and  3  are  still  uncertain. 
The  United  States,  notwithstanding  its  fertility,  only  originates 
the  Jerusalem  artichoke  and  the  gourds.  Forty-four  species  only 
are  very  ancient  or  prehistoric,  but  among  these  many,  like  tea, 
reached  Europe  latest.  De  Candolle  says,  "  The  original  distribu- 
tion of  cultivated  species  was  very  unequal.  It  had  no  proportion 
with  the  needs  of  man  or  the  extent  of  territory." 

The  system  of  cultivating  grasses  and  roots,  as  the  food  of  ani- 
mals who  in  turn  become  the  food  of  men,  and  the  consequent 
evolution  in  the  quantity  of  flesh  and  muscular  power  obtained 
in  cultivated  animals,  by  means  of  the  increased  supplies  of  food 


280  ECONOMIC  PIIlLOSOniY. 

produced  for  them  by  liuman  labor,  is  another  chief  cause  of  in- 
crease in  the  earth's  capacity  to  maintain  a  dense  population. 
Our  fat  stock  shows  consist  of  oxen  developed  by  liuman  labor 
and  art  to  three  or  four  fold  the  size  which  they  attain  in  a  wild 
state,  of  sheep  whose  fleece  has  risen  from  three  pounds  to  an 
average  of  twelve  pounds,  and  occasional  iiistances  of  thirty -five 
and  even  fifty-three  pounds.  Although  the  chief  of  the  cultivated 
species  of  plants  and  animals  were  old  at  some  one  locality  in  the 
world  3,000  years  ago,  to  all  other  localities  they  were  new  until 
within  one  or  two  centuries.  Thus  maize,  the  sweet  potato,  buck- 
wheat, rye,  bananas,  were  all  old  in  their  several  habitats,  but 
the  world  of  Socrates,  Seneca,  and  Plato  knew  nothing  of  them. 


CHAPTER    VIII. 

LABOR. 

109.  Definition  of  Labor. — No  word  would  seem  to  be 
more  definite  or  easily  defined  than  labor,  and  yet  few  so  suc- 
cessfully elude  definition.  If  we  say  it  is  "  human  effort  put 
forth  to  obtain  means  of  subsistence,  "  we  are  met  by  the  objec- 
tion that  this  definition  includes  something-  more  than  labor,  viz., 
the  exchange,  which  the  laborer,  makes  of  the  compensation  re- 
ceived for  his  labor,  for  the  means  of  subsistence.  Most  kinds  of 
labor  are  not  direct  effort  put  forth  to  obtain  means  of  subsis- 
tence, i.  e.,  the  labor  per  se  without  exchange  does  not  obtain  any 
means  of  subsistence.  One  who  feeds  or  drives  an  engine  for  a 
day  labors  directly  only  to  keep  the  engine  moving  by  means 
of  the  effect  of  the  steam  supplied  by  his  fuel  on  the  piston  rod. 
The  act  has  no  direct  relation  to  the  means  of  subsistence  of  the 
laborer.  On  the  other  hand,  two  men  may  be  fishing  side  by 
side.  The  sportsman  in  catching  his  fish  intends  to  have  it 
cooked  for  his  own  repast,  and  therefore,  as  far  as  food  are  means 
of  subsistence,  he  is  putting  forth  effort  directly  to  obtain  means 
of  subsistence.  Yet  this  is  not  to  him  labor,  but  strictly  and 
merely  sport  or  play — as  purely  as  if  he  were  j)laying  chess  or 
base-ball.  By  his  side,  however,  in  a  fishing  smack,  is  a  man 
who  makes  a  business  of  fishing,  and  who  does  not  intend  to  con- 
sume the  fish  he  catches,  but  to  sell  them.  To  him  the  same 
process  of  fishing  is  labor.  Therefore,  effort  put  forth  to  obtain 
means  of  subsistence  is  not  always  labor,  and  labor  is  not  always 
effort  put  forth  to  obtain  means  of  subsistence. 

Yet,  to  make  effort  labor,  it  is  not  necessary  that  the  woi-kcr 
shall  sell  his  services,  or  their  product.  A  farmer  laboi'S  when 
he  toils  to  fence  his  farm,  which  he  expects  never  to  sell.  It 
must  have  the  motive  of  necessity,  and  is  usually  combined  Avith 
the  idea  of  physical  exertion.  But  a  burglar  who  breaks  into 
one's  house  at  night,  to  carry  away  gold  or  plate,  does  not  labor, 
though  he  combines  great  physical  exertion  with  the  hope  of 
g-ain;  for  crime,  however  nmch  toil  and  gain  it  may  involve,  is 


282  ECONOMIC  PlIILOSOrilT. 

not  labor.     Bui  when  the  burglar  is  sent  to  prison,  though  he 

works  without  hojie  of  gaining  through  his  work,  that  is  labor.* 

If  we  say  it  is  etfort  put  forth  in  production,  or  in  producing 


*  C.  S.  Deims,  "Groundwork  of  Economics,"  §  5.3,  says:  "The  term  laborer 
work  {kibor,  ergasia,  travail,  arbeit)  is  not  easy  to  define.  But  this  is  no  excuse  for 
those  who  leave  it  altogether  uudelined,  nor  for  Mill,  who  leaves  it  obscure.  He  says 
(Pol.  Econ.,  Bk.  i.,  ch.  i.,  §  1)  that  it  is  'either  bodily  or  mental,  muscular  or  ner- 
vous, and  that  it  is  necessary  to  include  in  the  idea,  not  solely  the  exertion  itself,  but 
all  feelings  of  a  disagreeable  kind,  all  bodily  inconvenience,  or  mental  annoyance  con- 
nected with  the  employment  of  one's  thought  or  muscles,  or  botu,  in  a  particular  occu- 
pation.' This  leaves  us  in  the  dark  as  to  whether  that  plowman  labors  whose  plowing 
is  a  pleasure  to  him,  and  whether  playing  is  laboring,  not  to  speak  of  this  description 
of  labor  being  applicable  to  the  action  of  those  who  weep  around  a  tomb,  a  stronger 
use  of  the  term.  Adam  Smith  is  vague.  McCulloch  defines  labor  '  as  any  sort  of  ac- 
tion or  operation,  v.hether  performed  by  man,  the  lower  animals,  machinery,  or  natural 
agents,  that  tends  to  bring  about  any  desirable  result.'  But  this  is  to  distort  ordinary 
language,  and  to  turn  men  into  machines,  without  any  gain,  that  I  can  see,  for  the  pur- 
pose of  economics.  To  say  labor,  in  'political  economy,'  is  only  that  exertion  that 
demands  something  for  itself  in  exchange  (Perry),  in  its  obvious  sense,  excludes  the  ex- 
ertions of  slaves  for  their  master,  and  of  self-sufficing  peasants  for  themselves  and  their 
families.  To  define  it  the  exercise  of  any  human  faculty  for  a  definite  object  (Ilearn) 
would  turn  all  play  into  work.  To  limit  it  to  human  activity  directed  towards  the  acqui- 
sition or  preservation  of  property,  is  nearer  the  mark,  but  too  narrow  ;  for  all  unpaid 
exertions,  literary,  artistic,  political,  religious,  would  be  evidently  excluded,  and  too 
obscure,  for  a  judge  who  performed  his  office  for  the  sake  of  his  pay  would  or  would 
not  be  laboring,  according  as  we  understand  the  word  "  directed  "  to  apply  to  the  end 
of  the  operator  {finis  operands)  or  to  the  end  of  the  operation  (firiis  opei'is). 

"  It  is  best,  I  think,  to  look  only  to  the  end  of  the  operation,  and  to  define  labor  as  hu- 
man action,  of  which  the  proper  end,  or  natural  jnirpose,  is  some  good  external  to  itself. 
Thus,  whenever  the  action  in  itself  gives  a  reward  to  the  agent,  itis  not  labor.  So  none 
of  the  natural  functions  of  the  body,  as  eating  ;  so  no  recreation,  though  it  entail  the 
greatest  exertion,  as  hunting  ;  or  though  to  the  given  individual  it  may  be  most  un 
pleasant,  as  a  tiresome  banquet.  Conversely,  whenever  the  reward  is  not  in  the  action 
itself,  this  is  labor,  as  the  tilling  of  land,  whether  by  the  peasant  with  joy,  or  the  hire- 
ling with  sorrow  ;  and  the  action  of  the  night  porter,  though  it  be  mainly  to  sit  motion- 
less ;  and  of  the  boatman,  though  the  same  physical  act  of  rowing  when  done  by  the 
holiday  maker  at  his  side  is  not  labor  ;  for  the  end  of  rowing,  when  done  by  a  holiday 
maker,  is  different  when  done  by  a  hired  boatuian.    .    .    , 

"  The  best  solution  of  the  problem,  how  to  classify  labor,  seems  to  me  to  begin  by 
discarding  the  terms,  productive  and  unproductive,  as  misleading  and  unnecessary,  and 
then  not  to  divide  labor  according  to  its  results,  for  these  are  too  vague  and  disputable, 
but,  rather,  according  to  the  proper  object,  purpose,  or  end  of  the  particular  operation 
(finis  opens).  According  to  this  principle  of  division,  four  kinds  of  labor  can  be  dis- 
tinguished, industrial,  public,  ministerial,  and  predatory,  having  as  their  end,  the  first, 
production  ;  the  second,  some  function  of  government ;  the  third,  some  personal  ser- 
vice (ministration)  ;  the  fourth,  the  unlawful  acquisition  of  others'  property.  Under 
industrial  labor  would  come  that  bestowed  on  agriculture,  manufaciures,  and  com- 
merce ;  under  public  labor,  that  of  the  civil  and  military  service  in  the  widest  sense, 
from  the  highest  to  the  lowest ;  under  ministerial  labor,  that  of  the  clergy  and  teachers, 
of  literary  and  scientific  men,  of  the  legal  and  medical  profession,  of  musicians,  actors, 
and  the  like  ;  under  predatory  labor,  that  of  thieves,  smugglers,  pirates,  false  coiners, 
common  usurers,  and  the  like," 


LABOR  ELUDES  DEFINITION.  283 

commodities,  this  is  no  definition,  unless  we  have  first  defined 
commodities  and  production.  Even  then  it  would  be  incorrect, 
as  labor  may  be  employed  to  destroy  as  well  as  to  produce.  When 
the  Turks  captured  Constantinople,  they  proceeded  to  virtually 
destroy  the  Church  of  St.  Sophia,  as  a  temple  of  Christian  art, 
adorned  with  statues,  images,  and  paintings,  by  covering  them 
all  with  a  plain  white  wall,  underneath  which,  in  the  Mosque  of 
Omar,  they  are  supposed  still  to  remain.  The  toil  of  those  who 
had  created  these  statues  and  images  would  hardly  be  called  labor 
by  most  pei'sons,  because  it  was  art,  and  it  has  not  been  usual  to 
call  fine  art  labor,  even  where  it  is  constructive  of  commodities  of 
great  value.  But  the  toil  of  those  who  covered  up  these  statues 
was  certainly  labor,  and  would  have  been  equally  so  if  they  had 
been  employed  to  break  them  up  into  paving-stones.  Its  effect 
was  destructive,  as  to  the  objects  of  art,  though,  in  the  belief  of 
the  Turks,  it  was  constructive  of  a  higher  form  of  temple  for  re- 
ligious worship. 

If  a  man  carries  mortar  from  the  street  to  the  roof  of  a  build- 
ing in  a  hod,  that  is  certainly  labor,  if  he  is  free  and  is  working 
for  wages.  If  he  is  a  slave,  being  himself  capital,  it  would  seem 
that  his  work  must  also  be  capital,  since  it  is  only  for  his  work, 
as  the  end,  that  he  is  himself  owned,  as  the  imj)lement.  If  he 
brings  a  horse,  rope  and  pulley,  and  lifts  the  mortar  by  horse 
power,  charging  for  the  hire  of  horse,  rope  and  pulley,  sitting 
still  himself,  is  he  now  chai'ging  for  his  own  labor,  or  for  the  use 
of  capital  ?  But  if  his  capital  can  labor,  dispensing  with  his  own 
work,  will  the  charge  he  gets  be  interest  on  capital,  wages  of 
labor,  profits  of  enterprise,  advantage  of  monopoly,  or  premium 
on  idleness  ?  And  if  capital  invested  in  machinery  can  be  said 
to  perform  labor,  as  when  it  grinds  flour,  or  draws  trains  of  cars, 
why  does  it  not  equally  labor  when  it  takes  other  equally  elficient 
forms,  such  as  .sailing  ships,  nets  for  catching  fish,  implements  of 
all  kinds,  including  money  ?  And  if  implements  labor,  then 
I^d  itself,  being  the  chief  of  implements,  is  the  chief  of  laborers, 
and  to  speak  of  land  and  labor,  is  to  add  a  part  to  the  whole.  If 
labor  is  capital  when  it  works  from  fear  of  the  lash,  how  is  its 
nature  changed  when  it  works  from  fear  of  starvation  ?  And  if 
working  from  fear  converts  labor  into  capital,  why  is  not  a  man 
who  works,  from  fear  that  he  cannot  pay  a  note,  capital  ? 

It  was  not  wholly  from  oversight  that  Adam  Smith  avoided 
economic  definitions.  Exceedingly  comprehensive  terms,  like 
matter,  force,  time,  and  space,  that  can  be  easily  apprehended 


284  ECONOMIC  PHILOSOPHY. 

without  definitions,  become  mysterious  in  proportion  to  their  sim- 
plicity when  we  attempt  to  define  them.  Metaphysicians  prove 
that  matter  is  only  force,  and  that  force  is  only  matter,  but  when 
no  metaphysician  is  around,  a  child  can  tell  force  from  matter 
unerringly  and  without  difficulty.  Yet  the  word  labor  has  a 
meaning,  and  possibly  the  difficulty  of  defining  it  correctly  arises 
from  the  sentimental  objection  we  have  to  remember  that  labor 
has  sprung  from  slavery,  and  in  trying  to  designate  the  child  we 
have  omitted  the  surname  which  connects  it  with  its  oria-in, 
which  is  servile.  Labor  is  servile  effort — i.  e.,  effort  that  would 
not  be  put  fortii  for  the  intrinsic  pleasure  of  the  effort,  but  solely 
because  such  circumstances  exist,  that  one  man  feels  constrained 
to  serve  another.  This  is  why  the  expenditure  of  effort  in  art, 
science,  sport,  statesmanship,  crime,  enterprise,  eloquence,  or  re- 
ligion, is  not  labor.  But  work  by  the  convict,  or  slave,  though 
performed  without  hope  of  the  reward,  through  mere  consti-aint, 
is  labor.  We  are  not  fashioning  these  instances  to  fit  an  eco- 
nomic purpose,  but  are  simply  evolving  the  true  meaning  of  the 
word  labor  from  its  environment,  since  it  may  contain  an  im- 
portant economic  result. 

110.  Work  Differs  from  Labor.— When  effort  is  divested 
of  the  servile,  constrained,  or  necessitous  idea,  and  is  performed 
to  satisfy  an  innate  passion,  the  term  used,  both  in  common 
speech  and  throughout  literature,  changes  from  ' '  labor "  to 
"  work."  *  Men  say  of  such  an  one,  "  he  works  for  the  love  of 
it,"  but  it  becomes  awkward  to  say  he  "  labors  from  the  desire  to 
labor."  The  terms,  "love's  labor  lost,"  and  "  labor  of  love,"  are 
now  used  to  express  something  done  under  the  compulsion  of  a 
moral  or  passional  coercion,  which  would  otherwise  be  undone. 
An  author's  writings  are  his  "  works,"  so  far  as  they  are  written 
from  artistic  motives  ;  but  when,  as  in  the  case  of  Sir  Walter 
Scott,  an  author  is  involved  in  bankruptcy  to  a  large  amount, 
and  sits  down  deliberately  to  write  a  "Life  of  Napoleon,"  to  pay 


*  Cyrus  Elder,  in  "  Man  and  Labor,"  p.  86,  says  :  "  Man,  like  other  animals,  and  in  a 
higher  degree  than  the  other  animals,  because  more  richly  endowed  with  innate  im- 
pulses to  vaiioiis  labors  than  all  of  them,  is  naturally  a  worker ;  he  is  not  naturally  a 
tramp  or  a  loafer." 

Mr.  Elder  here  shifts  the  term  from  labor  to  work,  as  he  was  obliged  to  do  by  a  sense 
of  literary  exactness,  which  forbids  that  a  man  or  animal  working  from  innate  impulse 
should  be  said  to  labDr.  Even  an  engine  works  when  it  runs  smoothly.  It  labors  when 
it  is  obstructed,  or  is  unequal  to  the  task.  A  ship  in  a  heavy  sea  labors.  The  lightest 
adaptation  of  means  to  ends,  even  a  political  plan,  "  works  liice  a  charm."  Think  of 
one  who  should  say  of  the  Homestead  Act,  "  It  labors  like  a  charm." 


LABOR  SERVILE.  285 

off  his  creditors,  he  is  said,  also,  to  "labor"  on  this  poi'tion  of 
his  works. 

The  economic  reason  why  labor  shall  not,  and  can  not  in  most 
cases,  consist  of  services  which  it  is  a  pleasure  to  perform,  is,  first, 
that  many  of  the  tasks  required  to  be  performed  for  the  support 
of  man  are  not  of  a  kind  intrinsically  pleasurable  to  any  body; 
secondly,  those  who  perform  the  labor  can  not  by  any  possibility 
get  the  pleasure  which  their  labor  is  designed  to  subserve  (the 
miner  of  coal,  for  instance,  can  not  make  digging  coal  under 
ground  delightful,  because  somewhere  else  a  cheerful  parlor  will 
be  warmed  and  lighted  by  the  coal) ;  and,  thirdly,  if  all  labor  were 
pleasureable  in  itself,  labor-capacity  would  expend  itself  wastefully 
upon  the  first  laboi*  that  offers,  whereas  labor  power  needs  to  be 
carefully  economised  and  saved,  for  those  forms  of  labor  only  for 
which  there  is  a  social  demand  or  need,  and  this  social  need  can 
only  be  determined  by  the  willingness  of  those  who  are  in  need 
to  make  a  return  effort,  or  to  pay  for  the  effort  expended.  Hence 
the  economic  use  of  labor-force  i-equii'es  that  no  labor  shall  be  per- 
formed except  as  it  is  paid  for,  siuce  it  is  the  fact  that  pay  can  be 
got  for  it  that  is  the  index  that  points  out  the  ulterior  fact  that  it 
is  needed .  In  this  way,  as  we  have  seen  in  our  chapter  on  '  'Yalue," 
demand  steers  labor,  and  inertia,  or  the  indisposition  to  labor, 
except  as  we  are  paid  for  it,  economises  labor-force,  so  as  to  ensure 
the  expenditure  of  it  where  needed,  and  nowhere  else.  It  is  a 
delight  to  Gladstone  to  chop  down  trees,  but  if  it  were  a  delight 
to  all  men  to  do  so  there  would  be  no  trees  left.  Chopping  down 
trees  must  be  made  irksome  to  the  mass  of  mankind,  in  order  to 
limit  the  expenditure  of  human  force  in  this  way  tocases  wherein 
a  tree  needs  to  be  choi)ped  down,  and  to  ensure,  then,  an  adequate 
reward  in  wages  to  those  who  perform  the  task.  The  ultimate 
economic  necessity  that  labor  should  be  irksome  consists  in  the 
necessity  of  economizing  human  effort.  For  we  all  see  that  with 
nearly  the  whole  population  of  the  globe  working  activelj^  during 
all  their  waking  hours,  and  with  all  enjoyable  commodities  tend- 
ing ipvesistibly  toward  their  joroper  consumers,  and  all  ultimately 
consumed,  and  the  consumption  of  each  limited  by  nature  so  that 
he  can  not  if  he  would  consume  more  than  his  share,  and  with 
the  like  economic  necessity  that  all  the  surplus  of  enjoyable 
wealth  that  any  one  man  gets,  over  what  he  can  consume,  shall 
be  invested  in  some  form  of  reproductive  wealth,  and  that  the  sole 
function  of  this  reproductive  wealth  shall  always  be  to  promote 
the  production  of  consumable  wealtli,  and  to  forward  it  to  its 


286  EC0])10MIC  PHILOSOPHY. 

consumers,  i.  e.,  with  every  economic  law  working  toward 
equality  iu  the  distribution  of  consumable  commodities,  and  with 
all  these  consumed,  and  with  all  human  effort  economized  by  be- 
ing expended  only  where  it  is  paid  for,  there  is  still  none  too  large 
a  supply  of  commodities  and  services  for  the  world.  Obviously, 
therefore,  if  there  were  less  economy  of  effort,  as  there  certainly 
Avould  be  if  all  effort  was  pleasurable,  there  would  be  a  less 
aggregate  of  comfort. 

In  the  psychological  nature  of  man,  it  is  further  necessary  that 
economic  effort  or  labor  shall  be  painful  in  order  that  the  alter- 
native to  those  efforts  which  result  in  dispersing  and  expenditure 
shall  be  pleasui*able,  and  it  is  necessary  that  the  dispersion  of 
wealth  shall  be  rewarded  by  pleasures  which  do  not  attend  its 
accumulation,  or  mankind  would  not,  after  toiling  to  accumulate, 
also  toil  to  disperse  it,  as  we  constantly  see  them  doing  in  enlarg- 
ing their  scale  of  expenditure,  multii^lying  their  wants  with  every 
addition  to  their  income,  buying  parks,  country  seats,  yachts, 
pictures,  traveling  in  foreign  lands,  sojourning  at  watering 
places,  etc.  Those,  therefore,  are  in  error  who  assume  that  all 
labor  should  be  pleasurable  and  passionate,  as  Plato,  Fourier, 
and  the  socialists  generally  bave  done,  and  as  some  who  repudiate 
socialism  as  a  creed  still  fall  into  from  what  they  deem  to  be 
proper  moral  sentiment.*  Only  that  form  of  effort  to  which  man 
has  some  aversion  is  labor,  and  only  his  aversion  to  it  causes  him 
to  economise  his  effort  by  confining  it  to  remunerative  effort,  and 
only  by  confining  it  to  remunerative  effort  can  he  be  sure  that  he 
is  working  in  a  line  for  which  there  is  social  demand,  and  only 
by  woi'king  in  the  line  of  social  demand  can  he  be  really  useful. 
Hence  aversion  to  labor  has  both  a  basis  in  human  nature,  and 
an  outcome  of  social  utility. 

111.  All  Labor  can  Not  be  Agreeable. — Having  defined 
labor  as  servile,  constrained,  or  necessitous  effort,  it  next  becomes 
necessary  to  recognize  the  fact  that  the  necessity  does  not  proceed 


*  Cynis  Elder,  in  "  Man  and  Labor,"  p.  i!8,  says  : 

"  It  can  not  be  that  man  has  a  natural  aversion  to  labor,  nor  can  it  be  true  of  that 
peculiar  kind  of  man  called  by  the  political  economists  a  working-man.  Somebody  or 
something  is  to  blame  if  labor  lias  lost  its  natural  delight.  If  this  be  true,  we  may  ask 
in  the  language  of  the  great  mother, 

"  '  Who  his  drugged  my  boy's  cup  1 
Who  has  mixed  my  boy"s  bread  ? 
Who  with  sadness  and  madness 
Has  turned  the  man-child's  hea  . f  " 


LABOR  IS  IRKSOME.  287 

from  the  mere  coercion  of  the  strong-  over  the  weak,  but  from  the 
inherent  economy  of  nature  which  intends,  and  plans,  that  man- 
kind shall  live  only  by  rendering  mutual  services  to  each  other, 
including  many  of  the  most  painful,  disgusting,  unhealthy, 
shocking,  and  disagreeable  kind.  In  compact  city  life,  dead  offal 
and  excrement  mixst  be  removed,  and  the  more  putrid,  offensive, 
and  even  unhealthy  it  is,  the  greater  tlie  social  necessity  of 
removing  it.  Loathsome,  contagious,  and  malignant  diseases 
such  as  yellow  fever  must  be  treated  at  the  risk  of  one's  life,  and, 
the  more  fatal  or  loathsome  they  are,  the  greater  the  social  neces- 
sity for  their  treatment.  The  dead  must  be  buried,  the  sick, 
insane,  and  paupers  must  be  cared  for,  criminals  must  be  arrested 
and  punished,  even  if  need  be  to  the  death  penalty,  bad  passions 
and  base  propensities  must  be  met  and  reformed,  or  restrained  by 
the  coercive  force  of  law.  The  differences  that  arise  in  society 
from  conflicts  of  interest  must  be  adjusted  in  the  covirts,  and  occa- 
sionally wars  must  be  resorted  to  for  the  settlement  of  disputed 
questions  between  great  masses  of  peo^ile  or  different  races. 

To  perform  all  these  functions  well,  there  must  beau  organiza- 
tion of  industry,  a  difi'erentiation  of  function,  and  a  subdivision 
of  labor  whereby  each  individual  shall  become  the  atom  or  mole- 
cule, the  grain  of  fibrine  or  the  particle  of  gluten,  as  it  were,  in  the 
more  comprehensive  individual,  called  society.  Division  of  labor 
implies  the  continuing,  by  each  individual,  in  one  mode  of  action, 
until  the  purpose  of  society  is  accomplished.  The  same  atom  of 
iron  can  not  be,  at  once,  a  cog  in  the  driving-wheel  and  a  rivet  in 
the  boiler.  If  transferred  fi'om  one  of  these  jDlaces  to  the  other, 
the  wheel  breaks  or  the  boiler  bursts.  So  in  the  organization  of 
man  in  industry,  the  same  person  caii  not,  at  the  same  time,  act  as 
shoe-maker,  school-teacher,  farmer,  and  lawyer.  To  the  extent 
that  he  attempts  to  do  so,  he  disorganizes  the  machine,  and  indus- 
try refuses  to  make  use  of  him.  But  while  the  organization  of 
indu.stry  requires  him  to  do  one  thing,  or  class  of  things  only,  in 
order  to  be  i)roductive  to  society,  the  psychological  constitution 
of  his  mind  requires  that  he  shall  find  much  of  his  pleasure  in  tran- 
sition from  one  thing  to  another.  These  two  demands  can  not 
often  be  met  at  the  same  time,  and  hence  arises  a  division  of  most 
men's  time  into  business  hours  and  hours  of  leisure,  or  working 
hours  and  hours  of  rest,  or,  economically,  tlie  time  Ave  sell  to 
others  for  pay,  and  the  time  we  reserve  to  ourselves  for  pleasure. 

The  sale  of  our  time  to  others,  whereby  they  become  entitled 
to  claim  or  compel  from  us  the  performance  of  acts  which  would 


288  ECONOMIC  PHILOSOPHY. 

be  intrinsically  unwelcome  and  disagi-eeable,  if  we  were  not  paid 
to  perform  tliem,  is  what  is  generally  understood  by  labor.  The 
payment  for  labor-time  generally,  is  usually  called  wages ;  *  the 


*  Adam  Smith  ("  Wealth  of  Nations."  Book  i,  ch.  viii,  p.  29)  assumes  an  "  original 
state  of  things  "  to  have  subsisted  when  the  laborer  got  the  whole  produce  of  his  labor, 
a  state  of  things  which  historically  never  existed.  He  says:  "The  produce  of  labor 
constitutes  the  natural  recompense  or  wages  of  labor.  In  that  original  state  of  things, 
which  precedes  both  the  appropriation  of  land  and  the  accumulation  of  stock,  the  whole 
produce  of  labor  belongs  to  the  laborer.  He  has  neither  landlord  nor  muster  to  share 
with  him." 

So  far  is  this  from  being  true,thc  history  of  labor  opens  either  with  tribal  communism 
in  which  the  produce  of  labor  belongs  to  the  tribe,  or  with  slavery,  in  which  the  laborer 
himself  is  owned,    lie  continues : 

"  But  this  original  state  of  things,  in  which  the  laborer  enjoyed  the  whole  produce  of 
his  own  labor,  could  not  last  beyond  the  first  introduction  of  the  appropriation  of  land 
and  the  accumulation  of  stock. 

"  As  soon  as  land  becomes  private  property,  the  landlord  demands  a  share  of  almost 
all  the  produce  which  the  laborer  can  either  raise  or  collect  from  it."  The  fact  is  that  no 
labor  that  is  appropriative,  as  hunting  and  fishing,  is  done  upon  land  until  the  land  itsel  f 
has  first  been  appropriated.  Then  the  landlord  works  his  land  with  such  help  as  he 
needs,  at  first  owning  his  workers,  until  ownership  is  gradually  softened  into  wages. 

Smith  assumes  that  the  farmer's  profit  then  comes  in  as  a  second  deduction  from  the 
produce  of  labor,  and  the  wages  of  labor  are  what  is  left  of  the  produce  of  labor  after 
paying  the  landlord's  rent  and  the  farmer's  profit.  In  fact,  however,  the  hired  labor  of 
a  country  does  not  first  produce  and  then  submit  to  a  robbery,  after  the  manner  sup- 
posed by  Smith.  It  is  the  man  who  has  something,  not  the  man  who  is  destitute,  that 
marks  out  work  to  be  done,  furnishes  implements,  and  sets  the  idle  man  at  work. 

Roscher  ("Pol.  Ecou."  by  Lawler,Vol.  i,  p.  13V)  does  not  define  labor,  but  in  dividingit 
treats  it  as  synonymous  with  industry.     He  says:    "The  best  division  of  economic 
labor  is  the  following  : 
"(a)    Discoveries  and  inventions. 

"(6)  Occupation  of  the  spontaneous  gifts  of  nature,  as,  for  instance ,  of  wild  plants, 
wild  animals,  and  of  minerals  (appropriation).  Where  this  is  the  only  kind  of  economic 
labor,  man  is  necessarily  dependent  on  nature  in  a  high  degree. 

"(c)  The  production  of  raw  materials;  that  is,  a  direction  given  to  nature  in  orderto 
the  production  of  raw  materials  by  stock-raising,  agriculture,  forest  culture,  etc.,  but 
not  by  mining. 

"(d)  The  transformation  (verarbeitung)  of  raw  material  by  means  of  manufactories, 
factories,  the  trades,  etc. 

"(e)  The  distribution  of  shares  of  goods  among  those  who  are  to  use  them  directly, 
whether  from  people  to  people,  or  from  place  to  place  (wholesale),  or  among  the  indi- 
viduals of  the  same  place  (retail).  To  this  class  also  belong  leasing,  renting,  loan- 
ing, etc. 

"(/)  Services  in  the  more  limited  sense  of  the  term  which  embrace  personal  as  well 
as  incorporeal  goods.  As  for  instance  the  Labors  of  the  doctor,  teacher,  virtuoso,  of 
the  statesman,  judge,  and  of  preachers,  whose  office  it  is  by  way  of  eminence  to  pro- 
duce and  preserve  the  immaterial  wealth  known  as  the  state  and  the  church."  Koscher, 
however,  is  greatly  in  error  in  saying:  "  The  order  followed  in  the  above  classification 
is  that  in  which  the  different  classes  of  labor  are  wont  to  be  historically  developed  ."He 
wholly  omits  the  industry  in  which  all  other  industries  begin,  viz.,  fighting,  and  subdu- 
ing. The  soldier,  medicine-man  or  conjuror,  and  priest,  are  the  first  organizers  of 
industry.    The  first  product  sought  is  security  from  the  enemy.     The  first  source  of 


NAMES  FOR   WAGES.  289 

wage  paid  for  a  specific  act  is  sometimes  called  a  fee.  If 
the  time  and  service  paid  for  is  associated  with  official  rank,  high 
social  service,  skill,  responsibility,  and  dignity,  the  wage  is  called 


life  is  the  lance.  The  first  form  of  surplus  wealth  is  in  amulets  and  charms  to  drive 
away  evil  spirits.     But  he  is  right  in  placing  appropriation  before  production. 

In  savage  life  a  man  owns  whatever  he  can  appropriate.  In  civilized  life  a  thief,  by 
taking  what  he  can  lay  his  hands  on,  simply  declares  his  preference  for  savage  life  over 
civilized. 

J.  R.  McCulloch,  in  his  notes  to  Adam  Smith,  p.  435,  defines  labor  as  "  any  sort  of 
action  or  operation,  whether  performed  by  man,  the  lower  animals,  machinery,  or 
natural  agents,  that  tends  to  bring  about  aoy  desirable  result.  In  so  far,  however,  as 
it  is  done  by  natural  agents  it  has  no  value."  The  last  statement  is  not  altogether  true. 
The  first  man  to  invent  a  wind-mill  got,  as  profits,  the  whole  difference  between  the  cost 
of  grinding  the  corn  by  the  power  previously  in  use,  and  the  cost  of  grinding  it  by  wind 
power.  It  v/as  only  as  wind-mills  were  multiplied  that  his  profits  were  reduced  to  the 
ordinary  rates  of  interest  on  the  capital  invested  in  the  mill.  The  gratuitousness  of 
new  natural  agents  is  a  gratuitous  fallacy.  Ths  first  rates  of  transportation  by  steam 
were  graduated  on  those  by  sail.  So  far  as  steam  was  cheaper  the  engine  owner  made 
a  profit.  The  first  rates  of  transmission  by  telegraph  were  graduated  according  to  what 
the  companies  thought  the  public  would  pay  rather  than  send  by  mail.  Capital  em- 
ployed in  using  natural  agents  for  the  first  time,  does  not  at  once,  and  while  it  has  a 
monopoly,  come  down  for  its  prufiis  to  current  rates  of  interest  on  capital. 

//.  D.  MacLeod  ("  Principles  of  Econ.  Phil.,"  Vol.  i,  p.  273)  says:  ''  If  the  money  be 
paid  for  personal  services,  it  is  called  wages,  or  salary,  or  pay,  or  fees,  according  to  the 
different  species  of  service." 

Mill  (Book  i,  Ch.  i,  §  2)  says  :  "  Labor  is  always  and  solely  employed  in  putting  ob- 
jects in  motion;  it  can  only  create  utilities  and  not  substances,  and  it  is  productive 
when  it  results  in  bringing  into  existence  a  commodity,  and  unproductive  when  it  only 
gives  rise  to  an  emotion  or  pleasure." 

Jevons  ("  Theory  of  Pol.  Econ.,"  p.  183)  says:  "  Labor  is  any  painful  exertion  under- 
gone partly  or  wholly  with  a  view  to  future  good.  The  amount  of  labor  is  a  quantity 
of  two  dimensions— intensity  and  time.  Quoting  Adam  Smith's  definition,  Adam  Smith 
said:  "The  real  price  of  every  thing,  what  everything  really  costs  to  the  man  who  wants 

to  acquire  it,  is  the  toil  and  trouble  of  acquiring  it Labor  was  the  first  price, 

the  original  purchase  money,  that  was  paid  for  all  things."  Mr.  Jevons  says;  "This 
celebrated  passage  might  not  prove  to  be  so  entirely  true  as  it  would  at  first  sight  seem 
to  most  readers  to  be." 

Mi\  6'a/'<;y  ("  Social  Science  Condensed,"  by  McKean,  p.  90)  points  out  that  both 
Smith  and  McCulloch  begin  by  asserting  that  labor  is  the  solo  source  of  all  value,  and 
then  proceed  to  say  that  man  can  fence  in  a  water-fall  and  by  his  monopoly  get  pay 
for  its  gratuitous  services,  thus  making  monopoly  a  source  of  value  as  well  as  labor. 

liicardo  (Works  by  McCulloch,  p.  50)  says:  "  Labor,  like  all  other  things  which  are 
purchased  and  Bold,  and  which  may  be  increased  or  diminished  in  quantity,  has  its 
natural  and  its  market  price.  The  natural  price  of  labor  is  that  price  which  is  neces- 
sary to  enable  the  laborers  one  with  another  to  subsist  and  perpetuate  their  race  with- 
out either  increase  or  diminution. 

"  It  is  when  the  market  price  of  labor  exceeds  its  natural  price  that  the  condition  of 
the  laborer  is  flourishing  and  happy,  that  he  has  it  in  his  power  to  command  a  grcati'r 
proportion  of  the  necessaries  and  enjoyments  of  .life,  and  therefore  rear  a  healtliy  and 
numerous  family.  When,  however,  by  the  encouragement  which  high  wages  give  to 
the  increase  of  population,  the  number  of  laborers  is  increased, wages  again  fall  to  their 
natural  price,  and  indeed  from  a  reaction  sometimes  fall  below  it." 


290  ECONOMIC  PHILOSOPHY. 

salary.  If  tlie  wage  for  service  rendered  is  blended  with  a  profit, 
and  is  made  contingent  upon  a  risk,  it  is  a  commission.  If  the  labor 
is  expended  in  the  production  of  an  article  like  a  patent,  book,  or 
copyright,  of  which  capital  and  enterprise  incur  the  risks  and 
take  the  profits,  subject  to  compensation  to  the  author  or  inventor 
for  his  labor  by  a  percentage  on  the  sales,  its  pay  is  called  a  royal tj^ 
If  the  labor  is  performed  by  the  means  of  capital  of  others  loaned 
to  it  for  the  purpose,  and  is  paid  for  by  an  equal  share  in  the 
profits,  it  is  called  profit-sharing  or  working  on  shares. 

112.  Labor  Less  Broad  than  Production.— Labor  must 
not  be  confounded  with  production  nor  with  industi'y.  Produc- 
tion is  the  work  of  the  employer  of  labor,  since  it  is  his  act  of 
employment  that  produces  the  labor.  What  the  laborer  produces 
is  a  diversion  of  a  certain  quantum  of  wages  to  himself  in  return 
for  a  certain  quantum  of  services  to  his  emi^loyer.  The  contract 
assumes  that  the  employer  is  engaged  in  producing  a  commodity 
or  a  result,  be  it  a  railroad  or  a  pin,  and  that  in  the  course  of  that 
work  of  production  he  pays  a  definite  sum  for  the  service,  i.  e., 
the  obedient  physical  and  mental  action  of  the  laborer,  the  em- 
ployer usually  furnishing  subsistence,  implements,  working  space, 
I'aw  materials,  job,  associates  essential  to  the  division  of  labor, 
machinery,  and  marketing  the  product  at  his  own  risk  as  to 
w^hether  the  commodity  is  in  demand  or  will  pay  any  return 
wliatever. 

Industry  comprehends  the  grand  total  of  employer  and  era- 
ployed,  space,  capital,  contract,  machinery,  competing  supply, 
demand,  wages,  and  every  other  element  bearing  on  the  two 
jiarties,  employer  and  employee. 

113.  The  Wage  Fund  Doctrine. — It  is  hard  to  be  sure  what 
certain  economic  writers  have  meant  by  what  they  call  the  w^ages 
fund.*  A  usual  mode  of  stating  it  is  to  say  that  the  rate  of  wages 

*  Mr.  Cairnes  ("  Some  Leading  Principles,  etc.,"  p.  159)  quotes  Mr.  Mill  as  stating  the 
wages-fund  doctrine  ("  Principles  of  Political  Economy,"  Book  ii,  Ch.  xi)  thus: 
"  Wages,  then,  depend  mainly  upon  the  demand  and  supply  of  labor;  or,  as  it  is  often 
expressed,  on  the  proportion  between  population  and  capital.  By  population  is  here 
meant  the  number  only  of  the  laboring  class,  or  rather  of  those  who  work  for  hire; 
and  by  capital,  only  circulating  capital,  and  not  even  the  whole  of  that,  but  the  part 
which  is  expended  in  the  direct  purchase  of  labor.  To  this,  however,  must  be  added 
all  funds  which, witnout  forming  a  part  of  capital,  are  paid  in  exchange  for  labor,  such 
as  the  wages  of  soldiers,  domestic  servants,  and  all  other  unproductive  laborers.  There 
is,  unfortunately,  no  mode  of  expressing  by  one  familiar  term  the  aggregate  of  what 
may  be  called  the  wages- fund  of  a  country;  and  as  the  wages  of  productive  labor  form 
nearly  the  whole  of  that  fund,  it  is  usual  to  overlook  the  smaller  and  less  important 
part  and  to  say  that  wages  depend  on  population  and  capital.    It  will  be  convenient  to 


AMUSING  DULLNESS.  291 

is  the  quotient  arrived  at  by  dividing  the  whole  sum  applicable 
to  the  purchase  of  labor  among  the  whole  number  who  find  em- 
ployment. Of  course  it  is.  But  so  is  the  price  of  wheat  per  bushel 
the  quotient  arrived  at  by  dividing  the  whole  number  of  dollars, 
applicable  to  the  purchase  of  wheat,  among  the  whole  number  of 
bushels  actually  sold.  Yet  we  do  not  suppose  that  this  truism 
in  arithmetic  is  a  proposition  of  any  kind  in  economics,  or  that  it 
gives  rise  to  a  wheat  fund. 

The  price  of  any  quality  of  dry  goods,  per  yard,  is  the  quotient 
which  would  be  arrived  at  by  dividing  the  whole  sum  of  money 
applicable  to  the  purchase  of  that  quality  of  dry  goods,  among 
the  whole  number  of  yards  purchased.  Does  this  give  rise  to  a 
dry  goods  fund  ?  And  so  of  rent,  railway  freights,  and  so  on 
throughout  the  whole  range  of  prices. 

If  a  boy  were  asked  the  distance  from  where  he  was  standing 
to  the  next  town,  and  should  answer,  "That,  sir,  is  the  quotient 
which  may  be  arrived  at  by  aggregating  all  the  instances  of  like 
distance,  which  exist  in  the  world,  and  then  dividing  it  by  the 
total  number  of  distances  so  aggregated, "  it  would  require  a  per- 
son extremely  deficient  in  humor  to  fail  to  see  that  he  was  joking. 
And  yet  Mr.  Mill  seems  to  be  not  in  the  least  conscious  that  he  is 
joking,  when  he  says  the  average  rate  of  wages  is  arrived  at,  by 

employ  this  expression,  remembering,  however,  to  consider  it  as  elliptical,  and  not  as  a 
literal  Btatementof  the  entire  truth."  * 

Upon  the  above,  Cairnes  says;  "As  I  understand  this  passage,  it  embraces  the  follow- 
ing statement:  First,  '  wages-fund  '  is  a  general  term,  used,  in  the  absence  of  any  other 
more  familiar,  to  express  the  aggregate  of  all  wages  at  any  given  time  in  possession  of 
the  laboring  population;  second,  on  the  proportion  of  this  fund  to  the  number  of  the 
laboring  population  depends  at  any  given  time  the  average  rate  of  wages;  third,  the 
amount  of  the  fund  is  determined  by  the  amount  of  the  general  wealth  which  is  applied 
to  the  direct  purchase  of  labor,  whether  with  a  view  to  productive  or  to  unproductive 
employment." 

And  yet  Mr.  Cairnes,  on  p.  101,  defines  the  wages-fund  in  a  very  different  way.  He 
there  says:  "  It  seems  to  me  that  Mr.  Brassey  has  mistaken  the  statement  of  the  prob- 
lem for  its  solution.  It  needs  no  i)roof  surely  to  see  that  if  £40,000,000  be  added  to  the 
existing  capital  of  a  country,  and  the  greater  portion  applied  to  the  direct  luirchase  of 
labor,  the  supply  of  labor  and  other  things  continuing  the  same,  wages  must  rise,  or 
that  the  withdrawal  of  a  great  sum  from  the  payment  of  wages,  as  on  the  occasion  of  a 
commercial  collapse,  must  on  the  other  hand,  ceteris  paribus,  involve  a  fall  of  wages. 
To  us  this  is  not  to  solve  the  question,  but  to  state  it.  What  we  want  to  know  is  what 
determines  the  relation  of  supply  and  demand— of  the  wages-fund  to  the  laboring  popu- 
lation. Why  is  that  relation  such  as  to  yield  one  rate  of  wages  in  tiie  United  States, 
another  rate  in  Great  Britain,  and  a  third  rate  on  the  continent  of  Europey  If  Mr. 
Brassey  would  fairly  address  himself  to  this  problem,  I  think  he  would  find  that  the 
political  economy  of  the  wages  question  is  not  quite  so  simple  as  he  supposes." 
("  Some  Leading  Principles,"  etc.,  p.  IGl.) 

*  "Labor,"  p.  8-1. 


292  ECONOMIC  PUILOSOPIIT. 

dividing  the  total  sum  expended  on  labor,  among  the  total  number 
of  laborers. 

Mr.  Mill's  doctrine  was  attacked  by  Mr.  Thornton  on  the  ground 
that  the  alleged  wage  fund,  to  be  of  any  value  in  economics,  nmst  be 
a  determinate  sum,  i.  e. ,  we  nmst  be  able  to  know  first  in  the  case  of 
an  individual  employer,  and  then  in  the  aggregate  cases  of  all 
employers,  how  much  money,  if  any,  had  been  set  apart  in 
advance  for  the  payment  of  wages,  for  if  it  was  a  wholly  indeter- 
minable abstraction  it  was  of  no  use.  Mr.  Mill  gravely  yielded 
to  the  validity  of  Mr.  Thornton's  objection.  But  neither  gentle- 
man seemed  to  see  the  broad  humor  which  renders  the  whole 
proposition  on  an  exact  level  with  the  schoolboy's  plan  for  find- 
ing the  distance  between  two  points,  viz. :  guess  how  much  four 
times  the  distance  would  be,  and  then  quarter  it. 

Political  economy  can  never  make  rapid  progress  in  England, 
until  missionaries  of  humor  are  sent  into  that  country,  to  incul- 
cate, or  in  some  way  develop  there,  the  faculty  of  apprehending 
the  distinction  between  stupidity  and  profundity.  Malthus'  law 
of  population,  as  stated  both  by  himself  and  Eicardo,  illustrates 
the  same  point.  The  law  is,  that  as  the  laborer's  income  expands, 
his  power  and  tendency  to  procreate  expands  at  the  same  rate,  so 
as  to  hold  the  laborer,  ordinarily  and  naturally,  down  to  the  same 
standard  as  if  his  wages  had  not  been  raised.  Now,  if  an  English- 
man had  any  sense  of  humor,  he  would  see  that  there  is  no 
physiological  distinction  between  the  efi'ect  of  an  increase  of 
income  on  a  laborer,  a  profit-maker,  and  a  landlord,  as  to 
his  tendencies  to  procreate  his  species,  as  they  are  all  laborers  of 
some  sort.  Hence,  if  A.  T.  Stewart  married  on  an  income  of  say 
$1,000  a  year,  or  say  $500  each  for  himself  and  wife,  the  so-called 
law  of  Malthus  would  have  required  when  his  income  reached 
$6,000,000  a  year  that  Mrs.  Stewart  should  have  borne  him  12,000 
children.  In  fact  she  did  not  bear  him  one.  Yet  Englishmen 
like  Bon  amy  Price  keep  on  declaring  that  the  Malthus  Law  has 
to  do  with  Political  Economy,  when  it  is  only  a  form  of  uncon- 
sciout,  numor,  designed  to  enable  persons  to  be  most  amusing 
when  tliey  imagine  they  are  most  authoritative. 

When  Mr.  Cairnes,  however,  says  that  the  object,  of  a  wages 
fund  doctrine  is  to  explain  why  wages  are  higher  in  the  United 
States  than  in  Great  Britain,  and  higher  in  Great  Britain  than  on 
some  parts  of  the  continent,  it  immediately  becomes  evident  that 
the  word  "  fund  "has  no  business  in  the  title,  and  that  what  we 
are  searching  for  is  the  cause  of  the  rate  of  wages. 


THE  CAUSE  OF  WAGES.  293 

114.  The  Rate  of  Wages  and  Margin  of  Profits.— The 

natural  price  of  labor,  and  the  actual  rate  of  wages,  is  that  price 
at  which  the  employer,  if  he  is  a  profit-maker  {entrepreneur) 
believes  he  will  find  it  more  profitable  to  pay  the  wage,  than  to 
lose  the  chance  of  profit  by  dispensing  with  the  service.  The 
motive,  which  determines  the  employment,  is  the  same  as  deter- 
mines the  pi'ice  in  buying  land  or  goods.  If  it  be  said  that  this 
definition  runs  in  a  circle,  and  that  what  it  needs  to  set  forth  is 
the  cause  why  the  profit-maker  pays  more  in  America  than  in 
England,  the  ready  and  true  answer  is  that  the  difference  between 
cost  of  production  and  price  of  commodities  is  greater,  and, 
" profits  being  the  mother  of  wages,"  the  larger  the  mother  the 
larger  the  offspring.  And  if  it  be  said  that  we  are  still  defining 
in  a  cu'cle,  and  that  what  is  needed  to  be  known  is  why  the  profits 
are  larger,  we  answer  because  all  profits  grow  out  of  an  economy 
of  human  effort  in  effecting  the  maximum  of  consumable  wealth 
at  the  minimum  of  human  exhaustion,  and  that  this  economy  is 
so  facilitated  in  the  United  States  by  the  union  of  the  highest 
intelligence  with  the  most  untiring  industry,  in  the  application 
of  the  greatest  diversity  of  occupations  to  the  evolution  of  the 
products  of  the  most  abundant  areas  of  fertile  land,  that  more 
human  comfort  is  created,  per  head  of  population,  than  elsewhere 
exists.  The  smaller  the  effort  by  which  comforts  are  created  and 
enjoyed,  and  the  higher  the  standard  of  comfort  attained,  the 
higher  must  be  the  rates  of  profit  and  wages,  since  what  we  call 
profits  and  wages  are  only  comforts  expressed  in  the  anterior 
form  of  the  money  which  will  buy  them.  Hence  it  is  the  success 
of  industry,  or  of  the  war  whereby  man  overcomes  nature,  that 
makes  high  profits  and  high  wages,  the  division  of  the  gross  re- 
turns of  each  industry  between  capital  and  labor  maintaining 
always  that  essential  equality  which  we  have  pointed  out  in  our 
chapter   on  "  Profits  and  Loss." 

It  is  believed  that  the  average  rates  of  profit  on  capital,  in  all 
countries,  periods,  and  modes  of  business,  bear  about  the  same 
ratio  to  the  wages  of  labor  in  the  same  countries,  periods,  and 
modes  of  business. 

McCulloch  says  :*  "  The  common  and  ordinary  rate  of  wages 
in  any  country  really  depends  upjon  the  magnitude  of  that  por- 
tion of  its  capital  which  is  appropriated  to  the  i)ayment  of  wages, 
compared  with  the  number  of  its  laborers."     But  what  does  the 

*  Note  to  Sinith'8  ''  Wealth  of  Nations,"  p.  30. 


? 


294  ECONOMIC  PHILOSOPHY. 

magnitude  of  the  sum  to  be  ai^propi'iated  to  the  payment  of  wages 
depend  upon  ?  The  appropriation  is  in  all  cases  made  hy  the 
profit-maker,  and  always  with  an  eye  single  to  the  profit  he  can 
make.  Hence  the  total  sum  appropriated  to  pay  wages  is  not  the 
cause  of  the  rate  of  wages  ;  it  is  the  wages  itself  in  their  totality. 
Hence  the  cause  of  wages  is  profits.*  But  the  cause  of  rent,  of 
interest,  and  of  all  production  is  also  profits.  Hence  profits  are 
the  one  equalizing  standard  of  value  into  which  all  other  modes 
of  income  known  to  political  economy  are  exchangeable.  Wages, 
rent,  and  interest  are  all  modes  of  profit,  the  first  being  a  profit 
on  the  rendering  of  service  or  the  performance  of  labor,  the  sec- 
ond being  a  profit  on  the  ownershii?  of  land  or  the  capital  inv^ested 
in  its  purchase,  and  the  third  being  a  profit  on  the  loan  of  money. 
All  profits  tend  constantly  toward  an  equality  of  return  on  past 
efforts,  but  an  inequality  and  exorbitance  of  return  on  all  new 
efforts  which  achieve  a  larger  measure  of  satisfaction  to  human 
desires  from  a  smaller  expenditure  of  effort.  Hence  profits  are 
the  migratory  or  steering  principle  in  industry,  whose  guidance, 
i-ent,  interest,  and  wages  all  await  and  follow.  Profits  un])el  to 
the  great  inventions,  discoveries,  innovations,  economies, improve- 
ments. They  are  the  pillar  of  cloud  by  day  and  of  fire  by  night 
in  the  onward  march  of  industry.  They  keep  breaking  out  in 
the  most  unexpected  spots,  and  perpetually  surprising  the  world. 


*  Adam Smllh  f^o  i!imt\y  recognizes  as  almostlo  conceal  the  most  important  fact 
connected  with  the  wages  system,  viz.,  that  wages  are  due  to  and  vary  with  profits,  lie 
says  (p.  38) :  "The  liberal  reward  of  labor,  therefore,  as  it  is  the  necessary  effect,  so  it 
is  the  natural  symptom  of  increasing  national  wealth.  The  scanty  maintenance  of  the 
laboring  poor,  on  the  other  hand,  is  the  natural  symptom  that  things  are  at  aetand,aLd 
their  starving  condition  that  they  are  going  fast  backwards." 

Gen.  Francis  A.  Walker  ("  The  Wages  Question,"  pp.  139-130)  has  clearly  enunciated 
the  relation  of  profits  to  wages.  He  says :  "  If  a  person  have  wealth,  that  of 
itself  constitutes  no  reason  at  all  to  him  wliy  he  should  expend  any  portion  of  it  on 
labor,  on  machinery,  or  on  materials.  It  is  only  as  he  sees  that  he  can  increase  that 
wealth  through  production  that  the  impulse  to  employ  it  in  those  directions  is  felt. 
But  for  the  profits  by  which  he  hopes  thus  to  increase  his  store  it  would  be  alike  easier 
and  safer  for  him  to  keep  his  wealth  at  rest  than  to  put  it  in  motion  for  the  benefit  of 
others."  ...  So  long  as  additional  profits  are  to  be  made  by  the  employment  of 
additional  labor,  so  long  a  sufficient  reason  for  production  exists  ;  when  profit  is  no 
longer  expected,  the  reason  for  production  ceases.  At  this  point  the  mere  fact  that  the 
employer  has  capital  at  his  command  no  more  constitutes  a  reason  why  he  should  use 
it  in  production  where  he  can  get  no  profits  than  the  fact  that  the  laborer  has  legs  and 
arms  constitutes  a  reason  why  he  should  work  when  he  can  get  no  wages." 

J.E.  Cai?vi<?«("  Some  Leading  Principles  ")  p.  462,  says  :  "Capitalists  and  laborers 
receive  large  remuneration  in  America  because  their  industry  produces  largely." 

Edward  Atkinson,  in  "  What  Makes  the  Rate  of  Wages,"  states  the  same  principle 
thus  :   "I  have  attempted  to  demonstrate  that  in  all  productive  employment  the  rate  of 


NA TUBE  IS  NIGGAIWL  Y.  295 

It  is  not  clear,  however,  yet  in  what  definite  relation  profit- 
making  stands  to  wages-earning — in  the  comparative  comfort  and 
ease  of  life  it  brings  to  the  avei'age  of  those  engaged  in  the  two 
modes  of  life.  For  profit-making  includes  also  loss-incurring,  and 
the  means  of  estimating  the  totality  of  losses,  incurred  by  the  i^rofit- 
makers,  are  very  defective.  The  New  York  Chamber  of  Insurance 
once  put  forth  the  estimate  that  the  losses  arising  through  the 
destruction  of  property  by  kerosene,  used  for  lightnig  purposes, 
exceed  the  entire  value  of  all  the  petroleum  extracted  from  the 
wells  to  that  date.  Thei^e  is  a  prevalent  belief,  among  those  most 
experienced  in  gold  and  silver  mines,  that  the  amount  obtained 
from  the  profitable  mines  so  little  exceeds  the  losses  on  the  unprofi- 
table ones,  that  the  net  result  makes  raising  ore  less  profitable  than 
raising  corn.  The  number  who  fail  in  mercantile  life  is  fre- 
quently stated  at  from  90  to  95  per  cent.  But  those  who  succeed 
constantly  make  a  percentage  of  loss  which  tends  to  reduce  their 
profits  to  the  average  level  of  the  salaries  usually  paid  to  men  of 
their  cai^acity. 

115.  Is  Population  a  Check  on  Wages? — Adam  Smith 
taught  the  germ  of  the  doctrine,  which  Malthus  elaborated,  that 
there  is  a  sort  of  food  fund  in  nature,  apart  from  human  labor, 
which  may  properly  be  spoken  of  as  the  ' '  natural  means  of  sub- 
sistence ;  "  *  that  population  is  abundantly  supplied  in  proportion 

wages  which  can  be  paid  in  money  must  depend  on  the  sum  of  money  which  is  re- 
ceived from  the  sale  of  the  product.  Inasmuch  as  those  who  work  for  wages  in  strictly 
productive  occupations  constitute  by  far  the  largest  portion  of  wage-receivers,  the  rates 
of  wages  for  personal  services,  which  are  only  indirectly  productive,  are  gauged  by  the 
same  standard.  All  profits  and  wages  must  come  out  of  the  gross  product.  Further- 
more, all  profits,  wages,  earnings,  or  other  income,  must  be  substantially  derived  from 
each  year's  product,  because  the  year  corresponds  to  the  series  of  seasons  in  which  one 
crop  is  made.  A  part  of  the  product  of  each  year  is  carried  over  to  start  the  work  of 
the  next  year  upon  ;  but  a  part  of  the  product  of  the  present  year  was  brought  over 
from  the  previous  year  to  start  the  work  of  this  upon.  Therefore  the  measure  of  what 
there  is  to  be  divided  by  the  measure  of  money  must,  in  the  long  run,  depend  upon 
what  each  year's  product  will  bring  in  money.  If,  then,  the  annual  product  is  large, 
because  the  resources  are  great,  because  capital  is  ample,  because  labor  is  effective,  be- 
cause the  army  is  but  a  border  police— then  the  sum  of  money  derived  from  tlie  sale 
will  also  be  large,  for  the  reason  thatin  spite  of  all  natural  obstructions  between  one 
nation  and  another,  the  product  of  one  nation,  as  a  whole,  comes  directly  or  indirectly 
into  competition  witli  the  product  of  the  world." 

*  "  Wealth  of  Nations,"  by  McCulloch,  p.  36  :  "  Every  species  of  animals  naturally 
multiplies  in  proportion  to  the  tneans  of  their  subsistence,  and  no  species  can  ever 
multiply  beyond  it.  But  in  civilized  society  it  is  only  among  the  inferior  ranks  of  the 
j)eople  that  the  scantiness  of  subHistence  can  set  limits  to  the  further  multii)lication  of 
the  human  species,  and  it  can  do  so  in  no  other  way  than  by  destroying  a  great  part  of 
the  children  which  their  fruitful  marriages  produce," 


296  ECONOMIC  PUILOSOPHT. 

as  it  remains  small  relatively  to  this  natural  means  of  subsistence; 
that,  as  it  increases,  it  presses  upon  these  natural  means  of  sub- 
sistence ;  that  if,  from  any  cause,  this  means  becomes  abundant, 
the  multiplication  of  offspring  among  mankind  is  a  check  reduc- 
ing the  rates  of  wages,  checking  procreation,  until  the  means  of 
subsistence  again  catch  up  with  the  number  of  men. 

The  fallacies  in  this  doctrine  are,  (1)  that  it  is  only  in  the  savage 
state  that  the  food  fund,  which  sustains  man,  is  supplied  by  nature, 
and  even  then  the  average  labor  of  appropriating,  what  nature  is 
supposed  to  have  gratuitously  supplied, makes  division  of  labor, and 
therefore  increase  in  the  number  of  laborers,  a  source  of  greater 
abundance  in  the  supply.  In  hunting  deer  ten  persons  and  twenty 
dogs  will  get  more  than  ten  or  twenty  times  the  quantity  of  deer 
that  one  person  can,  because  they  can  ' '  corral "  the  deer,  and 
drive  him  within  their  range,  or  where  they  want  him. 

(2)  The  poor  always  multiply  faster  than  the  rich,  and  men  are 
always  more  reckless  in  multiplying  their  species  in  the  degree 
that  they  are  poor.  Families  continuously  rich  soon  become 
extinct. 

(3)  As  every  species  of  animal,  including  man, constitutes  a  part 
of  the  means  of  subsistence  of  other  animals,  the  faster  they  all 
multiply,  the  more  means  of  subsistence  there  must  be.  Man,  by 
cultivating  crops,  grains,  and  grasses  for  the  food  animals, 
increases  immeasurably  the  means  of  subsistence  of  horses,  asses, 
mules,  horned  cattle,  including  milch  cows,  sheep,  goats,  turkeys, 
gee.se,  chickens,  hogs,  hares,  and  all  domesticated  animals,  and  of 
many  wild  ones.  He  thus  makes  the  excess  of  the  activity  of 
the  procreative  power,  in  the  lower  grades  of  life  over  that  of  man, 
a  guarantee  of  the  far  more  rapid  increase  in  human  food  than 
man  himself  can  possibly  effect  in  his  own  numbers. 

(4)  Tlie  check  on  consumption  of  means  of  subsistence,  which  is 
found  in  checking  procreation,  checks,  in  an  equal  degree,  the 
means  of  production.  For  all  human  means  of  subsistence  are 
not  only  the  product  of  labor,  but  the  facility  of  their  production 
increases  with  the  increase  in  the  number  of  laborers  employed 
in  their  production,  far  more  rapidly  than  the  number  of  laborers 
does. 

(5)  The  check  on  decline  of  wages,  if  any  could  be  effected,  by 
diminishing  population,  vpould  take  effect  years  after  the  necessity 
for  it  is  felt,  if  it  is  ever  felt,  and  when  perhaps,  scarcity  may  have 
given  place  to  abundance.  Even  the  one  year  required  for  the 
gestation  of  the  child,  is  too  long  a  period  for  a  laborer  to  predict 


LITTLE  ECONOMIES.  297 

whether  it  will  increase  or  diminish  his  store,  and  he  certainly  will 
not  extend  his  glances  over  the  eighteen  years  required  to  convert 
the  prospective  offspring  into  a  competing  worker.  During  the 
fii-st  five  years  after  the  birth  of  a  child,  the  cost  of  his  support 
does  not  exceed  the  increased  value  of  the  laborer's  work  thi'ougli 
the  greater  stimulus,  steadiness,  and  sense  of  responsibility 
which  oi'dinarily  comes  with  the  parental  relation.  It  is  only 
when  the  child  begins  to  be  about  eight  or  ten  j^ears  of  age  that 
the  cost  of  his  maintenance  is  felt  as  a  tax,  but  by  that  time,  in 
most  conditions  of  life,  he  can  be  worth  his  board  as  a  helper.  Ui)on 
a  farm  he  can  gather  the  eggs,  feed  the  chickens,  drop  the  corn, 
ride  the  horses  to  water,  and  often  catch  and  harness  them,  pick 
the  berries,  and  on  the  great  farms  of  the  West  he  can,  perhaps, 
sit  on  the  sulky  of  the  cultivator,  and  do  part  of  the  mowing  or 
harvesting.  In  cities  he  can  be  cash-boy,  messenger,  answer  the 
bell,  and  perform  many  kinds  of  light,  useful  tasks.  It  is  doubt- 
ful if  there  is,  or  need  be,  an  unpi'oductive  period,  in  the  full  eco- 
nomic sense,  in  any  human  life.  To  suppose,  then,  that  a  passion 
w^hich  nature  has  made  one  of  the  most  difficult  to  resist,  since 
on  it  depends  the  continuance  of  the  human  race  on  earth,  would 
be  checked  in  its  action  by  the  apprehension  that  twenty-one  years 
later  it  would  place  the  labor  supply  in  excess  of  the  demand,  is 
so  profoundly  dull  as  to  be  seriously  funny. 

116.  Countries  of  High  and  Low  Wages. — The  reasons 
why  some  countries  maintain  a  higher  wage-rate  than  others  are 
not  unlike  those  by  which  some  individuals,  in  the  sam.e  country, 
maintain  a  higher  wage-rate  than  others.  China,  relatively  to 
Europe  and  America,  is  made  a  very  slow  country  by  the  absence 
of  beasts  of  burden  as  a  means  of  agriculture,  labor,  and  rui'al 
transportation,  and  by  the  consequent  absence  of  agricultural 
machinery,  and  of  interior  roads,  and  an  almost  exclusive  re- 
liance on  human  labor,  whereby  the  population  are  packed  in 
the  towns,  and  along  canals  and  rivers,  while  lai'ge  portions  of 
the  country,  which,  with  better  transportation,  would  be  studded 
with  farms,  are  left  in  solitude.  Hence  the  aggregate  earnings 
are  lower  and  enjoyments  fewer  than  in  Europe  and  America. 
Yet,  of  what  the  Chinese  do  produce,  nothing  is  wasted  from  hu- 
man consumption  by  the  demands  of  horses,  cattle,  and  means  of 
transportation.  Their  saving  in  railroad  building  alone  amounts 
to  six  thousand  millions  of  dollars  for  every  fifty  millions  of  pop- 
ulation com^jared  with  the  Ujiited  States.  Their  labor  is  all  directly 
bestowed  on  the  production  of  food  and  drink  and  very  little  on 


298  ECONOMIC  PHILOSOPIIT. 

mere  means,  machinery,  implements,  and  buildings.  Hence  a 
wage  very  much  lower  produces  a  degree  of  average  comfort  only 
a  very  little  lower  than  is  known  in  Europe  and  America,  or  the 
difference  in  comfort  is  far  less  than  the  difference  in  the  money 
used  in  paying  the  wages. 

There  are  even  many  compensating  economies,  so  far  as  human 
comfort  is  concerned,  in  a  stationary  civilization.  As  industry  is 
manifesting  no  enterprise,  it  is  making  no  losses  by  enterprise, 
but  only  those  very  great  losses  which  it  makes  through  lack  of 
enterprise.  It  is  not  expending  its  efforts  on  great  railways  not 
needed,  great  wars  for  mere  "  ideas,"  great  contests  for  abstrac- 
tions or  theories,  nor  is  it  expending  its  force  like  the  Egyptians 
on  great  pyramids  and  monuments,  like  the  Greeks  on  great 
architectural  temples,  statues,  and  carvings,  like  the  Romans 
on  great  roads,  or  wars  and  conquests,  like  the  Germans  and 
French  on  great  standing  armies,  or  like  the  Americans  on  great 
railroads.  Needing  less  force  of  character,  a  vegetable  diet  suffices, 
nor  is  this  reinforced  by  alcoholic  poisons.  Hence,  simultane- 
ously with  this  low  wage-rate,  there  runs  an  economy  of  effort, 
which  makes  all  the  efforts  actually  made  tell  effectively  on 
promoting  the  sustentation  of  life.  This  is  accomplished  perhaps 
more  successfully  and  evenly,  taking  long  periods  of  time 
and  great  numbers  of  population  together,  than  among  any  other 
race,  leaving  to  all  classes  of  the  Chinese  nearly  the  same 
ratio  of  time  for  cultivation  and  amusement  as  is  devoted  to  those 
purposes  in  other  countries.  * 

As  the  Chinese  are  slower  in  pi'oduction  than  Europe  and 
America,  in  like  manner  do  the  rural  and  peasant  populations  of 
most  of  the  continental  states  of  Europe,  and  of  many  parts  of 
Eiigland,  fall  behind  the  farming  classes  in  America.  A  lower 
rate  of  agricultural  profit  has  called  forth  a  lower  range  of  enter- 
prise among  farmers,  less  use  of  machinery,  and  a  slower  and 
finally  a  dearer  and  more  slavish  and  laborious  mode  of  produc- 
tion. 

Contrary  to  a  very  frequent  assumption,  cities  are  the  sphere  of 
more  productive  labor  than  the  country,  capital  earning  higher 


*  Adam  Smith  (p.  33)  says  :  "  China  has  been  long  one  of  the  richest,  that  is,  one  of 
the  most  fertile,  best  cultivated,  most  industrious,  and  most  populous  countries  in  the 
world.  It  seems,  however,  to  have  been  long  stationary,— but  it  does  not  go  backward. 
Its  towns  are  nowhere  deserted  by  their  inhabitants.  The  lands  which  have  once  been 
cultivated  are  nowhere  neglected.  The  same,  or  very  nearly  the  same,  annual  labor 
must  continue  to  be  performed,  etc." 


EFFECTS  OF  MA  CUINER  Y.  299 

pi'ofits  aucl  labor  higher  wages.  Points  fifty  miles  apart  differ  by 
from  50  to  100  per  cent,  if  the  one  is  sparsely  settled  and 
the  other  densely.  Adam  Smith  observed  that  wages  a  few  miles 
out  of  London  wei'e  much  less  than  they  were  for  the  same  ser- 
vice in  London.  The  same  holds  in  New  York  as  compared  with 
points  only  thirty  miles  distant. 

117.  Liabor-Saviiig  Machines. — The  introduction  of  labor- 
saving  machinery  has  some  tendency  to  enhance  wages,  in  the 
fact  that  the  employer  of  the  machinery  makes  at  first  as  a  profit 
the  whole  difference  between  the  cost  of  performing  the  work  by 
the  old  and  by  the  new  process,  which  rate  of  profit  is  only  grad- 
ually reduced  as  other  capitals  compete  in  the  performance  of 
the  same  work  by  the  new  machinery.  Until  the  higher  rate  of 
profit  is  thus  reduced  by  competition,  extraordinary  rates  of  pi-ofit 
are  being  made  on  the  capital  invested  in  performing  the  work 
by  the  labor-saving  process,  and  wherever  extraordinary  rates  of 
profit  are  being  made,  there  capital  will  forego  a  part  of  its  profits 
in  the  form  of  ino'eased  wages,  in  order  to  increase  its  output 
rapidly  and  to  "make  hay  while  the  sun  shines."  As  the  suc- 
cessful working  on  new  forms  of  machinery  nearly  always  in- 
volves some  degree  of  skill,  it  is  often  better  economy  to  enlarge 
the  wages  of  those  who  have  some  degree  of  skill  than  to  take  on 
new  and  unskilled  hands.  Probably  every  labor-saving  inven- 
tion has  witnessed  the  increase  of  wages  to  labor,  through  the 
increased  profits  to  capital  obtained  by  saving  labor-cost  in  the 
production  of  commodities,  during  the  interval  in  which  the 
former  selling  price  of  the  commodity  had  not  yet  fallen  to  the 
new  cost  of  production. 

One  of  the  most  intricate  problems  in  political  economy  is  to 
measure  the  gains  to  wages-workei's  against  the  losses  to  the 
same  class,  through  any  of  the  causes  connected  with  an  expan- 
sion of  dimensions  in  production,  whether  it  be  the  increase  in 
the  division  of  labor  incident  to  the  large  industries  relatively  to 
the  small,  the  introduction  of  machineiy,  the  extension  of 
markets,  the  widening  of  competition  and  consequent  equaliza- 
tion of  prices  over  a  large  area,  tlie  employment  of  large  capitals, 
the  exclusion  of  effective  competition,  or  any  other.  If  it  be 
sought  to  determine  whether  women  were  better  paid  or  more 
esteemed  before  or  after  the  distaff  and  spinning-wheel  were 
superseded  by  the  power  loom,  and  the  needle  by  the  sewing 
machine,  the  problem  becomes  involved  by  the  fact  that  loss  and 
profit  alternate  to  the  same  class,  from  the  same  cause,  as  rapidly 


300  ECO^'OMIC  PIIILOSOPUY. 

and  inextricably  as  the  threads  in  a  woven  fabric  alternately  suc- 
ceed each  other  as  upper  and  under.  The  flowing  robes  of  the 
ancients  economized  time  in  sewing,  but  wasted  cloth  relatively 
to  the  degree  of  warmth  afforded,  since  they  involved  little  or  no 
cutting,  sewing,  or  fitting  to  the  figure.  Sewing  in  its  first  effect 
economizes  weaving  or  makes  more  clothing  out  of  fewer  skins 
or  less  cloth  or  other  materials.  But  by  means  of  the  economy 
of  materials  effected  by  sewing,  so  many  more  garments  come  to 
be  worn  and  kept  for  wear  that  there  is  more  use  for  the  weaver 
than  if  the  economy  of  the  needle  had  not  been  practised.  The 
sewing  machine  seems  to  dispense  with  the  needle.  But  no 
sooner  has  it  done  so  than  styles  of  ladies'  apparel  so  change  as  to 
absorb  far  more  sewing  "per  front  foot  "than  had  previously 
been  in  vogue,  many  gowns  being  made  up  expressly  to  expend 
upon  them  all  the  sewing  possible,  and  being  so  draped  as  to  ren- 
der the  services  of  the  machine  subordinate  to  the  taste  of  the 
draper.  Thus  the  demand  for  the  needle  has  rather  increased 
than  diminished  through  the  introduction  of  sewing  machines. 
So  in  the  absence  of  statistics  it  might  with  reasonable  safety 
be  affirmed  that  in  America,  where  steam  is  so  largely  sub- 
stituted for  human  labor  in  transportation,  as  large  a  ratio  of  the 
population  are  still  employed  in  transportation  as  in  China,  where 
it  is  accomplished  wholly  by  human  labor.  The  increase  in  the 
division  of  labor  has  the  effect  to  educate  workmen  only  in  one 
part  of  a  process,  and  there])y  to  render  them  dependent  on  the 
co-operation  of  a  large  number  of  others,  so  that  loss  of  work  to 
one  in  many  cases  means  loss  of  work  to  all.  Per  contra,  this 
same  increase  in  the  division  of  labor  furnishes  some  form  of 
work  adapted  to  the  powers  of  the  most  crippled  or  incompetent, 
and  so  lessens  the  need  of  idleness,  and  therefore  of  the  depen- 
dence of  the  idle  on  the  industrious. 

118.  Labor  Coiubiiiatious. — The  degree  in  which  the  state 
can  regulate  rates  of  wages  depends  on  the  degree  in  which  it 
desires  to  be  the  resj^onsible  entrepreneur  in  all  productive  indus- 
tries. A  state  which  says  to  an  employer,  ' '  You  must  pay  a  given 
sum  for  a  certain  labor-time  "  should  be  prepared  to  run  the  indus- 
try itself  at  the  same  rate  of  wages  if  the  employer  fails  to  do  so. 
Now  that  the  government  of  England  has,  by  its  several  land  acts 
concerning  Ireland,  adopted  the  principle  of  "  tenant  right,"  i.  e., 
that  the  tenant  has  as  much  a  right  to  occupy  land,  upon  paying 
a  fair  rent,  as  the  landlord  has  to  receive  the  rent,  it  is  impossible 
to  predict  that  governments  may  not  in  the  near  future,  if  the 


CORNERS  ON  LABOR.  301 

j)i*essure  toward  socialism  continues,  acknowledge  a  droit  du  tra- 
vail, or  right  to  be  employed  at  a  fair  rate  of  wages,  by  any  one 
who  has  the  requisite  means  of  employment.  At  present,  how- 
ever, such  legislation  would  seem  to  be  visionary  and  subversive 
of  liberty.  If  labor  relations  can  be  adjusted  in  this  manner,  why 
should  not  the  sale  of  all  commodities  as  well  ?  On  this  basis 
there  would  soon  be  no  such  fact  as  individual  interest  left,  and 
the  state  would  become  the  sole  organizer  of  industry.  It  is  not 
the  province  of  economic  science  to  revolutionize  society  by 
demonstrating  the  theoretical  inadequacy  of  all  existing  condi- 
tions, but  rather  to  elucidate  the  laws  which  are  operative  in  mak- 
ing existing  conditions  what  they  are.  Hitherto  the  province  of 
the  state  has  been  to  supplement  individual  enterj^rise,  and 
to  facilitate  co-operation  in  industry,  but  not  to  compel  it — to  aid 
by  relief  the  sufferer  who  so  fails  in  industry  as  to  run  short  of 
the  means  of  subsistence,  but  not  to  acknowledge  that  if  he  can 
find  no  other  purchaser  for  his  labor  the  state  will  buy  it  at  a 
stipulated  price. 

Laws  forbidding  laborers  to  combine  to  put  up  the  price  of 
labor,  and  laws  forbidding  employers  to  combine  to  put  it  down, 
have  a  historical  value  as  the  expression  of  the  prevailing  public 
conscience  at  the  time,  like  laws  fixing  the  rates  of  interest,  or  the 
weight  and  price  of  a  loaf  of  bread.  The  purpose  of  all  trade 
unions  is  to  mass  large  numbers  of  laborers  into  a  controllable 
organization,  with  the  view  of  withholding  it  from  market  until 
its  demand  as  to  compensation,  hours,  terms,  or  other  details  is 
complied  with.  It  gets  a  "  corner  "  on  labor,  to  force  it  up,  in  the 
same  manner  as  buying,  holding,  and  refusing  to  sell  large  masses 
of  wheat,  cotton,  or  stocks  gets  a  corner  on  those  commodities, 
and  tends  to  force  them  up.  The  statutes  heretofore  passed 
against  corners  in  gi'ain,  in  this  country,  do  not  differ  in  principle 
from  those  formerly  passed  in  England  to  discourage  corners  in 
labor,  or  combinations  to  withhold  labor,  in  order  to  raise  its  price. 

The  fundamental  fallacy  underlying  such  laws  is  that,  while 
they  assume  that  a  laborer  is  entitled  to  all  his  labor  is  worth, 
they  assume  that  he  can  only  combine  to  get  more  than  his  labor 
is  worth,  whereas  there  is,. in  practice,  no  test  whereby  to  draw  the 
line  between  combining  to  get  the  true  value  of  labor,  and  com- 
bining to  obstruct  industry  l)y  setting  upon  labor  an  impossible 
price.  For  laborers  to  combine  to  get  the  true  value  of  labor 
can  hardly  be  called  objectionable.  And  yet  employers  have  the 
same  right  to  combine  to  avoid  paying  more.    The  limit  can  only 


302  ECONOMIC  PHILOSOPHY. 

attach  to  the  acts  to  be  performed  under  the  combination. 
McCulloch*  says  "a  criminal  act  cannot  be  generated  by  the  mere 
multiplication  of  acts  that  are  perfectly  innocent,"  meaning 
thereby  that  a  thousand  men  have  the  same  right  to  combine  and 
ask  at  once  for  higher  wages,  and  stop  work  if  the  request  is  not 
granted,  as  one  man  has  to  withhold  his  labor.  Mr.  Jevons  t  com- 
bats this  doctrine  strenuously,  holding  that  for  1,000  workmen  to 
withdraw  their  woi'k  at  once,  in  order  to  cripple  an  employer  on 
his  contracts  (or  a  car  company  on  its  franchise  of  carrying  pas- 
sengers), is  like  the  act  of  1,000  bank-depositors,  combining  to 
withdraw  their  deposits  at  once,  in  order  to  break  the  bank,  or  like 
a  combination  of  10,000  persons,  to  walk  at  one  time  in  a  certain 
street,  in  order  to  block  it.  The  English  Conspiracy  and  Protec- 
tion of  Property  Act  is  drawn  on  this  line,  and  makes  it  criminal 
to  break  a  contract  of  service  or  of  hiring,  knowing  or  havino- 
reason  to  belive  that  the  probable  consequence  of  so  doing,  either 
alone  or  in  combination  with  others,  would  be  to  endanger  life, 
limb,  or  property. 

*  "  On  Wages,"  2d  Ed.,  p.  90.  ~~        ' 

+  "  The  State  in  Relation  to  Labor,"  pp.  129-131.  "  There  is  no  bank  in  the  country 
which  could  stand  a  run  on  tlie  part  of  a  considerable  number  of  its  depositors.  It 
must  be  quite  apparent  that  any  agreement  between  bank  depositors  to  draw  out  money, 
in  order  to  overthrow  a  bank,  is  a  totally  different  thing  from  drawing  out  in  the  ordi- 
nary course  of  bur-iness,  and  is  in  fact  a  serious  matter." 

"There  is  hardly  one  of  the  ordinary  arrangements  of  trade  which  may  not  be  entirely 
upset  by  concerted  action.  The  bakers  and  butchers  might  starve  us  out ;  the  cab 
proprietors  might  refuse  to  carry  us  away  ;  innkeepers  might  decline  to  harbor  us;  our 
neighbors  might  tacitly  avoid  assisting  us.  No  man's  life  would  be  safe  if  unlimited 
boycotting  were  regarded  as  legal . " 

"Industrial  Treason  .  .  .  I  venture  to  think  that  a  great  strike,  if  carried  suffi- 
ciently far.might  assume  the  character  of  social  treason.  As  in  the  case  of  the  great  rail- 
way strike  in  the  United  States  in  1877,  it  might  bring  society  to  a  dead  lock.  If  10,000 
Yorkshireraen  were  to  march  upon  London,  with  the  very  best  arms  they  could  muster, 
the  government  would  probably  surround  and  capture  them  in  twenty-four  hours  by 
the  aid  of  railways  and  telegraphs.  But  if  ten  thousand  railway  men  were  to  form  a  con- 
spiracy to  obstruct  and  destroy  the  railways  and  telegraphs  of  the  kingdom,  they 
would  create  infinitely  greater  alarm  and  injury,  and  would  be  checked  with  far  greater 
difficulty." 

Mr.  Jevons'  point  involves  the  fact,  which  so  frequently  escapes  consideration  in  con- 
nection with  labor  troubles,  that  civil  legal  process  acts  only  on  capital.  Executions 
for  damages  are  collectible  only  against  property.  Hence  the  quiver  of  civil  law  reme- 
dies contains  no  arrow  which  will  reach  labor,  i.  e.,  compel  the  performance  of  a  con- 
tract to  work  by  a  laborer,  or  punish  its  non-performance.  We  do  not  urge  or  argue  that 
there  should  be  such  laws  enforceable  against  labor,  but  there  should  be  a  frank  recog- 
nition of  the  fact  that  there  are  no  such  laws. 

If  the  law  is  to  recognize  a  right  in  the  wages-worker  to  continue  at  work  at  a  rate 
which  arbitrators  may  regard  as  reasonable,  a  proposition  which  it  would  be  very  pre- 
mature to  affirm,  it  might  follow  as  a  corollary  that  some  mode  should  be  devised 
whereby  the  law  would  at  least  attempt  to  hold  the  wages-worker  to  perform  his  con- 
tract. 


LABOR  MAT  COMBINE.  303 

Shall  the  laborers,  who  combine,  be  permitted  to  overawe  and 
intimidate  otlier  employees  who  seek  to  take  their  places  ? 

What  species  of  arguments  and  inducements  shall  be  deemed 
to  be  a  fair  exercise  of  persuasive  speech,  and  what  shall  be  styled 
threats  and  intimidation  ?  These  have  been  made  questions  for 
determination  by  a  jury,  the  law  contenting-  itself  by  saying  the 
workmen  may  combine  to  stop  working,  and  peaceably  to  dissuade 
others  from  working,  but  not  to  coerce,  threaten,  or  intimidate 
those  who  propose  to  fill  the  places  they  have  vacated.  It  is  prob- 
able, however,  that  as  long  as  "  strikes  "  and  "  lockouts  "  occur, 
something  like  threats  and  intimidation  will  be  their  usual 
incident. 

There  is  a  disposition  among  economists  genei*ally,  to  concede 
that  labor  unions,  to  protect  wages,  have,  on  the  whole,  had  much 
the  same  effect  to  enhance  the  rate  of  wages,  as  wars  between  na- 
tions have  had  to  promote  national  rights,  and  to  compel  the  con- 
cession of  national  demands.  Their  costs  are  gi*eat.  Their  sacri- 
fices often  seem  far  more  cruel  than  the  wrongs  they  are  incurred 
to  resist.  It  is,  however,  as  idle  to  argue  against  them  as  to  argue 
against  war  of  any  other  kind,  or  even  against  litigation  in  tlie 
courts.  Wherever  there  are  conflicts  of  interest,  sentiment,  and 
belief,  there  must  be  war  in  some  form,  the  most  important  ques- 
tion being  in  what  manner  it  shall  be  conducted.  Whether  wise 
or  otherwise,  they  will  recur,  and  their  recurrence  leaves  in  its 
path  generally  much  temporary  loss  and  some  small  measure  of 
permanent  gain. 

119.  Arbitration  and  Labor  Coiii'ts. — To  some  minds  it 
seems  apparent  that  it  is  as  illogical  and  impracticable  to  attempt 
to  vest  courts  or  officers  with  the  power  to  decide  future  rates  of 
wages,  as  between  employer  and  employees,  as  to  decide  tlie  prices 
at  which  commodities  should  sell  in  every  particular  case.  Mr. 
Jevons  denies  that  such  laws  can  be  efficacious,*  but  admits  that 
in  the  reign  of  Elizabeth,  of  George  II.,  and  finally  in  that  of 
George  III.,  statutes  were  passed  conferring  this  power,  though 
finally,  in  the  last-named  reign,  tlie  principle  was  reasserted  that 
the  magistrates  and  arbitrators  should  not  bind  any  parties  to 
future  contracts,  except  by  consent  of  both  parties. 

Others  think  there  is  a  certain  heartlessness  in  treating  labor 
wholly  as  a  commodity,  and  that  the  fact  must  be  recognized  that 
the  laborer  is  made,  by  various  circumstances,  immovable  as  to  his 

*  "The  Stiie  in  Kclution  lo  Luh  r,"  p.  150. 


304  ECONOMIC  PHILOSOPHY. 

place  of  residence,  and  unchangeable  as  to  his  location,  and  must 
either  be  supported  by  taxation  as  a  pauper,  where  he  is,  if  he  loses 
his  work,  or  must  be  kept  in  work,  or  must  be  allowed  to  starve. 
That  society  does  not  claim  the  right  to  allow  him  to  starve  is  suf- 
ficiently shown  by  the  ijrevalence  of  the  poor  laws.  The  degree  of 
coercion  upon  the  tax-paying  employer,  involved  in  requiring  him 
to  pay  a  given  rate  of  wages,  does  not  seem  to  be  necessarily  more 
odious  than  in  requiring  him,  and  men  of  his  class,  to  support  the 
worker  outright  by  i*eason  of  his  loss  of  employment.  We  believe 
the  arbitration  laws,  hitherto  passed  in  the  United  States,  do  not 
involve  the  right,  on  the  part  of  the  courts,  of  determining  future 
rates  of  wages,  nor  do  we  perceive  by  what  process  or  machinery 
such  provisions,  if  enacted,  could  be  enforced.  Virtually,  there- 
fore, the  function  of  courts  of  arbitration  between  employers  and 
employees  must,  for  the  present,  be  conciliation. 

120.  Labor  Agitations  for  a  Social  Revolution. — The 
proposal  to  reorganize  society  upon  a  basis  that  shall  be  unselfish, 
public  spirited,  and  kind  to  all,  and  that  shall  make  men  happy  in 
proportion  to  their  unselfishness,  instead  of,  as  now,  giving  them 
wealth  in  proportion  to  their  possession  of  the  enterprising  and 
accumulative  faculties,  was  first  prominently  made  by  Plato  in 
his  republic,  and  has  been  reiterated,  by  visionaries  and  enthusi- 
asts, in  nearly  one  identical  form,  for  twenty -three  centuries.  It 
rests  on  certain  false  assumptions  in  political  economy,  chiefly 
that  all  human  possessions,  powers,  rights,  and  opportunities 
ought  to  be,  and  can  be,  equalized,  a  condition  which  would  be 
fatal  to  the  very  existence  of  all  these  possessions,  rights,  powers, 
and  opportunities.  The  so-called  economic  arguments  of  these 
agitators  generally  consist  in  representing  all  forms  of  invested 
capital  as  resulting  from  the  robbery  of  labor,  and  as  bemg  in  fact 
"  stolen  wages. "  They  make  no  account  of  the  fact  that  all 
invested  capital  is  employed  in  social  uses  ;  that  the  greater  its 
quantity  the  lower  the  rate  of  compensation  at  which  society  gets 
its  use  ;  that  society  gets  the  use  of  that  portion  of  capital  which 
is  privately  owned,  at  least  as  cheaply  as  it  gets  the  use  of  that 
which  is  publicly  owned  ;  and  that,  were  there  no  great  reservoirs 
of  private  ownership,  into  which  the  successful  could  profitably 
invest  their  earnings  and  savings,  society  could  not  be  tided  over 
its  periods  of  lower  production,  without  great  famines,  and  indeed 
civilization  could  not  exist;  women  and  children  could  not  be 
maintained  after  the  death  of  their  immediate  husbands  or  fathers; 
the  very  implements  of  the  great  industries,  .such  as  I'ailways, 


AT  LAST  LABOR  GETS  ALL.  305 

banks,  steamship  lines,  and  factories,  could  not  exist,  and  society 
would  be  remitted  back  to  the  condition  in  which  it  now  is  in 
Central  Africa. 

The  principle  of  absolute  free  speech  implies  the  unlimited  polit- 
ical right  to  teach  economic  and  social  falsehoods,  the  aim  of 
which  is  to  stir  up  the  destitute  class  of  society  to  believe  that  they 
can  by  some  undefined  uprising-,  coup  d'etat,  or  revolution,  come 
into  the  possession  of  plenty  of  every  thing  they  desire.  Under- 
neath these  complaints  there  lies  a  misconception  of  the  social  use 
that  is  actually  made  of  all  stored-up  wealth,  and  a  misinterpre- 
tation of  the  utility  of  wealth-accumulation,  as  a  means  of  promot- 
ing equality  of  wealth-consumption.* 

The  instinct  to  hoard  enjoyable  products  is  manifested  by 
squirrels,  ants,  bees,  and  hibernating  quadrupeds.  In  primitive 
stages  of  society  misers  might  hoard  gold  coin.  But  in  the  mod- 
ern organization  of  industry  there  is  no  hoard.  The  supposed 
hoard  is  not  aboard,  but  merely  a  power  over,  or  claim  upon,  some 
form  of  reproductive  wealth,  like  ships,  cars,  or  locomotives,  of 
which  labor  has  the  loan  and  custody  as  implements,  the  public 
hag  the  product,  viz.,  transportation,  society  has  the  net  result, 
viz.,  cheapness  and  equality  of  consumption,  and  the  so-called 
hoarder  has  a  power  to  draw  dividends  on  stock,  the  whole  of 
which — except  the  small  fraction  required  for  his  clothing,  shel- 
ter, food,  and  fuel — he  must  sooner  or  later,  and  dii'ectly  or  indi- 
rectly, and  at  home  or  abroad,  pay  out  for  labor.  It  is  singular 
that  the  socialists,  who  begin  by  affirming  that  labor  is  the  sole 
cause  of  all  value,  fail  to  infer  that  the  only  use  to  which  wealth 
can  be  ultimately  put  must  be  to  pay  for  labor,  and  hence  that,  in 
the  lo2ig  run,  labor  must  get  it  all. 

Thus  Mr.  Griinlund  first  arrives  at  the  rate   of   working  on 


♦  Robert  Ingcreoll,  in  a  lay  Bermon,  at  Chickering  Hull,  delivered  to  an  audience 
chiefly  i^ociahst,  said:  "It  is  an  insanity  to  pet  more  tbun  yon  want.  Iniiigine  a  man 
in  this  city,  an  intelligent  man,  m\y  with  two  or  three  million.s  of  coatsi,  eight  or  ten 
millions  of  hat^',  vast  warehouses  full  of  shoes,  billions  of  neclities,  and  imagine  that 
man  getting  up  at  four  o'clock  in  the  morning,  in  the  rain  and  snow  and  sleet,  working 
like  a  dog  all  day  to  get  another  necktie  !  Is  not  that  exactly  what  the  man  of  twenty 
or  thirty  millions,  or  of  five  millions,  does  to  day  ?  Wearing  his  life  out  that  somebody 
may  say,  '  How  rich  he  is  ! '    What  can  he  d()  with  the  surplus  ?    Nothing." 

The  investments  of  Vanderliilt  in  railways,  of  which  society  has  the  entire  use  in 
transportation,  of  which  labor  has  the  entire  loan  and  keeping,  for  productive  purposes, 
and  of  which  Vanderbilt  Las  the  control  and  government,  only  on  the  single  condition 
of  paying  more  for  its  stock,  and  running  it  more  economically  than  any  competitor, 
bear  only  a  humorous,  not  an  economic,  resemblance  ^to  an  investment  in  billions  of 


306  ECONOMIC  PUILOSOPIIT. 

shares,  which,  as  we  have  shown  in  a  previous  chapter,  is  carried 
on  between  capital  and  labor,  by  adding  the  value  of  the  raw  ma- 
terials, and  allowing  5  per  cent,  of  the  total  value  for  annual 
depreciation  of  machinery,  implements,  and  buildings — deduct- 
ing the  total  of  these  two  from  the  value  of  the  finished  products 
of  manufactures.  The  remainder  gives  the  total  joint  earnings, 
or  fund  for  division,  between  the  labor  performed  in  the  factory 
during  the  year  and  the  labor  stored  in  the  form  of  capital  in  tlie 
factory,  good-will,  stock,  laud,  machinery,  losses,  bad  debts,  ex- 
tensions of  i^lant,  profits,  and  all  other  modes  in  which  capital 
has  been  invested,  or  sunk,  in  creating  the  business  in  which  labor 
is  employed.  Mr.  Griinlund  assumes  that  labor,  instead  of  being 
permitted  to  work  the  factories  on  equal  shares  with  capital,  ought 
to  take  the  whole,  and  that  all  that  capital  gets  is  "  fleecings."  * 

This  is  equivalent  to  liolding  that  there  ought  to  be  no  means 
of  investing  the  savings  of  labor  in  any  reproductive  form  what- 
ever, but  that  civilized  society  ought  to  return  to  the  African  state, 
in  which  no  reproductive  capital  exists. 

But,  because  labor  agitators  can  formulate  no  remedies  which 
it  would  be  within  the  province  of  a  legislature  to  enact,  it  does 
not  follow  that  they  may  not  bring  about  a  state  of  feeling  in  the 

neckties.  The  basis  of  the  socialist  complaint  is  that  the  wealth,  accumulated  in  large 
fortunes,  is  wealth  capable  of  being  privately  osed.  It  is  not.  It  is  social  wealth  pub- 
licly used  and  privately  controlled. 

*  "  The  Co-operative  Commonwealth,"  by  Laurence  Griinlund. 

Mr.  Griinlund  continues,  through  278  pages,  to  anathematize  society,  but  the  follow- 
ing is  absolutely  the  only  line  of  exposition  he  gives  of  the  mode  in  which  things  are  to 
be  mended.    On  p.  102  he  defines  his  whole  remedy  as  follows  : 

"  For  what  is  '  the  Co-operative  Commonwealth  ?  ' 

"  Extend  in  your  mind  division  of  labor  and  all  the  other  factors  that  increase  the 
productivity  of  labor  ;  apply  them  to  all  human  pursuits  as  far  as  can  be  ;  imagine 
manufactures,  transportation  and  commerce  conducted  on  the  grandest  possible  scale, 
and  in  the  most  effective  manner  ;  then  add  to  division  of  labor  its  complement,— Coff- 
CERT  ;  introduce  adjustment  everywhere  where  now  there  is  anarchy  ;  add  that  central 
regulative  systetn  which  Spencer  Fays  distinguishes  all  highly  organized  structures,  and 
which  supplies  '  each  organ  with  blood  in  proportion  to  the  work  it  does  '  and — behold 
the  Co-operative  Commonwealth  ! 

"  The  Co-operative  Ccmimonwealth,  then,  is  that  futnre  social  order— the  natural  heir 
of  the  present  one — in  which  all  important  instruments  of  production  have  been  taken 
under  collective  control  ;  in  which  the  citizens  are  consciously  public  functionaries, 
and  in  which  their  labors  are  rewarded  according  to  results. 

"  A  definition  is  an  argument." 

Imagine  a  legislature,  or  constitutional  convention,  assembled  and  asked  to  enact  the 
above  vision  into  law.  The  act  would  read  :  "  Be  it  enacted  that  division  of  labor  and 
all  the  other  factors  that  increase  the  productivity  of  labor  shall  be  applied  to  all  human 
pursuits  as  far  as  can  be  ;  that  manufactures,  transportation,  and  commerce  be  con- 
ducted on  the  grandest  possible  scale,"  etc.    The  act  would  be  useful  only  as  a  joke. 


WHAT  HOLDS  A  MAjV  DOWK  307 

minds  of  many  men  which  may  call  for  legislative  as  well  as 
judicial  action.  There  is  a  point  at  which  the  teaching  of  a  false 
system  of  political  economy  merges  into  incitement  to  assassina- 
tion, thugism,  and  treason,  just  as  there  is  a  point  at  which  the 
doctrine  of  Malthus,  concerning  jjopulation,  merges  into  becom- 
ing accessory  before  the  fact  to  a  criminal  abortion,  and  just  as 
there  was  a  point  in  the  doctrine  of  the  duty  of  supx^ressing  relig- 
ious heresy  by  coercion,  where  even  the  supposed  preaching  of  the 
Christian  gospel  merged  into  an  attempt  on  the  life  of  innocent 
persons. 

The  inference,  in  logic,  is  short,  and  reasonably  correct,  that  if 
all  returns  upon  capital  were  a  robbery  of  labor,  then  it  would  be 
the  duty  of  the  laborer  to  avenge  his  poverty  on  the  capitalist. 
The  premises  being  false,  can  society  long  continue  to  hold  that 
every  man  has,  under  the  sacred  guise  of  free  speech,  the  right  to 
recommend  and  urge  crunes,  which  nobody  can  be  permitted  to 
commit  ? 

121.  Causes  which  Compel  Men  to  Work  for  Wages. — 
Law  and  government  have  almost  nothing  to  do  with  determin- 
ing whether  a  man  shall  continue  destitute — working  for  wages 
all  his  life,  or  shall  accumulate  a  fortune  and  employ  thousands 
of  laborers.  Birth  and  education  mfluence  it  almost  as  little. 
Neither  race,  sex,  color,  nor  even  health,  are  more  than  second- 
ary aids.  Honesty  is  not  indispensable  to  money-making,  and 
though  knavery,  thatkeejis  within  the  law,  is  often  consistent  with 
great  business  success,  yet  those  who  are  highly  successful  as 
money-makers  compare,  on  the  whole,  very  favorably  with  the 
unsuccessful,  even  in  integrity. 

The  qualities  which  take  a  man  out  of  the  wages  class,  or,  on 
the  other  hand,  condemn  him  to  wages  labor  for  life,  are  cleai-ly 
definable,  and  work  with  a  precision  nearly  invariable.  Haste 
informing  judgments,  egotism  in  contesting  the  aims  or  thwart- 
ing the  plans  of  one's  superiors  or  associates,  inability  to  defer  to 
the  will  or  judgments  of  those  on  whom  one  is  dependent  for  suc- 
cess, making  up  the  qualities  known  as  "big  head,"  will  keep  very 
bright  men  in  the  wages  class.  Animalism,  or  the  inabihty  to 
resist  the  temptation  to  sensual  indulgence  of  the  appetite  as  soon 
as  the  means  are  obtained,  i)revent  tliat  exercise  of  parsimony  at 
the  outset  which  is  usually  necessary  to  emancipate  one  from 
wages  work.  Timidity  in  investing  one's  money  in  doubtful  en- 
terprises, for  fear  of  losing  it,  may  often  concur  with  love  of  the 
ease  of  life  which  belongs  to  a  person  earning  comfortable  wages, 


308  ECONOMIC  PHILOSOPHY. 

to  retard  enterprise,  and  as  a  rule,  unless  a  person  becomes  a 
handler  of  capital,  and  an  employer  of  labor  on  his  own  respon- 
sibility, before  he  reaches  thirty  years  of  age,  he  will  worlc 
for  wages  all  his  life.  Multiplicity  of  aims,  when  one  is  ti'ying 
to  do  business,  as,  if  one  desires  also  to  be  a  patron  of  art,  music, 
politics,  religion,  literature,  philanthropy,  or  social  reform,  cause 
"too  many  irons  in  the  fire,"  a  fatal  objection  which  remands 
many,  who  have  once  acquired  caj)ital,  back  to  the  wages  life,  or, 
at  least,  to  salaried  positions.  A  defective  sense  of  value,  or  an 
inaptitude  for  discerning  in  what  directions  values  will  rise,  will 
keep  a  man  in  the  wages  life.  A  captious,  quarrelsome,  or  litig- 
ious temper,  peremptory  in  asserting  its  own  way,  and  quick  to 
terminate  business  relations  without  compromise,  strewing  a 
man's  life  with  unadjusted  enmities  and  severed  friendships,  will 
often  limit  gi'eatly  one's  ability  to  become  an  emploper  of  labor. 
Yet,  it  must  be  admitted  that,  not  seldom,  there  are  men  who,  by 
one  or  more  acts  of  sharp-grasping,  and  even  criminal  injustice, 
have  attained  the  beginnings  of  lai-ge  fortunes,  thus  beginning,  in 
villainy,  lives  which  have  been  distinguished  by  gi'eat  economic 
success. 

The  qualities  which  keep  a  man  in  the  wages  class,  when  an- 
alyzed, are  generally,  though  not  always,  those  which  would 
make  it  least  to  the  interest  of  society  that  he  should  organize  and 
control  labor.  Usually  it  is  being  unfaithful  over  a  few  things, 
that  prevents  his  being  made  ruler  over  many  things.  Animal- 
ism, egotism,  precipitancy,  insubordination,  sensualism,  timidity 
and  indecision,  love  of  ease,  fear  of  risk,  versatility  of  aims  in 
life,  lateness  in  learning  how  to  make  money,  defective  sense  of 
values,  inaptitude  to  adapt  production  to  demand,  uncompromis- 
ing quarrelsomeness  and  imperiousness,  are  all  reasons  which 
will  cause  one's  use  of  money  to  be  unproductive,  and  one's  influ- 
ence over  industry  to  be  disjointing  and  disastrous.  But  the  fact 
that  one  gets  his  money  by  a  trick  or  fraud,  as  Jacob  in  cheat- 
ing Esau,  does  not  indicate  that  the  use  he  will  make  of  the 
money  wull  be  of  a  kind  to  lessen,  derange,  or  demoralize  indus- 
try. 

The  kind  of  men  society  is  interested  in  having  placed  in  con- 
trol of  industry  are  those  only  who  will,  when  an  enterprise  is 
small,  devote  the  minimum  of  its  returns  to  personal  indulgence, 
and  the  maximum  to  productive  effort.  This  kind  of  man  may  be 
opprobriously  styled  a  mean,  sharp,  or  overreaching  man,  but  he 
has  the  qualities  which  will  impart  to  industry,  in  its  earlier  strug- 


ASSORTING  MEN.  309 

gles,  success  and  permanency.     On  these  qualities  labor  depends 
for  its  employment,  and  consumers  for  cheapness. 

When,  by  these  means,  as  much  effective  industry  is  brought 
under  the  control  of  one  will,  as  one  intelligence  can  wisely 
guide,  then  the  possessor  of  this  will  and  intelligence  has  risen 
to  his  greatest  possible  utility  and  dignity,  usefulness,  and  pi'ofit, 
as  an  accumulator  of  capital  and  organizer  of  labor. 

Meanwhile  the  lack  of  the  qualities  which  will  cause  a  man 
successfully  to  accumulate  capital,  always  implies  the  lack  of  those 
whereby  he  could  employ  labor  with  profit  to  itself,  since  all 
wages  work  is,  as  Mr.  Griinlund's  own  diagrams  show,  a  system 
of  product-sharing,  and  hence  the  ' '  boss  "  who  cannot  make  profits 
for  himself  cannot,  continuously,  make  wages  for  his  men.  But 
if  a  man  lacks  the  qualities  essential  to  make  the  possession  of 
capital  profitable  to  him,  it  is  no  social  wrong,  but  a  very  great 
blessing  to  him,  that  a  class  of  men  exist  possessing  these  quali- 
ties, and  able  to  give  useful  direction  to  his  industry,  which  he 
could  not  usefully  direct  himself. 

Whoever  has  seen  any  thing  of  the  two  classes  of  men  knows 
that  precipitancy,  misinformation,  generosity,  insubordination, 
lack  of  calculation,  and  yet  lack  of  courage,  characterize  the  de- 
liberations of  nearly  all  workingmen's  assemblies,  while  those  of 
capitalists,  however  grasping,  compromising,  or  corrupt  they  may 
be,  are  superior  in  a  spirit  of  calculation  and  forethought. 

The  wages  relation  does  exalt  the  profit-maker  to  the  position  of 
master,  and  sink  the  wages-earner  into  that  of  servant,  but  it  arises 
out  of  psychological  causes  as  clearly  a  part  of  the  necessary  con- 
stitution of  man  as  the  causes  which  distinguish  force  and  matter 
are  in  physics.  Out  of  this  relation  grows  an  organization  of  in- 
dustry which  is  anarchic,  in  the  sense  that  its  essential  principles 
are  not  due  to,  or  affected  by,  human  law  ;  but  which  is  of  far 
more  value  to  mankind  than  any  and  all  government  or  law  can 
possibly  be. 

122.  The  Organization  of  Labor  in  Industry. — Any 
organization  of  labor  which  fails  to  include  within  itself  the 
capital  necessary  to  the  employment  of  labor,  evidently  implies 
the  existence  of  another  organization  of  laboi-,  exterior  to,  and 
more  or  less  independent  of  it,  viz.:  the  organization  of  labor  by 
capital,  which  employs  the  labor,  gives  it  all  the  means  of  sub- 
sistance  it  actually  receives,  and  even  the  means  with  which  it 
sustains  all  collateral  and  secondary  attempts  at  organization, 
including  the  means  with  which  labor  organizes  itself,  to  fight 


3 1 0  ECONOMIC  PHIL  0  SO  PHY. 

capital,  wlien  war  between  the  two  is  necessary.  Hence  it  is  the 
primary  organization  of  social  industry,  through  the  co-operation 
of  labor  with  capital,  under  the  inducement  of  wages  to  the 
worker  and  profits  to  the  employer,  that  now  constitutes  the  ex- 
isting organization  of  labor  as  an  agent  in  actual  industry.  All 
other  organizations  of  labor,  such  as  the  Knights  of  Labor,  the 
Central  Labor  Union,  and  the  trades  unions,  are  organizations 
effective  to  aid  in  settling,  with  capitalists,  the  terms  upon  which 
laborers  shall  enter  into  the  final  compact  with  capital.  Thereby 
they  finally  become,  in  the  only  true  sense  of  the  word,  organ- 
ized labor,  i.  e.,  labor  organically  set  in  motion  to  effect  indus- 
trial results,  viz.,  to  increase  the  consumption,  production,  and 
distribution  of  commodities.  What  are  ordinarily  called  organi- 
zations of  labor,  i.  e. ,  societies  to  adjust  the  terms  on  which  men 
will  woi'k,  bear  the  same  relation  to  the  actual  organization  of 
labor,  or  to  society  at  work,  as  primaries  in  politics  bear  to  the 
real  government.  When  tlie  actual  officers  of  government 
have  been  selected,  the  primaries  dissolve  and  lie  dormant  until 
another  occasion  for  selection  arises,  while  the  government 
moves  on  in  the  hands  of  the  officers,  whose  choice  the  primaries 
have  aided  to  determine. 

When  the  Knights  of  Labor,  trades  unions,  Brotherhood  of 
Locomotive  Engineers,  and  other  similar  orders  have  done  their 
work,  labor  is  not  yet  organized.  It  has  oialy  fixed  the  terras  on 
which  it  will  organize.  Its  real  organization  is  only  arrived  at 
when  the  wheels  of  industry  are  again  set  in  motion,  with  every 
man  at  his  post,  the  loom  deftly  weaving  its  product,  the  Besse- 
mer cauldron  blazing  with  its  silvery  draft  of  liquid  flame,  the 
engine  toiling  smoothly  under  its  tremendous  burden,  and  the 
car  gliding  "o'er  the  stony  street."  Labor  is  really  organized 
only  when  society  is  again  at  work.* 

An  example  of  a  true  organization  of  labor  may  be  found  in  the 

*  In  a  paper  read  before  the  Cleveland  convention  in  May,  1886,  by  Lawrence  Har- 
mon of  Peoria,  it  was  stated  that  the  fact  of  200,000  men  striking  between  April  24th 
and  May  12th,  and  125,000  men  being  out  in  the  week  ending  May  12th,  had  entailed  a 
loss  of  wages  amounting  lo  $3,l'00,C00,  and  of  gross  returns  to  capital  rising  to  $2,500,- 
000,  of  $4,000,000  in  losses  upon  deferred  and  cancelled  contracts,  and  of  $20, 100,000 
upon  building  contracts  ;  the  entire  loss  upon  strikes  in  the  three  months  immediately 
following  the  first  of  May  aggregating  many  hundred  millions  of  dollars.  To  this  must 
be  added  the  effort  of  the  anarchists  in  Chicago  to  convert  the  strikes  into  a  social 
revolution,  th'»  slaughter  of  the  police  by  dynamite,  and  the  impending  sentence  upon 
leading  anarchists  consequent  upon  the  tragedy.  No  one  raistakt^s  those  events  for  an 
organization  of  labor.  They  are  the  disorganization  of  labor  in  its  most  short-sighted, 
cruel,  and  criminal  form.      See  note  to  j).  o-M. 


UNCOASCIOUS  PARTNERSHIP.  311 

following-  illustration  :  Every  one  recognizes  that  working  a 
farm  on  equal  shares,  where  one  person  finds  the  land,  improve- 
ments, buildings,  seeds,  fruit  trees,  implements,  and,  perhaps, 
cattle  and  flocks  and  poultry,  while  the  other  brings  only  the 
labor-power  of  himself,  his  family,  and  those  whom  he  may  hire, 
is  a  fair  bargain,  or,  to  put  it  more  emphatically,  a  just  partner- 
ship. For  the  farm,  as  it  stands,  represents  many  yeai's  of  labor 
already  done.  The  working  tenant,  who  proposes  to  work  the 
farm,  offers  one  year  of  labor  to  be  done,  against  many  years  of 
labor  already  done.  This  is  the  metayer  system  of  Europe.  In- 
deed, most  parts  of  the  world  in  all  ages  have  been  tilled  under 
it,  and  its  equity  still  remains  to  be  questioned. 

Now  fifty -four  railways,  which  cost  to  construct  and  equip 
them  $1,251,795,029.74,  make  annual  returns  to  the  Railway  Com- 
missioners of  Illinois.  Their  par  capital  is  more  than  twice  that 
sum,  but  with  that  we  have  not  at  pi'esent  to  do.  These  railways 
employ  156,007  Avorkers,  of  all  sorts,  from  president  to  brakeman. 
Their  gross  earnings  are  about  one  hundred  and  sixty-three  and 
one-half  millions  of  dollars,  and  yet  all  these  railways  are 
worked  upon  shares  by  the  naked  labor,  i.  e. ,  labor  not  backed  by 
the  least  capital  employed  in  the  business.  The  sharing  comes 
out  so  evenly,  though  no  effort  at  even  sharing  or  profit  sharing 
is  thought  of  in  adjusting  any  workman's  salary,  that  there  are 
paid  in  salaries  and  wages  $81,936,170.81,  and  there  are  paid  to 
the  capital  (labor  previously  done  in  constructing  and  equipping 
the  roads)  $81,720,265.53  yearly. 

123.  The  Terms  of  Partnership.  Labor  and  Capital. 
— Working  on  shares  is  not  an  accident,  in  that  natural  organiza- 
tion of  labor  which  arises  through  each  man  fitting  into  the 
niche  that  he  finds  made  for  himself,  and  doing  simply  the  best 
he  knows  how  to  do,  minding  always  his  own  business,  and  leav- 
ing other  people  to  mind  theirs.  For  instance,  the  total  manu- 
factures of  the  United  States  have  first  to  pay  for  their  raw 
materials  purchased,  all  of  which  have  been  the  finished  product 
of  one  or  more  previous  industries,  and  have  been  created  by  a 
joint  partnership  of  labor  with  capital,  resulting  in  a  joint  shar- 
ing of  wages  of  labor  with  retuinis  to  capital.  Having  paid  for 
these,  there  remains  out  of  the  whole  price  received  on  sale  of  the 
products,  a  gross  fund,  out  of  which  tlie  capital  (or  labor  done 
befoi'e  the  year  began)  had  to  divide  with  the  labor  done  during 
the  year.  The  division  in  1880,  for  the  total  manufactures  of 
the  United  States,  was  : 


3 1 2  ECONOMIC  PHIL  OSOPII Y. 

To  wages  (exclusive  of  those  earned  on  raw  ma- 
terials)   I    947,953,795 

To  capital  for  all  purposes 1,024,801,837 

The  share  taken  by  capital  includes  payment  for  erect- 
ing plant,  procuring  orders,  marketing  product,  extend- 
ing works,  making  repairs,  insurance,  machinery,  interest, 
losses  by  bad  debts,  and  losing  contracts,  etc.  The  principle  here 
carried  out  is  evidently  that  of  working  on  shares.  In  the  salt 
manufactui'e  the  division  was  : 

To  wages  (not  earned  on  raw  materials)      .      .        .        $1,260,023 
To  capital  (for  all  purposes) 1,495,594 

In  the  mixed  textile  fabrics,  the  division  was : 
To  wages  (not  earned  on  raw  materials)     .       .        .       $13,216,753 
To  capital  (for  all  purposes) 15,677,109 

In  the  iron  and  steel  manufacture,  the  division  was : 
To  wages  (of  same  process  for  wiiich  returns  of  capital 

are  counted) $55,476,785 

To  capital  (for  all  purposes) 49,809,750 

Where  the  nature  of  the  business,  or  the  inventions  made  in  it, 
are  such  that  capital  invested  in  machinery  performs  almost  the 
whole  of  the  labor  involved  in  it,  or  where  the  nature  of  the  busi- 
ness is  essentially  a  commercial  rather  than  a  manufacturing  one, 
the  slight  work  performed  in  the  manufactiire  being  a  mere  inci- 
dent in  a  process  essentially  of  buying  and  selling,  as  in  meat 
packing,  lumber,  leather,  etc.,  the  transaction  is  less  a  partner- 
ship and  the  share  of  labor  diminishes.  Where,  on  the  other 
hand,  men  and  skill  are  nearly  every  thing,  and  machinery  next 
to  nothing,  as  in  the  ship-building,  at  a  time  when  it  consists, 
as  now,  in  the  United  States,  almost  wholly  of  repairing, 
and  the  silk  manufactui*e  at  a  time  when  new  processes  have 
to  be  intx'oduced  througli  new  workmen,  and  a  generation  has 
to  be  educated  up  to  the  art,  the  .share  of  capital  sinks,  and  the 
share  of  wages  expands  to  three-fold  the  partnership  share. 
Compare : 


Slaughtering    and  j  Wages  to  labor 

meat  packing.  .  .  {  Gross  returns  to  capital  . 

Woolen      g  o  o  d  s  i  Wages  to  labor 

manufacture.  .  .    \  Gross  returns  to  capital 

1       ■>  \  Wages  to  labor 

l^umoer.        .         .   ^  ^.^.^^^  returns  to  capital 

y      ,^  ]  Wages  to  labor 

l^eatner.        .        .   |  q-^.^^^  returns  to  capital . 


$10,508,530 
25,314,981 
25,836,392 
33,924,718 
31,845,974 
55,226,360 
4,840,413 
7,199,375 


CO-OPERATIVE  SHARING.  oV6 

And  again  compare  the  arts  in  which  machineiy  is  of  little  im- 
portance, ship  repairing,  or  in  which  skill  is  being  developed  by 
an  educating  process  (silk  manufactui*e)  : 

Ship-building,    re-  S  Wages  to  labor        .        .  .  $12,713,813 

pairing.         .          ^  Gross  returns  to  capital  .  .  3,350,156 

Silk  and  silk  goods  \  Wages  to  labor         .         .  .  9,146,705 

manufacture.  .  .  \  Eeturns  to  capital    .         .  .  3,805,217 

It  is  idle  to  deny  that  these  figures  prove  that  under  the  exist- 
in;]-  wages  system  all  industry  is  ijroduct-sharing,  in  fact.  Though 
tlie  proportion  in  which  the  two  factors  share  with  each  other 
varies,  according  to  the  relative  importance  of  the  service  which 
capital  renders  to  labor,  when  weighed  against  that  which  labor 
renders  to  capital,  equivalent  values  exchange  between  the  two. 
Where  labor  can  say  to  capital,  we  can  perform  this  work  three 
times  better  without  you  than  you  can  without  us,  as  in  shij)  re- 
pairing, it  takes  a  three-fold  share,  and  vice  versa. 

It  would  be  interesting  to  compare  the  unintentional  profit- 
sharing,  thus  pointed  out  in  the  aggregate  industries  of  the  United 
States,  with  the  intentional  profit-sharing  practiced  by  M.  Godin 
in  France,  by  the  Pillsbury  Flour  Mills  at  Minneapolis,  by  the 
Peacedale  Woolen  Manufactory,  and  by  Brewster  &  Co. ,  with  a 
view  of  determining  whether  the  share  of  the  value  of  the  aggre- 
gate product  which  goes  to  wages  is  larger  in  proportion  to  the 
share  which  goes  to  capital,  in  the  intentional  system  of  profit- 
sharing,  than  it  is  in  the  unintentional  system.  It  would 
probably  be  found  that  the  wage-workei*s  get  the  highest  ratio  of 
the  aggregate  product,  in  those  industries  which  depend  the 
most  for  their  profits  upon  the  eff'orts  of  the  wage-workers. 
The  editor  of  Le  Devoir  makes  the  very  remarkable  calcula- 
tion concerning  M.  Godin's  enterprise  at  Guize,  "that  if  all 
the  working  population  of  Finance  were  employed  in  12,333  simi- 
lar co-operative  workshops,  and  if  similar  cash  sums  had  been 
dispensed  in  each  one,  since  the  Familistre  Society  has  been  regis- 
tered, it  would  have  given  an  increased  purchasing  power  of  no 
less  than  £292,880,000  during  that  short  period."  But  how  would 
an  addition  of  more  than  one  hundred  thousand  millions  of  dol- 
lars, to  the  wages  bill  of  the  manufacturers  of  France,  affect  them 
in  their  competitions  with  those  of  England,  Germany,  and  the 
United  States  ?  Does  the  stimulus  of  profit-sharing  enhance  the 
quality  or  rapidity  of  the  work,  in  a  degree  as  great  as  it  increases 
the  cost  ?  If  not,  would  not  the  deduction  from  the  profits  lessen 
the  degree  in  which  works  could  be  extended,  new  machinery 


314"  ECONOMIC  PHILOSOPHY. 

supplied,  and  the  number  of  manufactures  that  could  continue 
their  works,  and  would  not  curtailment  in  these  directions  react 
against  the  wages  of  labor  ? 

The  Pillsbury  Flour  Mills,  at  Minneapolis,  pays  dividends  only 
to  those  workmen  who  have  continuously  remained  in  service  for 
five  years,  and  to  men  in  certain  positions  of  responsibility,  with- 
out regard  to  grades  of  service.  It  has  paid  three  dividends  of 
125,000,  $26,000,  and  $35,000,  and  the  number  of  dividends  is  con- 
stantly increasing.  To  estimate  the  exact  value  of  the  profit-shar- 
ing policy,  to  the  employers  and  the  employed,  it  would  be  neces- 
sary to  know  the  gross  annual  earnings,  which  constitute  the  fund 
for  real  division  between  capital  and  labor.  This  is  arrived  at  by 
deducting  fi'om  the  aggregate  value  of  the  annual  product  the  cost 
of  the  raw  materials  used,  only.  The  difference  will  be  the  total 
fund  for  division  between  labor  and  capital.  Adding  together 
the  wages  and  dividends  paid  to  labor, and  comparing  the  ratio  of 
this  total  to  the  total  received  by  capital, with  the  total  received 
by  labor  and  capital  respectively  in  other  establishments,  would 
show  whether  the  owners  of  the  mills  do  or  do  not  make  a  profit 
by  profit-sharing,  and  whether  this  system  will  aid  or  handica]> 
them  in  their  contests  with  competitors.  Few  working-men  will 
claim  that  co-operation  or  profit-sharing  should  be  resorted  to 
from  philanthropic  or  charitable  motives.  If  resorted  to  at  all, 
it  must  be  shown  to  profit  the  profit-sharer,  as  well  as  the  profit-re- 
ceiver. The  motive  for  it  must  be  a  business  motive.  The  report 
of  the  Massachusetts  Labor  Bureau  holds  that  profit-sharing  must 
not  interfere  with  the  right  to  discharge  workmen  for  negligence 
and  uiefficiency.  And  the  e  "f perience  of  Brewster  &  Co.  shows 
that  profit-sharing  does  not  whou  ^  prevent  strikes.  Their  work- 
men struck  for  eight  hours  a  day  w  ^^^'^  ^^^^^  ^^^^  ^^  ^^^  ^^^^^'^  ^^^^ 
power  to  reduce  their  day  to  eight  houi  ""'  ^"^^  ^^^"  ^^  striking 
they  lost  a  dividend  of  $11,000  which  w  -^uld  have  been  due  a 
month  later,  besides  losing  $8,'ooo  in  wao-es  "  \  '  ^*'^  ^""^  ""^  ^^"^ 
weeks  they  went  back  to  work  on  tlie  old  plan  ot '  ''"'^'^^  '""^"^^ 
without  the  profit-sharing  '       " 

In  what  degree  the  wages  system  may  change  into  one  ot  ^  "'''^^' 

odS:^'  ""^  "''  ^"'  '^  ^''''^'''  -^'^  -^-t-^ty-     The  teniae,  "  "^ 
tTlJ^Z^^'f  '""  complexity,  andas  industry  grows  in  intens%, 
work  t?i     "^    T  ""^"'^^^^  ^"^  ^^^""^^1  «^1^"^«  to  piece  and  jot 
Z.i\T}'''"7  r.'  P^^'*"^^'«l^iP«  to  joint  stock  concerns,  orcor^- 
o"b  r;  ^''l  "^^      ^^^^"^^^'  ^^^'^^  ^^r.  in.  certain   kinds . 

o!   business,  be  a  reaction  toward  profit-sha^.^  and  co-opera-.- 


HOME  AND   FOREIGN  LABOR.  315 

tion,  it  is  too  early  to  determine,  but  we  see  no  reason  to  pre- 
dict it. 

1 24.  Effect  of  Iinportation  of  Coini>etiiig  Products  on 
tlie  "Wages  of  Labor. — In  proportion  as  transportation  is  cheap- 
ened, the  competition  between  both  capitalists  and  laborei*s,  in  the 
production  of  such  commodities  as  admit  of  ready  transportation, 
extends  the  war  of  competition  to  the  populations  of  all  countries 
having  like  natural  facilities  of  production.  If  cost  of  transpor- 
tation between  England,  France,  Germany,  Russia,  or  India,  and 
tlie  United  States  were  reduced,  in  point  of  both  dix-ect  monej- 
cost  and  delay,  to  0  (zero)  or  nothing,  so  that  a  commodity,  at  the  in- 
stant of  production  anywhere,  could  be  sold  in  the  United  States 
at  as  low  a  figure  as  at  its  point  of  foreign  i)roduction,  and  if  the 
foreign  country  made  equal  use  of  machine  power  in  production 
with  ourselves,  so  that  our  labor  could  compete  with  theirs  on 
equal  terms,  it  is  obvious  that  wages  of  labor  expressed  in  monej^ 
in  all  these  countries  would  be  equalized,  those  having  the 
lowest  rates  being  raised,  and  those  having  the  highest  de- 
pressed, until  one  common  level  would  be  obtained.  In  what- 
ever degree  our  wages  are  higher  than  those  of  the  other 
countries  named,  we  owe  the  fact  either  to  the  inequality  of  our 
competition  owing  to  our  greater  use  of  machinery,  or  the  ob- 
structions to  traffic  afforded  by  distance.  For,  abolishing  these 
two  inequalities,  the  foreign  and  domestic  labor  market  would  be- 
come one  market,  and  it  is  a  fundamental  pi'inciple  in  economics, 
that  one  commodity  can  only  have  one  price  in  one  market,  where 
competition  is  free,  and  all  purchasers  are  in  equal  possession  of 
all  tlie  facts. 

Our  profits  of  enterprise  would  of  course  suffer  a  like  deduction ; 
but  with  that  we  are  not  now  concerned.  Higher  profits  of  capi- 
tal, and  higher  wages  of  labor,  are  the  industrial  forces  at  work  to 
induce  the  migration  of  populations  from  old  to  new  centimes  of 
industry.  When  these  stop,  national  growth  by  immigi-ation  will 
stop.  Wages  of  labor,  in  the  countries  named,  bear  to  each  other 
about  the  following  proportions  : 

United  States,  England,  France,   Germany,    Russia,   India, 
150.  110  to  90.       70.  60.  30.  10. 

Multiplying  these  rates  of  wages  into  the  wages-working  popu- 
lations of  tlie  respective  countries,  and  striking  an  equation 
tlirougllbut  the  entire  mass,  would  show  tliat  if  inequalities  arising 
from  machinery,  and  protection  arising  from  cost  of  transporta- 


316  ECONOMIC  rUILOSOrUY. 

tion  were  both  removed,  we  might  look  for  a  wage  rate  of  perhaps 
20  or  30  in  place  of  150,  since  the  nation  with  which  we  would 
ultimately  equalize  would  be  India  with  her  330,000,000  of  people, 
among  which  a  fall  in  our  wage-rate  of  12  cents  could  only  be  ex- 
pected to  make  a  rise  of  2  cents,  owing  to  their  gi-eater  number. 

Setting  out,  therefore,  with  the  axiom,  that  differences  of  value 
in  labor  and  all  other  commodities  arise  from  the  relative  obstruc- 
tions that  exist  either  in  the  production  or  transportation  of  botli 
labor  and  commodities,  between  the  countries  of  higher  and  those 
of  lower  prices,  and  that  in  order  to  maintain  two  markets  or, 
what  is  the  same  thing,  two  market  prices,  on  one  commodity, 
labor,  for  instance,  there  must  be  intermediate  obstructions,  pre- 
venting a  perfectly  gi-atuitous  interchange,  or  free  trade,  between 
the  two  markets,  we  arrive  at  the  conclusion  that  to  countries 
paying  high  wages  and  high  i^rofits,  perfect  free  trade  in  com- 
modities involves  the  simultaneous  degradation  of  labor  and 
bankruptcy  of  capital. 

125.  Effect  of  Military  Protection  to  Foreign  Trade 
on  Home  Wages. — The  supposed  question  between  fi'ee  trade 
and  protection  is  sometimes  obscured  by  confining  the  discussion 
to  one  mode  of  protection,  and  assuming  that  countries  that  do  not 
adopt  that  particular  mode  of  pi'otection,  as,  e.  g.,  by  tariff,  are 
examples  of  free  trade.  But  a  country  may  send  its  armies 
throughout  the  world,  invading  the  territory  of  every  weak  bar- 
barian state,  planting  fortresses  in  its  harbors,  and  forcing  trad- 
ing stations  into  its  rivers,  and  with  its  bayonet  at  the  throat  of 
500,000,000  of  people,  may  plant  its  bankers  in  their  towns,  itsships 
in  their  harbors,  and  its  flag  over  every  coaling  station  by  which 
ocean-going  steamers  may  reach  it.  Its  bankers  may  be 
supplied  with  money  and  credit  at  3  per  cent,  per  annum  because 
capital  at  home  is  untaxed.  Its  steamers  may  be  subsidized  out 
of  the  national  revenues  instead  of  being  left  to  the  earnings  they 
can  make  by  carrj-ing  cargoes  cheaply.  With  all  these  wires 
laid  and  nets  sprung,  this  nation  may  say  to  these  barbarians  "  Buy 
where  you  can  buy  cheapest,  i.  e. ,  of  me,  or  111  conquer  you.  I 
will  open  your  ports  to  commerce  with  me,  and  will  close  your 
factories  and  farms  to  commerce  among  yourselves,  by  grape 
and  canister,  whether  it  bankrupts  your  native  industries  and 
disorganizes  your  native  labor,  or  not."  This  may  be  called  for 
sweetness  and  purity's  sake  fi'ee  trade,  but  it  is  the  protection  of  for- 
eign trade  by  military  force.  And  if,  by  this  forced  co^iquest  of 
all  foreign  markets,  so  large  a  foreign  trade  is  built  up  that  the 


MILITARY  PROTECTION.  317 

interests  of  its  farmei's  become  subordinate  in  importance  to  its 
foreign  trade,  and  it  tlierefore  admits  foreign  corn  free  of  duty,  tliis 
is  not  free  trade,  but  the  sacrifice  of  its  rural  industries  to  an  en- 
forced foreign  trade.  The  Empire  of  Rome  was  even  more  ungra- 
cious to  the  farmers  of  Italy,  since  with  the  proceeds  of  its  for- 
eign conquests  it  bought  the  foreign  corn  and  gave  it  free  to  the 
citizens,  tlius  rendering  it  impossible  for  the  fai-mers  of  Italy  to 
raise  corn  at  all.  But  this  was  discovered  to  be  no  triumph  of 
free  commerce,  but  only  an  armed  destruction  of  home  industry. 
It  only  bankrupted  the  government,  to  attempt  to  give  away  a 
supply  of  corn,  equal  to  the  cessation  of  production  in  Italy, 
caused  by  the  free  corn.  Instead  of  cheap  bread  it  brought 
waste  lands  and  a  bankrupted  peasantry. 

Modern  England  repeats  the  Roman  example.  But  of  this  in 
another  chapter.  Military  protection  to  foreign  trade  must  not 
be  mistaken  for  free  trade.  It  is  a  form  of  protection.  It  accounts 
for  the  higher  rate  of  wages  maintained  in  England  than  that 
which  prevails  in  France  and  Germany. 

126.  Diversity  of  Industries  Essential  to  High  Wages. 
— In  a  country  where  few  industries  are  carried  on,  many  persons 
nmst  toil  slavishly  and  spend  large  portions  of  time  in  idleness, 
vice,  or  crime,  or  some  form  of  social  revolution  or  war,  because 
they  fail  to  find  the  industry  that  is  congenial  to  them ;  and,  on 
the  other  hand,  many  people  must  suffer  a  severe  restriction 
upon  all  their  artistic  enjoyments  and  rarer  capacities,  because 
they  are  not  brought  into  contact  with  good  social,  intellectual, 
artistic,  scientific,  religious,  and  philosophic  means  of  culture. 
Thus  production  is  scanty,  and  consumption  is  meagre,  and  of  a 
mei-e  animal  scope  and  kind.  So  hard  and  barren  of  incident  is 
the  life  of  herdsmen  and  shepherds  in  Australia,  that  they  have 
been  known  to  forget  their  powers  of  speech,  and  degenerate  into 
imbeciles,  for  lack  of  an  opportunity  to  exchange  ideas  with  their 
fellows.  Among  a  very  sparse  population  the  ratio  of  time  spent 
in  idleness,  physical  and  mental,  so  increases,  that  in  a  life  it  must 
often  have  the  effect  of  enabling  a  person  to  live  only  one  year  of 
sensations  in  many  years  of  duration.  Compared  witli  such  a 
barren  and  slow  life,  an  active  life  in  town  is  characterized  as 
"fast, "or  as  ''  living  many  years  in  one." 

The  capacity  to  "live  fast"  arises,  therefore,  from  the  diversifi- 
cation of  industries.  It  must  not  be  supposed  tliat,  within  reason- 
able limits,  living  rapidly  and  vigorously  shortens  life.  On  the 
contrary,  no  one  fact  tends  so  essentially  to  lengthen  life,  as  the 


3 1 8  ECONOMIC  PHIL  080PHT. 

ability  to  fill  up  all  its  moments  with  transitions  from  each  form 
of  exertion  to  some  other,  before  the  pleasure  involved  iu  the 
exertion  while  it  is  novel  shall  liave  degenerated  into  satiety, 
disgust,  or  weariness. 

The  development  of  man  mentally,  morally,  and  socially  is 
therefore  the  product  of  diversification  of  industry.  The  progress 
of  society  in  wealth-production,  only  faintly  measures  his  corres- 
ponding increase  in  the  capacity  to  obtain  from  wealth  the  enjoy- 
ment it  is  capable  of  bestowing,  and  to  infuse  into  life  the  joy  with 
which  it  can.  be  filled.  In  the  degree,  therefore,  that  a  gov- 
ernment pursues  a  course  calculated  to  cause  sixteen  industries  to 
be  carried  on  instead  of  eight,  or  thirty-two  whei-e  but  for  its 
action  only  sixteen  would  be  prosecuted,  it  gathers  tip  the  idle 
hours  of  millions  of  men  and  women,  and  consecrates  them  to 
productive  industry,  while  it  brings  into  their  mental  cultui'e  the 
relief  and  intellectual  profit  found  in  a  greater  diversity  of 
amusements,  instruction,  and  mental  commerce.  At  the  outset, 
in  a  new  country,  no  industry  is  so  profitable  as  the  same  indus- 
try would  be  where  all  the  processes  of  commerce  are  established. 
Even  farming  and  fishing,  in  the  early  settlement  of  New  England 
and  Virginia,  involved  greater  hardship  and  suffering  than 
would  have  been  performed  at  all,  if  the  fish  and  food  could  have 
been  got  by  as  small  an  effort  as  would  have  sufficed  in  the  old 
world.  Emigrants  never  go  to  new  countries  in  search  of  ease 
and  repose.  Every  house  has  to  be  built,  and  every  farm  fenced, 
and  every  crop  reaped,  at  far  greater  than  the  old-world  cost  of 
time  and  effort. 

Gradually,  however,  the  new  country  begins  to  develop  modes 
of  industry  in  which  it  becomes  superior  to  the  old.  By  dis- 
covering the  proper  haunts  of  fish  and  game  the  hunting  and 
fishing,  at  first  precarious,  becomes  abundant.  Then  it  is  ascer- 
tained that  potatoes,  tar  and  rosin,  hewing  timber  for  shipping, 
and  lime,  can  be  got  out  cheaper  than  in  the  old  world.  As 
exchanges  multiply,  profits  rise,  time  and  tools  become  productive, 
and  men  feel  entitled  to  wages  for  their  time.  Profits,  however, 
are  for  the  time  only  obtainable  in  the  production  of  those 
things  which  depend  on  forest  trees,  such  as  turpentine,  or  on 
wild  game,  such  as  pelts,  or  on  cheap  land. 

At  length  the  country  has  produced  every  form  of  land  pro- 
duct, but  some  of  these  products  require  so  small  a  labor  to  manu- 
facture as,  e.g.,  wheat  into  fiour  and  flour  into  bread,  and  pelts 
into  furs,  and  hides  into  leather,  that  the  attemj)t  is  made.     The 


NATURAL    PROTECTION.  319 

iustant  it  is  made  an  international  competition  sets  in.  0 wing- 
to  the  existence  of  grist  mills,  tanneries,  and  furrier  establishments 
in  the  old  world,  and  the  difficulty  of  inaugurating  the  smallest 
new  enterprise  in  competition  with  one  already  established,  it  is 
only  a  question  of  freight,  on  the  wheat  to  England,  and  on  the 
flour  back,  whether  ever  a  grist  mill  can  be  started.  Make  the 
transportation  low  enough,  and  quick  enough,  and  the  new  colony 
can  not  grind  its  own  corn,  weave  its  own  wool,  distil  its  own 
turpentine,  dress  its  own  furs,  or  even  educate  its  own  children, 
or  hold  its  own  church  service.  Certain  industries,  however,  find 
a  natural  protection  in  the  three  thousand  miles  of  sea  which 
intervene  between  the  new  settlers  and  the  countries  of  old  and 
cheap  productions.  Education  is  not  importable  and  childi*en 
can  not  be  sent  across  the  seas  to  be  taught,  nor  can  parents  cross 
the  ocean  to  pray  or  attend  worship.  Hence,  the  school-teacher 
and  clergyman  have  natural  protection,  and  fli'st  among  the 
manufactures  that  grow  up  are  those  factories  in  which 
ignorance  of  those  things  which  our  fathers  have  known 
is  converted  into  knowledge,  and  doubt  into  faith.  So  buildings 
are  not  importable,  and  this  fact  protects  the  carpenter.  Horses 
must  be  shod  near  the  farm  whereon  they  draw  the  plow,  and 
this  protects  the  blacksmith. 

At  length,  however,  the  country  says  we  have  all  the  ores, 
coal,  lime,  and  other  materials  to  make  iron  and  steel  ;  and  we 
can  never  introduce  these  industries  at  all  if  we  wait  until  they 
can  be  started  here  at  a  profit,  since  the  time  will  never  conae 
when  one  producing  these  things  in  a  small  way  can  produce 
them  as  cheaply  as  one  producing  them  in  a  large  way.  But 
before  we  can  produce  in  a  large  way  we  must  produce  in  a  small 
way.  Hence,  we  must  produce  these  things  at  a  loss  first,  in 
order  ever  to  produce  them  at  a  profit.  They  find  by  examina- 
tion that  this  argument  apphes  to  far  moi'e  industries  in  number, 
and  that  their  value  and  profits,  if  inaugurated,  would  be  far 
greater  than  the  entire  category  of  industries  on  which  producers 
have  natural  protection.  Thereupoi^  they  impose  sucli  a  duty  on 
the  importation  of  the  competing  product,  as  will  cause  it  to  be 
superseded  by  the  domestic  product.  Thereupon  they  nmltiply 
the  number  of  industries  pursued  first  two-fold,  then  twenty-fold. 
There  will  probaldy  always  be  those  who  will  argue  that  this 
multiplication  of  industries  does  not  increase  the  rate  of  wages. 
But  there  will  always  be  a  sufficient  preponderance  of  opinion  in 
favor  of  tlie  policy  to  make  it  part  of  Mic  inevitable  ;iii(l  necessary 


320  ECONOMIC  PHILOSOPHY. 

action  of  every  self-governing-  country-,  unless  we  may  possibly 
except  a  country  like  Turkey,  which  indulges  in  a  religious  scruple 
against  import  duties  lest  they  may  have  the  effect  to  cause  a 
part  of  the  revenues  of  an  orthodox  Mohammedan  government 
to  be  contributed  by  alien  infidels  and  Christian  Giaours.* 

127.  Exclusion  of  Immigration  as  a  Measure  to  Pro- 
mote Wagfes. — As  wages  are  the  result  of  a  nearly  equal 
division,  between  capital  and  labor,  of  the  gross  earnings  of  all 
industry,  and  as  all  earnings  of  industry,  when  ultimately 
analyzed,  become  exchanges  of  mutual  service,  it  follows  that  no 
increase  of  earnings  can  be  effected  by  diminishing  the  number 
of  those  who  in  this  country  exchange  service,  i.e.,  by  excluding 
new  workei'S,  either  by  preventing  births  or  excluding  immigra- 
tion. Wherever  the  policy  of  increasing  wages,  in  the  whole 
population  of  a  country,  by  diminishing  population,  crops  up,  and 
whatever  form  it  assumes,  it  is  a  mischievous  error.  It  results 
from  reasoning  from  a  particular  industry  to  the  case  of  all 
industries,  forgetting  that  as  industries  are  the  complement  of 
each  other,  what  may  be  the  surplus,  and  hence  the  poison  of 

*  One  of  the  ingenious  fallacies,  by  which  this  manifest  dictate  of  common  prudence 
is  assailed,  is  to  assert  that  the  population  of  a  country  may  be  divided  into  those  who 
are  protected,  and  those  who  are  not.  As  well  might  we  assert  that  the  rains  of  heaven 
benefit  those  only  who  are  caught  out  in  the  shower  without  an  umbrella.  A  late  free 
trade  organ.  The  Million,  which  died  of  inanition,  at  Des  Moines,  Iowa,  divided  tlie 
workers  of  the  United  States  into  tliose  engaged  iu  agriculture,  7,670,493;  personal  and 
professional  service,  4,074,238;  trade  and  transportation,  1,810,256;  manufacturing, 
mechanical,  and  mining,  3,837,112.  It  then  deducted  from  the  manufacturing  group 
certain  classes  of  industries,  which  it  classes  as  not  protected  by  the  tariff,  such  as 
bakers,  blacksmiths,  box  factory  operatives,  tinners,  millers,  butchers,  carpenters, 
carriage  makers,  tailors,  and  others,  numbering  in  all  2,147,631.  Wherefrom,  it 
concluded  that  the  workmen  of  the  United  States  were  divided  into : 

Protected 1,605,253 

Unprotected 15,786,253 

Total 17.392,095 

A  like  argument  might  be  framed  against  the  protection  of  forts  by  counting  the  few 
who  dwell  near  enough  to  be  immediately  under  their  guns  and  walls  with  the  vast 
number  who  do  not.  The  7,670,493  farmers  are  chiefly  protected  in  the  fact  that  while 
they  produce  only  their  crops,  it  is  consumers  only  who  can  produce  prices  on  those 
crops,  and  a  crop  without  a  price  is  not  a  commodity,  but  a  discommodity.  Whatever 
is  the  difference  between  the  price  of  a  farmer's  product  on  his  farm,  and  at  its  place 
of  consumption,  is  to  the  farmer  a  tax  for  transportation  of  his  products.  This  he 
knows  can  only  be  removed  by  a  transfer  of  the  manufacturing  business  in  its  totality 
to  near  his  farm.  Whatever  removes  this  transportation  tax  is  to  him  not  a  tax,  but  a 
boon.  If  protection  brings  the  factory  to  the  farm,  and  whether  it  does  or  not  is 
simply  a  question  of  fact,  to  be  verified  by  observation,  then  one  might  as  well  classify 
the  people  into  those  who  are  benefited  by  the  sunshine  and  those  who  are  not,  as  into 
those  who  are  and  are  not  "  protected  workers." 


IMMIGRATION  AND    WAGES.  321 

one  becomes  the  source  of  supply,  and  hence  the  salvation,  of 
another. 

In  excluding  immigrants  by  wholesale  without  selection,  each 
industry  would  be  excluding  its  customers,  in  some  definite  ratio 
to  its  competitors.  Suppose  that  to  benefit  the  wages  of  shoe- 
makers we  apply  exclusion.  An  analysis  of  the  immigrants  for 
1886  and  1887  shows  that  about  1  in  231  were  shoemakers  before 
coming.  But  the  census  shows  a  demand  for  only  1  in  -140,  that 
being  the  average  ratio.  Shall  we  shut  out  231  shoemakers'  cus- 
tomei'S  to  avoid  getting  one  shoemaker,  or  shall  we  trust  that  of 
every  two  shoemakers  that  come,  one  will  seek  some  other  em- 
ployment, and  thus  the  whole  movement  will  have  added  to  the 
demand  for  labor  as  largely  as  to  the  supply.  All  immigration 
distributes  itself  among  the  various  occupations  in  proportion  to 
the  demand  for  it  ;  it  is  this  demand  that  determines  the  distribu- 
tion. In  doing  so,  it  necessarily  maintains  the  adjustment 
among  iudusti'ies  at  the  most  tiseful  economic  level,  and  hence 
can  not  do  otherwise  than  bsing  a  ratio  of  consumers  to  produ- 
cers, in  any  one  occupation,  exactly  corresponding  to  what  it 
would  have  been  had  they  not  come. 

The  case  of  the  Chinese  formed  an  exception  in  this  respect, 
since  they  nearly  all  followed  one  or  two  occupations,  viz., 
washing,  cooking,  domestic  service,  and  cigar  folding,  which  had 
previously  been  performed  by  women.  To  the  extent,  however, 
that  they  became  miners,  railroad  builders,  shoemakers,  and  the 
like,  the  principle  would  apply.  The  resident  Chinese,  therefore, 
were  quick  to  recognize  the  advantage  which  would  come  to 
those  already  here  from  the  exclusion  of  further  comers,  and 
rejoiced  over  the  event,  their  argument  being  "more  Chinee, 
less  wagee  ;  no  more  Chinee,  more  wagee." 

In  the  economic  sense  every  new  woi'ker,  the  moment  he 
ax'rives,  becomes  an  American  worker,  consuming,  say,  ninety- 
seven  per  cent,  of  American  products  and  three  per  cent,  of 
foreign  jiroducts  ;  whereas,  as  a  worker  in  Europe,  whose  com- 
modity, or  the  product  of  whose  labor  is  brought  here,  he  is  a 
foreign  worker  in  the  sense  that  he  consumes  only  three  per  cent, 
of  American  products  and  ninety -seven  per  cent,  of  foreign  prod- 
ucts, the  imported  product  acting  only  and  simply  as  a  displace- 
ment of  American  by  foreign  labor,  until  Avorn  out. 

128.  The  Barter  of  Domestic  Liabor  lor  Domestic  La- 
bor Promotes  Domestic  Wages. — The  vastly  greater  em- 
ployment given  to  domestic  labor  by  consuming  objects  of  domes- 


322  ECONOMIC  PHIL  OSOPIIY. 

tic  production,  and  the  consequent  effect  of  this  poHcy  to  pi'omote 
American  wages,  where  the  country  has  its  choice  between  nativ^e 
and  foreign  products,  is  seen  where  the  raw  materials  and  fuel 
used  in  producing  the  product  in  question  are  very  bulky  and  do 
not  admit  of  transportation  to  the  foreign  country,  while  the  fin- 
ished product  is  very  compact  and  admits  of  ready  transfer  over 
long  distances.  In  such  cases  the  country  which  pays  somewhat 
more  for  the  finished  product,  may  make  a  profit  several  times 
greater  than  this  loss,  in  having  raw  materials,  which  perhaps  are 
the  incident  of  another  production,  or  are  the  spontaneous  gifts  of 
nature,  raised  in  value  from  mere  worthless  waste  substances  to  a 
value  which  makes  them  a  leading  staple.  Thus  where  a  country 
packs  its  meats,  before  shipping  them,  it  gives  value  to  its  salt, 
sawdust,  cooperage,  ice,  staves,  boxes,  etc.  When  it  makes  its 
I3a])er  it  gives  value  to  its  streams  of  water,  straw,  wood,  coal, 
bread-stuffs,  cornstalks,  I'ags,  and  many  other  domestic  products, 
which  it  could  never  sell  to  the  paper-makers  of  a  foreign 
country,  but  can  sell  in  the  form  of  paper  to  its  own 
people.  When  it  tans  its  own  leather  it  gives  value  to  oak 
bark,  sumach,  and  a  dozen  other  worthless  things.  In  making 
glass  it  gives  value  to  clays,  sands,  mill-sites,  coal,  and  chemicals 
of  various  kinds.  In  making  iron,  it  gives  value  to  ores,  coal, 
lime,  wood,  railways,  canals,  vegetables,  and  hundreds  of  other 
unexportable  products  which  could  not  be  sold  abroad. 

A  man's  freedom,  in  trading  straw  for  paper,  depends  more  on 
the  price  he  can  get  for  his  straw,  than  on  that  he  must  pay  for  his 
paper.  If  all  trade  is  barter,  as  contended  by  the  advocates  of  so- 
called  free  trade,  when  a  choice  is  offered  between  the  foreign 
article  and  the  domestic,  the  interest,  as  it  appears  to  the  individual 
buying  the  paper,  may  not  be  identical  with  the  interest  as  it  actu- 
ally is  to  the  nation  as  a  whole.  For,  to  the  buyer,  it  is  not  barter 
at  all,  but  a  purcliase  for  money.  But,  to  the  nation  at  large,  it  is 
barter,  and  will  be  paid  for  in  commodities,  with  the  difference 
that,  if  it  be  American  papei',  it  can  be  bax'tered  for  by  giving  any 
one  of  a  thousand  domestic  products  in  exchange,  including  land, 
labor,  instruction,  fuel,  vegetables,  hay,  cla^',  brick,  lime,  sand, 
rocks,  fruits,  forest  trees,  etc. ;  but  if  bought  abi'oad  it  can  be  paid 
for  only  in  cotton,  wheat,  beef,  or  pork.  Though  the  domestic 
price  may  range  higher  than  the  foreign  (an  incident  to  protec- 
tion which  is  by  no  means  invariable),  yet  the  trade  or  commerce 
in  the  domestic  article  is  freer,  at  the  higher  price,  than  the  trade 
in  the  foreign  at  the  lower  price,   because,  in  the  latter  case,  the 


SOCIAL   ESTEEM  AS    WAGES,  323 

actual  privilege  of  barter,  when  it  comes  to  be  applied  as  it  must 
always  be  in  fact,  allows  the  domestic  paper  to  be  paid  for  in 
either  of  several  hundred  or  a  thousand  articles,  in  which  the 
foreign  paper  can  not  be  paid  for. 

It  was,  moreover,  very  trulj'  pointed  out  by  Adam  Smith  that 
the  domestic  paper  gave  employment  to  two  domestic  capitals  and 
two  domestic  sets  of  laborers,  viz.,  those  employed  upon  the  paper 
itself  and  those  emploj'ed  upon  the  product  given  in  exchange  for 
it,  while  the  foreign  paper  give  semployment  to  only  one  domes- 
tic capital  and  one  force  of  domestic  labor,  viz.,  that  employed 
upon  the  product  given  in  exchange  for  the  paper. 

129.  Wages  of  Social  Labor. — The  distinction  is  made  by 
some  economists  '^  between  the  wages  paid  by  the  profit-makers, 
and  which  are  paid  from  motives  of  profit  only,  and  those  which 
are  paid  for  domestic  professional  and  official  service. 

Many  of  the  most  useful  services  to  mankind,  however,  are 
compelled  upon  economical  principles  to  be  rendered  gratui- 
tously. No  capitalist  could  afford  to  pay  a  Copernicus  to  discover 
the  true  theory  oftlie  solar  system,  partly  because  he  would  be  him- 
self unable  to  discover  the  Copernicus,  and  partly  because  the  num- 
ber of  men  who  desire  to  perform  as  great  a  service  as  Copernicus, 
and  who,  with  perhajis  equal  ability,  will  fail  in  doing  more  than 
propound  a  chimera,  is  so  great  that  the  ambition  to  do  great 
things  for  mankind  needs  rather  to  be  checked  than  encouraged; 
since,  with  most  men,  the  ambition  can  lead  only  to  great  inutil- 
ity and  bitter  failure.  Hence  I  am  unable  to  agree  with  Mr. 
Elder's  ingenious  hypothesis,  that  social  services  of  great  spiritual 


*  Cyrus  Elder,  in  "  Man  and  Labor,"  p.  64,  says :  "  As  to  that  more  important, 
because  more  largely  productive  labor  which  directly  originates  immaterial  utilities 
only,  the  natural  law  of  its  reward  is  not  so  obvious.  It  cau  not  be  paid  with  the  whole, 
or  a  part  of  its  product.  The  doctor  who  cures  a  patient  can  not  be  paid  in  health  ;  the 
professor  who  educates  a  pupil  can  not  be  paid  in  knowledge  ;  the  jurist  can  not  be  paid 
with  a  part  of  the  principle  of  justice  which  he  establishes.  Looking  at  our  ascending 
and  widening  column  of  labor,  and  considering  all  that  is  involved  in  it  with  reference 
to  the  teachings  of  history,  we  conclude  that  men  naturally  tend  to  rate  this  higher 
labor  as  to  its  honors  and  rewards  according  to  the  proportion  in  which  it  i)erforms  a 
social  use.  That  labor  which  serves  the  whole  community  in  its  protection,  direction, 
leadership,  ranks  highest;  and  this  order  descends  by  degrees,  through  service  to  smaller 
numbers,  until  it  ends  in  that  labor  which,  performing  a  material  use  only,  is  governed 
by  another  and  different  law  of  compensation. 

"  The  analysis  we  have  made  corresi)ondH  broadly  to  the  social  degrees,  distinct,  yet 
overlapping  each  other  ;  the  first  and  lowest,  in  which  labor  fixes  itself  in  things  ;  the 
second,  in  which  labor  fixes  itself  in  institutions  ;  the  third  and  highest,  in  which  labor 
fixes  itself  in  man.    It  is  just  in  the  proportion  that  this  last  and  highest  form  of  labor 


324 


ECONOMIC  PHILOSOPHY. 


utility  are  necessarily  paid  for  in  lofty  material  rewards.  The 
utmost  that  could  be  said  is  that  there  is  a  crude  sort  of  justice 
in  the  deffi'ee  in  which  the  economic  value  of  intellectual  service 

prevails  that  productiveness  increases,  and  that  man  increases  in  value,  while  institu- 
tions and  tilings  decline  in  value  and  increase  In  utility. 

"  As  to  institutions— the  state  and  the  church — these  in  a  progressive  society  obey  the 
same  law  of  declining  values  and  increasing  utility.  In  the  ruder  conditions  of  life,  as 
n  the  early  periods  of  history,  the  community  is  exhausted  in  the  effort  to  preserve  it- 
self. The  head  of  the  state  requires  and  has  control  of  the  lives  and  labors  of  the 
people.  The  value  of  government  is  enormous,  its  utility  small.  The  like  holds  good 
as  to  ecclesiastical  institutions,  the  machinery  of  which  in  the  ruder  stages  of  society  is 
infinitely  costly  as  compared  with  the  services  which  it  renders.  An  illustration  in  the 
form  of  diagrams  may  be  helpful,  and  will  at  least  provoke  criticism.  Let  the  following 
ascending  columns  represent  the  stream  of  history  : 

POLITICAL  INSTITUTIONS. 


Free  Government. 


LimitedMonarchy. 


Despotism 


Utility. 


cm 


o 


ai 


Value. 


a 

a 

> 

o 
O 


c 
o 


Taxation  under  General  Laws. 


People  have  a  voice  in  imposing 
taxes . 


Life 
Ruler. 


and  Labor  belong  to  the 


ECCLESIASTICAL  INSTITUTIONS. 


Free  Church. 


Clerical  Hierarchy. 


Supreme     Pontifical 
Power. 


Utility. 


« 


o 

03 

a 

S3 


e3 


O 


Value. 


Voluntary  Support. 


Government  Support,  Tithes,  etc. 


Unman    Sacrifice.    Lauds    ab- 
sorbed by  the  Clergy. 


WOMEN  AS  WOEKEJRS.  325 

corresponds  generally  to  its  material  reward.  Yet  the  wife  and 
children  of  the  inventive  Goodyear  wei^e  buried  by  chai'itable 
contribution,  and  the  magnificent  invention  of  telegraphy  left 
Prof.  Morse  to  be  provided  for  by  the  donations  of  his  friends. 
While  the  children  of  the  artist-inventor  have  derived  a  modest 
income  from  the  cultivation  of  flowers  upon  the  estate  presented 
to  him  by  his  neighbors,  the  vast  invention  he  bequeathed  to  the 
world,  and  no  small  share  of  the  great  fortunes  to  which  it  has 
given  rise,  have  become  the  property  of  one  who  is  known  to  the 
patent  office  only  as  the  inventor  of  a  mouse-trap.  Social  labor 
of  the  highest  value  is  paid  in  a  curi-ency  of  its  own,  when  it  is 
paid  at  all.  But  nmch  of  it  is  wholly  unpaid.  The  fame  of  great 
usefulness  settles  often,  like  a  mantle,  on  the  complacent  shoulders 
of  entertaining  chax-latans  and  eloquent  impostors,  and  the  men 
who  most  convulse  and  shake  society,  by  their  blunders,  are  as  often 
laid  to  rest  under  the  heaviest  burden  of  the  flowers  of  social 
esteem. 

130.  Wages  of  Women. — Women  offer  themselves  in  a 
limited  number  of  occupations,  rejecting  usually  the  coarse,  vul- 
gar, enterprising,  arduous,  and  dangerous.  In  clinging  to  occu- 
pations which  are  deemed  becoming  to  woman  as  d  sex,  they 
come  chiefly  into  competition  with  those  women  who,  as  members 
of  a  household,  can,  if  necessary,  perform  the  same  work,  in  a  man- 
ner which  has  the  effect  of  gratuitous  competition,  since  the  lat- 
ter will  receive  the  same  support  and  maintenance,  if  they  do  not, 
as  if  they  do  work. 

It  may  well  be  questioned  whether  society  can  afford  to  adopt 
the  theory  that  woman  ought  to,  or  can,  with  average  profit  to 
herself  or  to  men,  be  a  self-supporting  competitor  in  the  labor 
market.  It  could  only  be  avoided  by  returning  to  the  Roman 
idea  of  the  family,  whereby  a  woman  could  not,  by  the  death  of  her 
husband  or  father  merely,  be  thrown  on  her  own  exertions  for 
support.  She  was  still  a  member  of  some  Roman  household  or 
gens,  and  entitled  to  its  protection  while  rendering  it  her  service 
and  obedience.  Perhaj)s,  in  our  modern  life,  there  are  many 
women  to  whom  even  the  restraint  of  a  family  relation,  selected 
by  choice,  seems  unbearable,  and  who  would  not  be  grateful  for 
a  title  to  dependence  on  a  relative  more  distant  than  husband, 
father,  or  son.  Thei-e  are,  howcv(M',  many  cases  of  sisters,  ruth- 
lessly thrust  out  upon  the  world,  wliom  it  is  within  the  power  of 
their  brothers  to  supj)ort ;  of  nieces  in  severe  straits,  whose  uncles 
are  in  affluence  and  the  like.      The  growing  disintegration  of  the 


326  ECONOMIC  PlIiLOSOPUY. 

family,  and  the  facility  of  divorce  and  remam'iag'e,  operate  in 
some  instances  to  reveal  to  woman  a  capacity  of  self-suppoi*t 
and  of  independence  far  more  enjoyable  than  any  support  she 
would  have  as  a  wife.  In  other  instances,  the  end  is  as  painful  as 
it  could  well  be. 

There  are  many  circvimstances  which  render  a  woman's  woi-k, 
year  by  year,  less  valuable  to  her  employer  than  that  of  a  man, 
even  where  she  performs  much  of  the  work  equally  well.  Her 
prospective  marriage  constantly  thi'eatens  to  terminate  her  work, 
while  the  marriage  of  a  man  confirms  his  steadiness  as  a  worker. 
She  does  not  enter  the  bolder  and  more  riskful  as  well  as  gainful 
occux^ations,  wherein  her  product  and  not  her  labor  is  sold,  such 
as  farming,  house- building,  and  manufacturing,  and  from  which, 
therefore,  it  would  not  be  practicable  to  exclude  her  by  mei-e 
opinion.  Yet  among  the  women  who  do  enter  these  managing 
occupations,  there  are  many  that  evince  the  highest  skill.  In 
1880,  in  the  United  States,  14,744,942  males  and  2,647,157  females 
were  working  for  gain  out  of  a  total  of  about  26,000,000  persons 
of  each  sex.  About  one  in  teii  females  and  three  in  five  males 
are  toilei'S  for  hire  or  profit.  In  New  York,  out  of  2,031,369  fe- 
males over  ten  years  of  age,  there  were  360,381  money-makers, 
while  a  male  population  of  1,960,059  contained  1,524,264  toiling 
for  gain.  There  were,  therefore,  1,670,988  women  and  425,795 
men  not  productively  employed,  or  whose  toil  was  not  for 
sale. 

'Each  man  at  work  supports  one  woman,  and  every  four  men  at 
work  sujjport  one  idle  man;  every  fifteenth  man  supports  two 
women,  and  four-and-a-half  women  are  supported  by  men  where 
one  even  tries  to  support  herself ;  2,247  women  and  375,213  men 
do  some  kind  of  farming  or  manage  farms.  Although  land  de- 
scends equally  to  daughters  and  to  sons,  and  though  there  can  be 
no  discrimination  on  account  of  sex  against  woman  as  a  farmer — 
since  it  is  the  product  and  not  the  labor  that  is  sold,  and  no  one 
buying  hay  or  horses  can  tell  whether  a  man  or  a  woman  raised 
them — yet  only  one  farmer  in  180  is  a  woman,  and  in  most 
cases  she  is  a  farmer  only  temporarily,  Avhile  she  is  a  farmer's 
widow. 

In  professional  and  personal  service — the  life  neai'est  like  that 
of  a  wife  or  daughter  in  the  household,  as  it  involves  no  risk  and 
little  heavy  toil,  and  gives  wide  room  for  personal  favor  in  selection 
— the  women  rise  to  205, 829  in  New  York  and  the  men  to  332,068. 
How  closely  women  in  their  choice  of  work  adhere  to  the  family 


WOMANLY  WORK.  327 

order,  eveu  when  out  of  the  family,  is  shown  by  the  fact  that  in 
the  United  States  12,294  women  to  only  1,189  males  find  work  as 
nurses,  108,198  women  to  13,744  men  work  as  launderers,  938,910 
women  to  136,745  men  work  as  domestic  servants,  1,615  women 
to  781  men  Avork  in  charitable  institutions,  12,313  women  to  6,475 
men  keep  boarding-houses,  and  13,182  women  to  17,255  men  teach 
or  live  by  music.  On  the  otiier  liand,  in  trade  and  transportation, 
in  New  York,  there  are  324,304  males  to  15,215  females.  In  manu- 
factures, mechanics,  and  mining,  there  are  492,674  males  and 
137,190  females.  Thus,  women  seeking  employment  gravitate 
toward  the  family  type  in  their  selection,  and  virtually  say:  "  If 
we  cannot  have  households  of  our  own,  we  will  toil  as  neai'h'  in 
the  household  as  wc  cau.'' 

The  industrial  question  is,  therefore.  How  many  women  outside 
the  family  can  be  emploj^ed  in  a  manner  essentially  like  emploj'- 
ment  m  the  family-  ?  Woman's  ofi'er  of  labor  in  the  market  is  not 
free  as  is  that  of  a  man — "  I  will  do  all  woi4c,''  but  is  encumbered 
by  this  condition :  "  My  work  must  be  womanly  work;  i.  c,  it 
must  resemble  as  nearly  as  possible  that  which  woman  performs 
in  the  family."  But  woman  in  the  family  is  a  gratuitous  worker, 
i.  e.,  she  works  for  love,  affection,  and  favor,  and  takes  her  pay 
in  kindness,  generosity,  and  indulgence,  and  not  in  wages.  Hence 
the  360,381  women  in  New  York,  who  offer  to  toil  for  hire,  really 
offer  to  compete  with  and  underbid  the  1,670,988  women,  or  many 
of  them,  who  ask  no  wages,  and  can  at  a  pinch  do  the  same  things 
without  pay,  which  the  toilers  are  trying  to  earn  pay  -for  doing. 
In  domestic  service,  the  competition  is  not  so  much  between  one 
cook  and  another,  as  a  choice,  by  the  matron  of  the  house,  whether 
she  will  hire  a  cook  or  do  it  herself.  Hence  nearly  every  woman 
works  against  an  unpaid  competitor.  For  though  the  waives  and 
sisters,  daughters  and  mothers,  of  the  well-to-do  in  America 
especially,  are  the  conspicuous  and  accepted  centers  of  all  luxur- 
ious and  aesthetic  living,  yet  as  all  this  is  done  for  favor,  their 
influence,  in  controlling  and  depressing  the  price  of  the  labor  of 
the  women  who  are  compelled  to  work,  is  very  nearly,  especially 
in  periods  of  adversity,  tliat  of  a  vast  fund  of  gratuitous  comjjet- 
ing  labor.  Such  a  fund,  whether  it  take  the  form  of  machinery, 
foreign  pauper  labor,  or  "  lady  "  labor  ready  to  become  "  help  " 
on  demand,  can  not  fail  to  exert  a  depressing  influence  on  the 
wages  of  the  class  whom  it  affects. 

The  occupations  selected  by  women  are  also  usually  those  in 


328  ECONOMIC  riJJLO^Ol'Jir. 

which  combination  by  workmen  to  raise  wages  is  less  effective* 
But  even  where  women  are  engaged  in  work  in  which  unionism 
may  be  made  effective,  they  have  only  very  recently  begun  to 
take  part  in  the  unions. 

*  Coat  of  str-ikes  and  results.  The  Textile  liecord,  of  Philadelphia,  for  February,  188S, 
presents  the  following:  The  following  shows  the  number  of  strikes  that  occurred 
in  this  country  in  each  of  the  successive  years:  1881,  471;  1883,  454;  1883,  478; 
ISW,  645;  1885,  1412.  These  involved  22,35G  establishments  in  all.  In  1887  about  853 
strikes  occurred,  but  full  details  are  not  at  hand.  During  the  period  named. 
New  York  State  had  the  largest  number  of  establishments  affected  by  strikes 
and  lock-outs,  the  wlole  number  being  10,775.  Of  the  strikes  about  47  per  cent, 
succeeded;  about  13  per  cent,  were  partially  Buccessful,  and  40  per  cent,  failed. 
In  the  six  years  the  lossea  incurred  are  estimated  as  follows  :  to  strikers,  $51,- 
816,105  ;  and  to  locked-out  persons,  $8,132,717,  a  total  wage  loss  of  $.59,948,882. 
This  makes  a  loss  of  about  $40  to  each  striker.  Losses  to  employers  in  six  years, 
$34,164,914.  The  dif^turbauces  occurred  mainly  in  13  industries,  namely,  boots  and 
shoes,  bricklaying,  building,  clothing,  cooperage,  food  preparations,  furniture,  lumber, 
metals,  mining,  stone,  tobacco  and  transportation.  Out  of  the  22,336  establishments 
engagt'd,  building  trades  furnished  6,C60,  or  more  than  one-fourth.  The  total  number 
of  employees  involved  during  the  six  years  was  1,318,624.  The  number  employed  in 
all  the  establishnients  before  the  strikes  was  1,662,045;  afterwards.  1,636,247,  a  loss  of 
25.798.  There  were  103,038  new  employees  engaged  after  the  strikes.  Of  the  whole 
number  engaged  in  striking,  88.56  per  cent,  were  males,  and  11.44  per  cent,  were 
females.  New  York,  Pennsylvania,  Massachusetts,  Ohio  and  Illinois  contain  49  per 
cent,  of  all  the  manufacturing  establishments  in  the  country,  and  58  per  cent,  of  the 
capital  invested  in  pucli  industries.  In  them  about  76  per  cent,  of  the  strikes  and  91 
per  cent,  of  the  lock-outs  occurred.  Of  the  strikes,  82  per  cent  were  ordered  by  labor 
organizations.  The  lemarkable  increase  of  the  number  of  strikes  in  1886  seems  clearly 
to  be  due  to  the  activity  of  the  Knights  of  Labor. 


CHAPTER  IX. 

MONEY. 

131.  What  Is  Money  ?— Money  is  that  for  which  all  men 
will  sell  or  serve  ;  the  one  commodity  for  which  all  others 
exchange.  As  language  is  the  one  idea  which  expresses  all 
others,  so  money  is  the  one  value  which  states,  measures,  and 
transfei'S  all  others  that  can  be  stated,  measured,  or  sold.  The 
functions  of  money  are  to  hoard,  exchange,  preserve,  estimate, 
state,  and  distribute  values ;  to  induce,  organize,  employ,  and  re- 
ward free  labor  ;  to  stimulate  human  effort  to  its  highest  capacity 
in  the  production  of  wealth,  and  to  the  most  equal  possible  dif- 
fusion of  wealth  among  men,  for  enjoyment.  Througli  it,  as  an 
economic  agent,  the  instinct  of  accumulation  or  gain  in  man  is 
pi'opelled  forward  in  industry,  invention,  discovery,  investiga- 
tion, art,  science,  religion  and  philosophy,  charity  and  philan- 
thropy, law  and  government,  until  by  it,  as  an  economic  force, 
man  is  evolved  out  of  slavery  into  freedom,  out  of  idleness  into 
industry,  out  of  poverty  into  wealth,  out  of  barbaric  superstition 
into  enlightened  scientific  knowledge,  and  out  of  crime  and  vice 
into  i"eflnement  and  mutual  kind  services,  and  reciprocal  friendly 
regard  and  love.*    In  thus  outlining  the  economic  functions  of 


*  Mr.  Jevons,  in  his  work  on  "  Monej',"  seems  to  regard  the  term  money  as  too  vari- 
able in  its  meaning  to  be  capable  of  definition,  since  it  applies,  he  says,  "  to  bullion, 
standard  coin,  token  coin,  convertible  and  inconvertible  notes,  legal  tenderand  not  legal 
tender,  cheques  of  various  iiinds,  mercantile  bills,  exchequer  bills,  stock  certificates," 
etc. ,  each  of  which  "  requires  its  own  definition."  To  this  Mr.  Sidgvvick  replies  that 
it  implies  that  it  is  logically  correct  to  define  a  number  of  species  where  it  would  be  logi- 
cally erroneous  to  try  to  define  their  common  genus.  ("The  Principles  of  Pol.  Econ." 
p.  230.)  Mr.  Jevons  distinguished  four  functions  which  money  fulfils  in  modern  socie- 
ties. It  is  (1)  a  medium  of  exchange  ;  (2)  a  measure  of  value  ;  (3)  a  standard  of  value 
[i.  «.,  as  Mr.  Walker  says,  a  standard  for  deferred  payments]  ;  (4)  a  store  of  value. 

Mr.  Sidgwick  adopts,  approvingly,  the  definition  given  by  F.  A.  Walker  in  "  Money, 
Trade  and  Industry,"  p.  4,  viz.  :  "  that  which  passes  freely  from  hand  (owner)  to  hand 
(owner)  throughout  the  community,  in  final  discharge  of  debts  and  full  payment  for 
commodities,  being  accepted  equally  without  reference  to  the  character  or  credit  of  the 
person  who  offers  it,  and  without  the  intention  of-the  person  who  receives  it  to  con- 
sume it.  or  enjoy  it,  or  apply  it  to  any  other  use  than  in  turn  to  tender  it  to  others  in 


;5"50  ECONOMUJ  PIIILOSOPHT. 

which  money  is  the  essential  instrument,  the  economist  is  not 
culled  upon  to  define  the  spiritual  forces  and  metaphysical  pow- 
ers, human  and  divine,  which  make  use  of  this  instrument,  still 
less  to  substitute  one  for  the  other.  The  analysis  of  these  forces 
constitutes  a  field  of  investigation  sufficient  to  tax  and  exhaust 
the  utmost  powers  that  can  be  applied  to  it.  A  few  economic 
writers  have  sought  to  strengthen  their  discussion  of  economic 
questions  by  asserting  that  economic  science  can  only  lead  to 
right  conclusions,  accordingly  as  it  is  subordinated  to  some  par- 
ticular school  of  thought  in  metaphysics.* 

The  conception  of  this  treatise  is  to  remit  religious,  moral,  meta- 
physical, and  theological  inference  and  discussion  entirely  and 
absolutely  to  those  works  and  persons  which  make  these  depart- 
ments of  thought  their  specialty. 


discharge  of  debts  or  payment  for  commodities."  A  convenient  summary  of  this 
definition  would  be,  "  Money  comprises  all  current  moans  of  payment  and  purchase." 

Hume  says:  "Money  is  not,  properly  speaking,  one  of  the  subjects  of  commerce, 
but  only  the  instrument  which  all  have  agreed  upon  to  facilitate  the  exchange  of  one 
commodity  for  another.  It  is  none  of  the  wheels  of  trade:  it  is  the  oil  which  renders 
the  motion  of  the  wheels  more  smooth  and  easy." 

To  this  Carey  ("  Principles,"  condensed  by  McKean,  p.  352)  says:  "  Had  he,  however, 
found  it  asserted  that  corn,  wiue,  and  the  flesh  of  sheep  and  oxen,  had  been  'agreed 
upon '  by  men  as  the  food  they  were  to  use,  he  would  certainly  have  asked  for  some 
evidence  that  they  really  had  come  to  such  an  agreement,  and  had  not  been  led  to  act 
as  they  do,  by  the  fact  that  such  commodities  had  been  piwided  by  the  Creator  for 
men,  while  creating  food  of  other  descriptions  for  the  nourishment  of  cows,  horses, 
fheep,  and  other  animals.  He  would  naturally  have  asked  the  question—'  Suppose 
they  did  not  eat  these  things,  what  others  could  they  eat  ?  '  and  when  the  answer  had 
been  made,  that  they  must  either  eat  of  them  or  perish,  he  would  have  regarded  it  as 
evidence  that  their  course  had  been  determined  by  a  great  law  of  nature,  and  had  not 
been  '  agreed  upon  '  by  themselves." 

Roscher  ("Pol.  Econ.,"  Bk.  ii.  ch.  iii.  §cxvi.)  says:  "  Such  a  commodity,  universally 
in  favor,  and  which,  on  that  account,  is  employed  as  an  intermediary  in  the  effecting  of 
exchanges  of  the  most  varied  nature,  in  the  measuring  of  all  exchange  values,  and  as  a 
value-carrier  in  time  and  space,  we  call  money." 

Tlie  question,  whether  the  term  money  shall  be  deemed  to  be  confined  in  its  proper 
signification  to  coins  of  gold  and  silver,  or  shall  extend  likewise  to  any  generally  ac- 
ceptable means  of  payment,  depends  on  the  connection  in  which  the  term  is  to  be  used. 
In  a  question  of  legal  interpretation,  as  where  the  Constitution  of  the  United  States 
clothes  Congress  with  the  power  to  "  coin  money  and  regulate  the  value"  (weight  and 
fineness)  thereof,  it  would  be  mischievous  to  hold  that  paper  money  was  here  intended, 
as  that  is  incapable  of  being  coined.  But  if  the  question  be  as  to  the  volume  of  money 
Mhich  regulates  prices,  as  in  the  article  on  "  Commercial  Crises,"  by  Horace  White,  in 
"American  Cyclopedia  of  Political  Economy,"  it  is  equally  erroneous  to  make  gold 
bullion,  or  even  coined  gold,  the  sole  money. 

*  C.  S.  Devas,  in  "  Groundwork  of  Economics,"  following  Sismondi,  subordinates 
economics  to  Catholic  ethics,  and  Chalmers,  Wayland,  and  Mill  reflect  their  metaphys- 
ical and  theological  bias  in  their  economic  discussion. 


MONEY  BEGINS  AS  TREASURE.  331 

To  perform  tlie  functions  above  outlined,  money  must  be  an 
article  attractive  in  its  uses  and  compact  in  its  quality,  or  it  can 
not  first  be  hoarded  as  treasure.  It  is  the  tendency  of  barbarous 
tribes  and  simple  minds  to  hoard  a  metal,  and  to  deem  it  precious, 
that  gives  it  its  first  requisite  for  use  as  money,  viz. ,  general  ac- 
ceptability. Silver  in  India,  to-day,  is  found  performing  this  fii-st 
simple  function  of  mere  treasure,  /.  e.,  of  hoarding.  Tlie  severity 
of  famines  is  often  measured  by  the  degree  in  which  the  silver 
ornaments  of  the  ryot  are  offered  for  sale,  or  for  coinage 
at  the  mint,  to  purchase  food,  for  among  the  Mahometans  and 
Hindoos  the  holiday  costume  becomes  a  sort  of  savings  bank.* 
This  seeming  extravagance  of  di*ess  is  really  parsimony  and  econ- 
omy, and  rebukes  those  simple-minded  i)ersons  who  wonder  at 
the  folly  of  barbarians  in  investing  largely  in  ornaments  instead 
of  clothing.  In  times  of  distress  white  muslin  and  kid  gloves 
would  not  procure  them  as  many  pence  as  their  silver  ornaments 
would  pounds.!  The  transition  of  the  precious  metals  from 
hoarded  treasure  into  medium  of  exchange,  and,  perhaps,  back 
into  hoarded  treasure,  took  place  in  a  marked  way  at  the  capture 
of  the  treasure  hoards  of  Asia  by  Alexander,  of  Mexico  by  Cortes, 
of  Peru  by  Pizarro,  and,  to  some  degree,  occurs  daily. 

The  metal  for  use  as  money  needs,  next  after  being  treasui*e,  to 
be  malleable,  so  that  it  may  easily  receive  the  coinage  stamp  that 
shall  indicate  its  weight  and  fineness,  and  dispense  with  the  ser- 
vices of  an  expert  at  every  trade.  Diamonds,  therefore,  while 
attractive,  and  invaluable  as  a  means  of  storing  wealth,  are  of  no 
use  as  money,  since  they  cannot  be  stamped  at  all,  nor  can  they 
be  divided  without  a  great  loss  of  value. 

The  moment  an  acceptable  article  is  arrived  at,  into  which  all 
other  values  can  be  translated  at  will,  all  other  commodities,  and 


*  "Groundwork  of  Economics,"  by  Devae,  p.  413.  Wonier  Williams,  "  Modern  In- 
dia," 2d  edit.,  p.  30. 

t  Devas,  "  Groundwork  of  Economics,"  p.  414,  says  :  "  The  average  tender  of  silver 
ornaments  every  month,  at  the  Bombay  Mint,  before  the  year  1876,  was  £000  ;  but  in 
November,  18?ii,  owiuj:  to  the  famine,  it  reached  £7,000,  shot  up  to  £100,000  in  Decem- 
ber, and  then  kept  steadily  nsiufj  till,  in  September,  1877,  it  reached  £189,754,  and  Uie 
total  for  the  two  years,  1877  and  1878,  was  £1,940,138  (Qaarlerlij  Revitu\  Ajiril,  1879,  p. 
389).  Le  Play  gives  examples  from  Russia  and  Turkey  of  peasant  women  wearing  mul- 
titudes of  silver  coins  in  their  dress.  And  f;"ld  and  silver  ornaments  have  been  conspic- 
uous in  many  of  those  peasant  costumes  of  Europe,  which  grew  up  when  the  mediieval 
sumptuary  laws  fell  into  decay.  So,  in  Friesland,  the  golden  cap  of  the  peasant  women 
is  worth  300  gulden,  or  about  £25.  In  Portugal  they  wear  jewelry  of  Moorish  designs 
worth  from  £5  to  £.30." 


332  ECONOMIC  PHILOSOPHY. 

especially  labor,  offers  itself  in  the  market,  and  commerce  among 
men,  or  the  exchange  of  mutual  services,  begins.  The  instant 
the  article  ceases  to  be  generally  acceptable,  commodities  and 
services  are  hoarded  in  lieu  of  money,  and  commerce  stops.  In 
the  case  of  labor-capacity,  to  hoard  it  is  to  waste  or  lose  it,  since, 
if  not  employed  or  exchanged  at  the  instant  of  production,  each 
hour  and  moment  of  labor-capacity  is  lost  forever.  Hence  any 
cessation  in  the  efficiency  of  money  involves  and  includes  a  cor- 
responding cessation  in  the  rendition  of  voluntary  mutual  ser- 
vices by  men  to  each  other.  If  mutual  services  are  rendered  at 
all,  they  must  then  be  rendered  from  some  emotional  or  relig- 
ious reason,  or  from  compulsion  or  force. 

Money  is  thus  the  economic  spring  which  moves  all  voluntary 
industry,  the  mediator  that  effects  every  exchange,  the  agent  that 
employs  all  free  labor,  and  the  medium  in  which  all  worth  is 
stated  and  paid  foi'.  Without  it,  little  emulation  would  be  possi- 
ble, and  hardly  any  excellence  would  be  sought,  or  civilization 
attained.  It  bears  the  same  relation  to  human  commerce  as  the 
blood  sustains  to  the  body,  or  the  circulation  of  plants  to  their 
life.  It  is  the  most  useful  of  jjurely  physical  agents  in  industry. 
It  ranks  only  next  below  the  metaphysical  principles  of  the  hu- 
man soul  as  a  force  in  economics.  So,  in  nature,  water  is  perhaps 
the  most  fruitful  of  purely  terrestrial  agents  in  promoting  growth. 
Yet  it  ranks  below  the  mysterious  potency  of  the  sunlight,  in 
whose  immediate  generative  action  all  life  finds  its  birth. 
Money  is  below  man  in  social  utility,  as  moisture  ranks  below 
the  sun's  ray  in  vegetative  utility.  Yet,  in  our  efforts  to  define 
the  limits  of  its  potency,  let  us  not  fall  into  the  error  of  under- 
stating or  denying  its  value.  Let  us,  rather,  magnify  man  by 
showing  his  capacity  to  comprehend  money,  than  belittle  hun  by 
training  him  to  denounce  it.  So  the  poet  tacitly  praises  the  sun- 
light, without  mentioning  it,  when  he  utters  that  beautiful  trib- 
ute to  water,  since  none  of  the  powers  he  attributes  to  water  could 
be  manifested  did  not  the  sunlight  bring  them  into  action  : 

Pure  element  of  waters,  wheresoe'er 

Thou  dost  foreake  thy  subterranean  hauuts, 

Green  herbs,  bright  flowers,  and  berry -bearing  plants 
Rise  into  life,  and  in  thy  train  appear  ; 
And  through  the  sunny  portions  of  the  year, 

Swift  insects  shine,  thy  hovering  pursuivants. 

But  when  thy  bounty  fails,  the  forest  pants, 
And  hart,  and  hiad,  and  hunter  with  his  spear 
Languish  and  droop  together. 


CAPrURE  PRECEDES  TRADE.  333 

All  these  powers  are  none  the  less  inherent  in  water  because 
they  imply  the  superaction  of  the  sun's  ray ;  so  all  the  powers  of 
money  are  none  the  less  inherent  in  money  itself,  because  they 
imply  and  presuppose  the  superaction  of  man  as  a  thinking,  will- 
ing, acting  being.  As  the  action  of  water,  however,  can  be  elu- 
cidated without  agreeing  upon  any  particular  theory  of  light,  so 
the  economic  action  of  money  does  not  necessarily  imply  har- 
mony in  the  theories  we  may  entertain  concerning  man's  meta- 
physical nature. 

132.  Origin  of  Money. — It  is  usual,  or  frequent,  among 
economists  to  assert  that  trade  began  with  barter,  and  that  trade 
by  barter  gradually  gave  way  to  trade  for  money.  This  suppo- 
sition was  rendered  plausible  by  the  fact  that  Eui'opeans,  trying  to 
tx'ade  with  the  savages,  found  gold  and  silver  money  not  avail- 
able, and  had  to  resort  to  barter.  As  barter,  however,  instead  of 
bemg  simpler  than  trading  with  money,  is  much  more  difficult,  it 
seems  likely  that  seizure  by  force  or  piracy,  and  plunder,  and  not 
barter,  is  the  real  precursor  of  commerce.  Savages  would  never 
try  to  overcome  the  difficulties  of  barter,  since  until  money  is 
introduced  there  are  no  terms  in  which  values  can  be  thought  of, 
and  hence  the  notion  of  equivalence  of  value  in  commodities 
which  underlies  barter  can  not  be  entertained.  The  fact  that 
surprised  Stanley,  in  going  down  the  Congo,  was  that  the  natives, 
beyond  the  region  where  money  was  in  use,  had  no  conception 
of  barter,  and  no  use  for  a  stranger  except  to  eat  him.  In  attempt- 
ing to  barter  with  them,  he  had  to  arrange  the  terms  of  the  trade, 
and  then,  by  fighting,  compel  them  to  make  it.  He  was  a  pirate, 
who  paid  for  his  captui'es. 

It  is  clear  in  Homer  that,  before  money  was  in  use  among  the 
Greeks,  the  value  of  things  was  estimated  in  oxen,  as  it  would 
now  be  in  pounds  or  dollars,  and  sometimes  oxen  were  used  in 
payment.*  But  at  the  period  of  the  writing  of  the  narrative  of 
Abraham's  purchase  of  the  cave  of  Macphelah  for  "  shekels  of  sil- 
ver, current  money  of  the  merchant,"  silver  had  come  into  gen- 
eral use  as  money. 

*  MacLeod,  "  Principles  of  Econ.  Phil.,"  Vol.  i.  p.  186,  cites  as  follows :  "  Thus  we 
have,  Iliad,  vii.  468  : 

"  '  From  Lemnos'  isle  a  numerous  fleet  had  come 
Freighted  with  wine    .    .    . 

All  the  other  Greeks 

Hastened  to  i)urcliaBc  ;  Home  with  brass,  and  some 
With  gleaming  iron,  some  with  hides, 
Cattle,  or  slaves. ' 


334  ECONOMIG  PIIILOSOPIIY. 

In  Judea,  at  a  veiy  remote  antiquity,  gold  was  familiar,  as  it 
was  also  to  the  red  race  in  Egypt,  since  they  made  war  upon  Nubia 
and  Ethiopia  for  possession  of  the  mines.* 

Singularly  enough  the  date  of  banks,  and  paper  money,  seems  to 
be  coeval  with  that  of  coin.  The  Chinese  claim  to  have  records 
of  the  issue  of  ' '  flying  money  "  as  early  as  2697  B.  C.  A  speci- 
men, said  to  have  been  issued  in  1399  B.  C,  is  in  the  Asiatic 
Museum  in  St.  Petersburg,  printed  in  blue  ink  on  paper  made 
from  the  fiber  of  the  mulberry  tree.  The  Chinese  bills  bore  the 
name  of  the  bank,  number  of  the  note,  value,  ijlaceof  issue,  date 
and  signature  of  the  proper  bank  officers.  The  value  was  ex- 
pressed in  figures,  words,  and  in  some  cases  in  pictorial  represen- 
tations showing  coins  or  ingots  equal  to  the  face  value  of  the 
paper.  In  the  Metropolitaii  Museum  of  Art,  New  York,  are 
Babylonian  tablets  of  banking  transactions  of  the  year  601  B.  C, 
or  the  reign  of  Nebuchadnezzar.  They  record  loans  made  in 
silver  shekels,  drafts,  x^ledges  of  secvu'ity,  etc. 

Probably  the  period  at  which  iron  was  used  in  Sparta,  as  money, 
followed  naturally  upon  that  in  which  oxen  were  used  through- 
out Greece,  as  described  in  Homer,  Certainly  the  Spartans 
passed  to  silver  and  gold  as  their  prosperity  increased.  Copper 
was  at  first  the  sole  money  of  ancient  Rome,  and  the  same  word 
continued  to  denote  both  money  and  copper,  long  after  gold  and 
silver  had  to  a  great  extent  supplanted  it.f  In  England,  silver 
was  coined  by  the  government  for  many  centuries  before  gold, 
which  latter  was  first  coined  to  a  limited  extent  in  the  reign  of 
Henry  III.,  but  has  been  the  prevailing  metal  in  England  for 
most  of  two  centuries  past,  and  especially  since  1816,  when 
England  adopted  the  single  standard  by  making  gold  its  sole 
money  of  unlimited  legal  tender. 

133.  The  Form  of  Money. — Money,  when  considered 
with  reference  to  the  basis  oji  which  it  circulates,  may  be 
conveniently  divided  into  (1)  coin  or  value  money,  (2)  paper  or 


"  In  II.  ii.  448,  Minerva's  shield,  the  ^gis,  had  100  tassels,  each  of  the  value  of  100 
oxen.  In  II.  vi.  234,  Homer  laughed  at  the  folly  of  Glaucus,  who  exchanged  his 
golden  armor,  worth  100  oxen,  for  the  bronze  armor  of  Diomede,  worth  nine  oxen.  In 
II.  xxiii.  703,  Achilles  offers  as  a  prize  to  the  conqueror  in  the  funeral  games  in 
honor  of  Patroclus  a  large  tripod  which  the  Greelts  valued  among  themselves  at  twelve 
oxen,  and  to  the  loser  a  female  slave,  which  they  valued  at  four  oxen  ;  and  in  the 
same  book,  883,  Achilles  stak<  s  a  spear  and  a  cauldron  worth  an  ox." 

*  Brughsch'd  "  Eg\pt  under  the  Pharaohs,"  Vol.  ii.  p,  81. 

1  Shadweirs  "  System  of  Pol.  Eeon.,"  p.  256, 


WEIGHT   IN   TONS. 


VALUES  OF  SILVER  PRODUCED  IN 
500  YEARS. 


\.m 

Au.tri(i 7.»30_ 

.^m 

Ob  rm  >ny 8,-fTO . 

Jluulft 3,200. 

SpBDiakAmerica 

United  SlntM ll.OUO^ 

.  .1.235 
2,220 
^2.0)3 

OtUtr  Counlrtos 11,200. 


VALUES  OF  GOLD   PRODUCED  IN  500  YEARS. 


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Tub  Cbakt  etiowe  the  rare  of  production  of  Gold  nod  Silver  in  values  from  discovery  of  America  to  date,  on  a  scale  of 
S1.CIUO.000  10  cacti  aniaU  geciioii  Hue. 

The  Uiai^rama  fhow  the  relative  values  of  production  of  Silver  and  Gold,  totAl  qunDtitics  produced  by  •  ach  ouDtry,  an4 
percentage  of  its  prudiictlon  f  >  thn  tntiil  for  rome  period. 

The  Tabic  shows  relative  production  by  weit;lit  m  all  countries. 


FORMS  OF  MONET.  335 

credit  money,  and  (3)  money  of  account  ci"  money  which  exists 
only  in  mental  conception  or  idea.  The  first  is  value,  the  second 
is  a  promise  concerning  value,  the  third  is  a  mental  recognition 
of  value  in  some  commodity  exterior  to  itself.  Coined  money  is 
again  divided  into  standard  coin  and  subsidiary  coin,  which  is 
also  usually  token  coin.  Paper  or  credit  money  is  further 
divided  as  to  its  condition  into  redeemable  and  irredeemable,  and 
as  to  its  mode  of  issue  into  that  issued  by  governments,  by  banks, 
and  by  individuals  or  firms.  Money  of  account  is  the  unit — 
pound,  dollar,  fi'anc,  or  marc — into  which  the  legal  concep- 
tion of  money  embodies  itself.  Some  forms  of  money  cross 
these  lines  of  division  and  partake  of  the  nature  of  two  or  more  of 
these  kinds.  Gold  certificates,  and  certificates  as  issued  by  the 
United  States  Treasury,  and  all  Bank  of  England  notes  issued  on  a 
direct  deposit  of  an  equivalent  sum  in  coin,  are  not  so  much  credit 
Inoney  as  paper  representatives  of  coin.  A  credit  is  given  to 
their  issuer,  but  only  to  the  fact  that  he  has  the  coin  for  which 
these  were  issued.  This  is  much  less  a  credit  than  the  general 
trust  that  government  will  redeem  a  note,  which  it  is  known  to 
have  issued  because  it  had  not  the  coin  on  hand  to  redeem  it 
with.  Again,  bills  of  exchange  are  at  times  credit  money,  and  in 
so  far  as  they  offset  and  extinguish  each  other  without  the  use 
of  actual  money,  they  make  "money  of  account  "not  merely 
the  idea  of  money  but  the  substitute  for  money. 

Money,  whether  of  coin  or  j)aper,  when  considered  witli  refer- 
ence to  its  status  in  the  law,  is  either  legal  tender  or  not  legal 
tender;  and,  if  legal  tender,  it  may  be  so  to  an  unlimited,  or  to  a 
limited,  amount.  Money  of  whatever  kind,  considered  with 
reference  to  the  degree  of  esteem  in  which  it  is  held,  relative  to 
some  other  form  of  money,  may  be  at  par,  or  at  a  discount.  All 
money,  considered  with  reference  to  the  relation  of  the  country 
where  it  is  issued  to  the  country  in  which  it  appears,  is  either 
foreign  or  domestic. 

134.  The  Substance  of  Coins. — The  material  of  which  the 
higher  class  of  coins  is  made,  gold  or  silver,  prior  to  being  coined 
is  called  bullion.  Bullion  rises  and  falls  in  value,  according  to 
the  ratio  of  the  supply  of  the  article  to  the  demand  for  all  pur- 
poses, including  that  of  coinage,  and  also  according  to  the  abun- 
dance of  the  means  of  purchasing  it,  among  which  the  various 
forms  of  credit  and  of  credit  money  may  be  part.  Money  coined 
is  not  of  invariable  value  relatively  to  commodities,  but  its  value 
is  far  less  variable  tlian  the  bullion  of  which  it  is  made.     For, 


336  ECONOMIC  PHILOSOPHY. 

when  coined,  it  lias  two  sources  of  value,  viz.,  the  intrinsic  value 
of  the  bullion  included  in  the  coin,  and  the  value  arising-  from  the 
credit  of  the  government.  This  credit  is  impressed  upon  the  coin  by 
its  stamp,  in  connection  with  the  statutes  defining  the  uses  to  which 
the  coin  may  be  legally  put.  These  may  maintain,  at  par  with 
any  coin  of  like  denomination,  a  coin  the  value  of  the  bullion  in 
which  may  be  much  less  than  the  face  or  par.*  Nor  is  it  true 
that  the  coin  which  is  made  of  a  relatively  depreciated  metal,  and 
which  is  held  at  par  by  the  credit  of  the  government  issuing  it, 
falls,  as  some  suppose,  to  the  value  of  the  bullion  it  contains,  the 
instant  it  is  taken  to  another  country.  For,  though  the  statutes 
under  which  it  is  issued  have  no  direct  efficiency  abi'oad,  to  com- 
pel people  of  other  countries  to  take  it  at  par,  yet,  if  they  invest  it 
with  a  satisfactory  degree  of  credit,  it  will  circulate  abroad,  if  it 
circulates  at  all,  at  the  same  value  as  it  circulates  in  its  own 
countrj^,  less  only  the  small  "shave,"  or  profit  which  a  broker 
will  ask  to  send  it  home  for  exchange. 

The  standard  coin,  of  any  country,  is  that  in  which  its  statutes 
make  all  public  and  private  obligations,  and  dues,  receivable  and 
payable,  to  any  amount.  The  silver  dollar  and  gold  dollar  are 
alike  standard  coins  of  the  United  States,  since  the  entire  national 
debt,  all  customs  dues,  and  all  private  debts,  are  legally  payable 
in  either.  But  no  silver  coins  are  standai'd  coins  of  England  since 
1816,  though  silver  coins  only  ai'e  standard  in  India.  Silver  is 
also  legal  tender  by  the  banks  in  redemption  of  their  bills  in  Scot- 
land and  Ireland.  But  certain  silver  coins  are  legal  tender  in 
England  for  private  debts  not  exceeding  £5. 

In  France,  Germany,  and  Italy,  silver  coins  are  legal  tender 

*  Count  Rosconi,  delegate  from  Italy,  at  the  Paris  Monetary  Conference  of  1878,  thus 
expressed  this  point.  ("Inter.  Men.  Conf.  1878,"  p.  Gl) :  "A  metai  is  one  thing,"  he  (-aid, 
"  but  money  is  another.  Nature  makes  the  metal ;  law  alone  makes  the  money.  If  the 
uncoined  metal  is  subjected  as  merchandise  to  all  the  accidents  of  supply  and  demand, 
all  the  variations  of  the  market,  the  coined  metal  being  no  longer  a  merchandise,  but 
having  legal-tender  power,  has  a  price  which  does  not  vary.  In  a  piece  of  metal, 
coined  according  to  certain  rules  as  to  alloy,  impression,  size,  shape,  weight,  the  law 
becomes  in  a  manner  incarnate.  It  gives  it  the  power  of  paying  obliiatious,  a  virtue,  a 
price  which  the  metal-merchandise  could  not  obtain.  It  is  not  wrong  to  say  thai  silver 
rises  and  falls  in  the  market;  in  the  territory  of  the  state,  where  the  law  reigns  and 
governs,  the  value  of  the  coin  does  not  change.  Our  countrymen  would  be  greatly 
astonished  if  they  were  to  be  told  that  the  flve-franc  piece  which  they  laid  by  in  1873, 
which  they  put  into  a  savings-bank  or  kept  in  their  chests,  has  in  the  last  five  years 
performed  all  the  somersaults  outlined  in  the  very  instructive  table  which  the  Director 
of  the  Administration  of  Coins  and  Medals  of  Paris  has  kindly  communicated  to  the 
conference.  The  metal  changes  in  value,  it  is  true  ;  but  as  long  as  the  state  mainiains 
itself  the  coin  does  not  change ;  it  has,  actually  and  efEectively,  the  value  which  is  indi- 
cated by  its  imprint." 


THE  DOLLAR.  337 

for  public  and  private  debts  to  an  unlimited  amount,  but  in  Ger- 
many the  coinage  of  silver  is  restricted  to  a  certain  sum,  and  in 
France  and  Italy,  the  coinage  of  silver  is  at  present  suspended. 

The  standard  dollar  of  the  United  States  is  a  coin  whose  emblem- 
atic stamp,  on  both  sides,  is  prescribed  by  act  of  Congress.  If  of 
gold,  it  must  contain,  when  stamped,  25.8  grains,  fV  fi"^) 
i.  e.,  nine-tenths  of  its  weight  must  be  pure  gold  and  one-tenth 
alloy.  It  must  have  a  diameter  of  M  of  an  inch  and  a  thick- 
ness of  Yuhj  of  an  inch. 

If  of  silver,  it  must  contain,  when  coined,  412|-  grains  of 
standard  silver,  j%  fine,  being  371^  grains  of  pure  silver,  and 
is  |g  of  an  inch  in  diametei',  and  yg^^  of  an  inch  tliick.  The 
act  creating  the  silver  dollar*  made  it  weigh  416  grains  (in- 
stead of  412i),  but  it  contained  371  grains  of  pure  silver,  as 
now,  that  element  never  having  been  changed.  A  reduc- 
tion was  subsequently  made  by  statute  in  the  weight  of  alloy. 
No  gold  dollar  piece  was  at  fii-st  authorized,  but  the  eagle,  or  ten- 
dollar  piece,  was  to  contain  270  grains  of  standard  coin  and  247.5 
grains  of  pure  gold.  One  gold  dollar  would,  therefore,  have 
weighed  27  grains,  and  would  have  contained  247.5  grains 
of  pure  gold.  Fifteen  times  24.75  grains  gives  3711  grains,  the 
weight  of  pure  metal  in  the  silv^er  dollar,  making  the  ratio  between 
the  pure  metals  in  our  coins  1  to  15 — the  ratio  being  estimated  on 
the  pure  metal  and  not  on  the  standard  weights  in  the  coins,  t 
This  was  the  ratio  recommended  by  Hamilton's  report  on  the 
establishment  of  a  mint,|  but  attained  in  connection  with  a  differ- 
ent measure  of  alloy.  By  introducing  about  one-ninth  instead  of 
one-twelfth  alloy  as  recommended  by  Hamilton,  Congress  raised 
the  weight  of  the  standard  dollar  to  416  grains  instead  of  405. 
England,  Spain,  Portugal,  and  Fi'ance  then  put  an  alloy  of  one- 
twelfth  of  the  total  or  standard  weight  into  their  gold  coins.  § 
Besides  the  dollar,  the  other  coins  of  the  United  States  are  the 
double-eagle,  eagle,  half-eagle,  three  dollars,  and  quarter-eagle, 

*  Passed  April  2,  1792. 

+  "  History  of  Bimetallism  in  the  United  States,'' by  J.  Laurence  Lanu'lilin,   p.   21. 

t  Dated  May  5,  1791.  Hamilton  recommended  as  followH:  "That  the  unit  in  the 
coins  of  the  United  States  ought  to  correspond  with  twenty-four  grains  and  three- 
fourths  of  a  grain  of  pure  gold,  and  with  371  grains  and  one-fourth  of  a  grain  of  pure 
silver,  each  answering  to  a  dollar  in  the  money  of  account."  The  former  is  exactly 
agi-eeable  to  the  present  value  of  gold,  and  the  latter  is  witliin  a  small  fraction  of  the 
mean  of  the  two  last  emissions  of  dollars,  the  only  ones  wliicli  are  now  found  in  com- 
mon circulation,  and  of  which  the  newest  is  in  the  greatest  abundance.  The  alloy  in 
each  case  to  be  one-twelfth  of  the  total  weight  which  will  make  the  unit  twenty-seven 
grains  of  standard  gold  and  405  grains  of  standard  nilver. 

§  "Bimetallism,"  by  Laughlin,  p.  21. 


338 


BCOKOMTC  PHILOSOPHY. 


the  first  five  being  made  of  gold  only,  the  last  of  either  gold  or 
silvei'.  The  standard  coins  of  other  countries  are  shown  by  the 
following  table  published  by  the  director  of  the  mint: 

ESTIMATE  OF  VALUES  OF  FOREIGN  COINS, 
JANUARY  1,  1885. 


Country. 


Argentine  Kepublic 


Austria 

Belgium 

Bolivia  

Brazil 

British  Possessions 

in  North  America. 

Chill 


Cuba. 


Denmark  . 
Ecuador  . . 

Egypt.... 


France 

German  Empire. . . 
Great  Britain 


Greece. 


Hayti 

India., 
Italy.., 


Japan. 


Liberia. 
Mexico. 


Netherlands. 

Norway 

Peru 

Portugal 

Russia 

Spain 


Sweden 

Switzerland. 

Tripoli 

Turkey 


U.S.  of  Colombia. 
Venezuela 


Monetary  ui\it. 


Peso  , 


Florin 

Franc 

Boliviano    

Milreis  of  1,000  reis. 


Dollar. 
Peso . 


Peso . 


Crown  . 

Peso 

Piaster. 


Franc 

Mark 

Pound  sterling. 

Drachma 


Gourde. 


Rupee  of  16  annas. 
Lira 


Yen. 


Dollar. 
Dollar. 


Florin 

Crown 

Sol 

Milreis  of  1,000  reis 
Rouble  of  ]i;0  copecks 
Peseta  of  lUO  centimes 

Crown 

Franc 

.Mahbub  of  20  plasters 
Piaster 

Peso 

Colivar 


Standard. 

Value 
in  U.S. 

money 
0  96.5 

Gold  and  silver 

Silver 

39.3 
19.3 
79.5 
54.6 

Gold  and  silver 

Silver 

Gold 

Gold 

Gold  and  silver 

1  00.0 
91.2 

Gold  and  silver 

93.2 

Gold 

Silver 

26.8 
79.5 
04.9 

Gold 

Gold  and  silver 

Gold 

Gold 

19,3 

23.8 

4  86.6!_, 

Gold  and  silver 

19.3 

Gold  and  silver 

96.5 

Silver.. 

Gold  and  silver 

37.8 
19.3 

Silver 

85.8 

Gold 

Silver 

1  00.0 
86.4 

40.2 
26  8 
79.5 
1  08.0 
63.6 
19.3 

Gold  and  silver 

Gold 

Silver 

Gold 

Silver 

Gold  and  silver 

Gold  

Gold  and  silver 

Silver 

Gold 

26.8 
19.3 
71.7 
04,4 

Silver 

Gold  and  silver 

79  5 
19.3 

Standard  coin. 


1-20,  1-10,  1-5,  ]4  and 
1  j)eso,  ^  argentine 
and  argentine. 

5, 10  and  20  francs. 
Boliviano. 


Condor,  doubloon, 
and  escudo. 

1-16,  %,  H,  }4,  and  1 
doubloon. 

10  and  20  crowns. 

Peso. 

5,  10,  25,  50,  and  100 
piasters. 

5,  10,  and  20  francs. 

5,  10,  and  20  marks. 

1^  sovereign  and  sov- 
ereign. 

5,  10,  20,  50,  and  100 
drachmas. 

1,  2,  5,  and  10  gour- 
des. 

5,  10,  20,  50,  and  100 

lire. 
1,2,5, 10,  and  20  yen, 

gold,  and  silver  yen. 

Peso  or  dollar,  5,  10, 
25,  and  50  centavo. 

10  and  20  crowns. 
Sol. 

2,  5,  and  10  milreis. 
14,  5^,  and  1  rouble. 
5,  10,  20,  50,  and  100 

pesetas. 

10  and  20  crowns. 
5,  10,  and  20  francs. 

25,  50,  100,  250,  and 

500  piasters. 
I'eeo. 
5,  10,  20,  50,  and  100 

bolivar. 


Subsidiary,  sometimes  called  fractional  coins,  are  those  in  which 
private  debts  generally  of  from  five  dollars  to  five  pounds  are 
payable,  and  which  are  not  legal  tender  beyond  that  sum.  Their 
material  is  usually  silver,  copper,  brass,  nickel,  or  bronze.  Those 
of  tlie  United  States  are  half-dollars,  quarter-dollars,  twenty-cent 


SILVER  AND  GOLD.  ,  339 

pieces,  and  dimes,  all  of  silver,  half-dimes  and  three  cents  of 
silver  or  nickel,  cents  of  copper,  and  nominally  mills,  though  no 
mills  are  coined. 

The  poorer  a  country  is,  the  slower  its  rate  of  production,  and 
the  more  nearly  its  currency  is  expended  only  on  objects  essen- 
tial to  vital  consumption,  viz.,  food,  clothing,  and  shelter,  the 
cheaper  and  baser  may  be,  and  perhaps  must  be,  the  materials 
Avhich  it  uses  as  money.  In  China,  India,  Italy,  and  Egypt, 
where  the  wages  of  labor  are  low,  silver  is  the  standard  money  of 
larger  commerce,  and  the  coin  in  which  all  credit  money  is  re- 
deemable, while  bronze  and  brass,  of  lower  value  than  copper,  are 
necessary  for  small  change,  in  the  payments  for  goods  at  retail, 
and  for  petty  services.  As  the  rate  of  production  and  the  volume 
of  wealth  increase,  more  of  it  takes  the  form  of  means  of  pro- 
duction or  repi'oducti  ve  wealth,  larger  values  need  to  be  expressed, 
and  the  volume  of  metallic  currency'"  increases  rapidly,  but  the 
ratio  of  increase  of  credit  currency  is  still  greater,  so  that,  in  such 
countries,  both  gold  and  silver  become  secondary  to  credit  money. 
They  remain  chiefly  as  means  of  adjusting  balances,  and  giving 
stability  to  the  credit  currency,  which  becomes  the  chief  means 
of  payment. 

If  a  country  makes  abundant  provision  for  the  issue  of  large 
bills  or  notes,  whetlier  of  the  government  or  of  banks,  its  use  of 
gold  will  be  less  in  quantity  than  if  it  does  not;  and  if  it  provides 
an  abundant  issue  of  small  bills,  its  use  of  silver  will  be  less. 
Gold  and  silver  are  hardly,  in  most  countries,  competing  cur- 
rencies, but  gold  is  rather  the  currency  of  capital  and  the  whole- 
sale trade,  and  silver  of  labor  and  the  retail  trade,  except  in  so 
far  as  bills  and  notes,  large  or  small,  may  supersede  both  gold 
and  silver.  England,  though  having  the  single  gold  standard, 
uses  about  $100,000,000  worth  of  silver,  all  of  which  is  subsidiary, 
but  all  of  which,  owing  to  the  absence  of  small  bills,  is  in  active 
and  nmch-needed  circulation.  The  silver  coinage  of  England 
under  Victoria  includes  a  crown  containing  436.35  grains  (live 
shillings),  a  half-crown  containing  218.17  grains,  a  florin  174.54 
grain.s,  a  shilling  87.27  grains,  a  sixpence  43. 63,  a  groat  29.06  grains, 
and  a  threepence  21.81  grains.  The  standard  for  silver  coin  from 
the  second  year  of  Elizabeth  to  the  present  day  has  been  11  '/lo 
])ai"ts  of  pure  silver  to  nine-tenths  part  alloy. 

13.5.  CIlall}•■«^s  ill  Britisli  C<Hiiaj4e. — A  few  gold  coins 
were  struck  by  English  kings  previous  to  the  Norman  Conquest, 
but  the  regular  currency  was  silver.  A  "  gold  penny"  was  coined 


340  ECONOMIC  PHILOSOPHY. 

in  1257,  which  was  of  tlie  value  of  twenty  pence,  and  is  now  so 
rare  that  it  sold  for  £140  in  June,  1864.  It  contained  45i  grains 
of  pure  gold  without  alloy.  In  reign  of  Edward  III.  (1327-1377) 
there  wei-e  four  issues  of  gold  coins,  viz.,  florins,  weighing  108 
grains,  current  for  6s.,  half-florins,  and  quarter-florins  ;  nobles, 
half-nobles,  and  quarter-nobles.  The  noble  had  138y*3  grains 
and  was  current  for  6s.  8d.  It  had  jfj  of  alloy.  This  propor- 
tion was  the  only  one  in  use  prior  to  Henry  VIII.  In  reign  of 
Edward  IV.  the  gold  coins  were  the  rose  noble  or  rial,  the  half- 
noble,  quarter-noble,  angel,  and  angelet.  The  weight  of  the  noble 
or  rial  was  108  to  120  grains,  and  it  was  current  for  8s.  4fZ.  The 
angel,  so-called  from  its  bearing  a  figure  of  the  Archangel  Michael 
slaying  the  dragon,  contained  eighty  grains,  and  was  current  at 
6s.  8(i.  The  angelet  was  a  half -angel.  Some  of  these  sold  in  1864 
for  from  £10  to  £30.  Sovereigns,  stamped  with  an  image  of  the 
sovereign  on  his  throne,  appeared  in  the  reign  of  Henry  VII. 
(1485-1509),  were  of  the  weight  of  240  grains,  and  current  for  £1, 
or  20s.  In  Henry  VIII.  's  reign  there  were  at  first  double  sover- 
eigns, sovereigns,  rose  nobles  or  rials,  George  nobles,  angels  and 
half-angels,  crowns  and  half-crowns.  Later,  in  years  thirty-four 
and  thirty-five  of  his  reign,  came  the  pound  sovereign,  in  which 
the  weight  was  reduced  from  240  grains,  current  for  £1  2s.,  to  200 
grains,  current  for  £1,  or  20s.  At  the  close  of  his  reign  the  pound 
sovereign  contained  192  grains,  and  was  made  current  for  20s. 
The  crown  at  the  latter  date  contained  forty-eight  grains,  and  was 
current  at  5s.  In  the  reign  of  Edward  VI.  (1546-1553)  the  sover- 
eign sank  to  174y\  grains,  and  was  still  current  for  £1.  Double 
and  triple  and  six-angel  pieces  were  issued.  In  the  reign  of  Mary 
the  sovereign  was  restored  to  240  grains,  and  made  current  for 
£1  10s.  The  rial,  120  grains,  passed  for  15s.,  the  angel  for  10s. 
In  this  reign  coins  passed  from  the  hannnered  stage  and  were 
milled.  The  sovereign  returned  to  174yT  grains,  and  was  cur- 
rent at  20s.,  the  fineness  being  twenty-two  carats  fine  gold  and 
two  carats  alloy.  At  the  union  of  the  two  kingdoms  under  James 
I.  there  were  issued  unites,  double  crowns,  Britain  crowns,  half- 
Britain  crowns,  and  thistle  crowns.  The  unite  weighed  only 
154ff  grains,  and  was  current  for  20s.,  or  £1.  The  "unite" 
or  gold  pound  of  the  time  was  also  called  a  "laurel,"  and  receded 
in  weight  during  the  reign  of  James  I.  to  140fx  grains.  Under 
Cromwell  there  were  fifty-shilling  pieces,  twenty-shilling  pieces, 
or  "broads,"  containing  140|?^  grains,  and  half-broads,  the 
broad   being   equal  to  the  pound.     Under   Charles  II.  tiie  term 


SILVER  COINS.  -'^41 

guinea  came  into  use,  the  coinage  being  of  a  five-guinea  piece, 
weiglit  647  18-S9  gi-ain,s,  cui'rent  for  £5,  a  two-guinea  piece,  a 
guinea,  and  half-guinea.  Tlie  guinea  for  a  terra  after  1663  circu- 
lated at  a  value  of  20s.,  in  1694  at  21s.  6c?.,  from  1694  to  1696  at 
30s.,  from  which  it  sank  again  to  21s.  6d.  before  1702.  The  guinea 
or  pound  I'eceded  to  129|f  grains.  In  the  reign  of  George  III. 
sovereigns  were  again  issued  as  the  equivalent  of  the  pound — the 
weight  again  falling  to  123^V/o  grains.  In  the  reign  of  Vic- 
toria this  continues  to  be  the  weight  of  the  gold  "sovereign," 
which  stands  for  the  pound  sterling.  Since  1816  it  has  been  the 
standard  unit  of  coinage. 

The  pound  sterling,  the  national  unit  of  English  currency,  is  re- 
puted to  have  been  originally  a  pound  troy  of  silver.*  But  works 
on  English  coinage  f  first  describe  the  coinage  of  the  silver  pound 
as  occurring  in  the  reign  of  Charles  I.  (1625-1649),  when  it  con- 
sisted of  1858  grains  of  silver,  of  the  standard  of  llyV  parts  fine 
silver,  to  f'y  part  alloy.  The  other  silver  coins  of  this  period 
were  the  10s.  piece  of  929  grains  ;  the  crown,  464|  grains  (de- 
clined from  480  grains  in  reign  of  Edward  VI.)  ;  the  half-crown, 
232^  grains  ;  the  shilling,  92|  grains  (declined  from  96  grains 
since  Edward  VI.)  ;  the  sixpence,  46|^  grains  ;  the  groat,  31 
grains  (declined  from  421  grains  .since  Henry  VIII.,  and  48  grains 
since  Edward  IV.)  ;  the  threepence,  half-groat,  penny,  and  half- 
penny. Prior  to  Henry  VII.  the  silver  coinage  seems  to  have 
been  confined  to  groats,  half  groats,  pennies,  halfpennies,  and 
farthings,  though  testrons  (shillings),  having  144  grains  each, 
were  coined  in  liis  reign.  | 

After  about  1600  the  cheap  gold  of  Mexico  and  Peru,  pouring 
in  upon  England,  maintained  a  lower  value  in  the  bullion  than  it 
was  worth  in  coin,  and  hence  was  coined  largely",  di-aining  Eng- 
land of  silver.  The  i-elative  quantities  of  the  two  metals  coined 
fui'nishes  no  criterion  of  their  respective  circulation,  but  only  of 
their  relative  cheapness,  as  it  is  always  the  metal  which  is  over- 
valued in  coin  that  seeks  the  mint. 


COINAGE. 

Under  Charles  II., 
"      James  II., 

GOLD. 

£.        s.  d. 
177,253   19    5 

2,113,638     2   8 

SILVER. 

£.        s.  d. 

3,722,180    2     8 

518,316     9     5 

*  "  The  Silver  Pound,"  by  S.  Dana  Ilortou,  p.  74. 
t  IIonfrey'H  "  English  Coins,"  p,  223. 
X  Henfrey'8  "  English  Coins." 


342  ECONOMIC  PHILOSOPHY. 


COINAGE.                                   GOLD. 

SILVER. 

£ 

s. 

d. 

£      s. 

d. 

Under  William  and  Mary,      443,328 

15 

G 

79,026     9 

4 

"      William  III.,               2,975,550 

16 

1 

7,014,047  16 

11 

"      Anne,                           2,484,531 

8 

4 

527,469  10 

4>^ 

From  1787  to  1798  silver  coins  became  so  scarce  in  England  that 
it  was  sought  to  supply  the  deficiency  by  coining  Spanish- Amer- 
ican dollars  and  half-dollars  countermarked  with  the  head  of 
George  III.  They  passed  current  at  5s,  and  later  at  5s.  6d.  Since 
the  recoinage  of  1816,  crowns,  half-crowns,  florins  (2s.),  sixpences, 
threepences,  and  groats  of  silver  have  been  issued.  From  1685  to 
1694  tin  halfpennies  and  farthings  were  coined.  Pennies,  half- 
pennies, fartliings,  half -farthings,  and  quarter-farthings  have 
been  coined  of  copper  in  most  reigns  since  Charles  II.  In  1874 
the  London  mint  coined  fifty -four  tons  of  copper  pence  and  half- 
pence, and  one  hundred  tons  of  bronze  pence,  halfpence,  and  far- 
things. Its  largest  issue  of  bronze  coins  was  134  tons  in  1875. 
Silver  and  copper  coins  of  small  value  facilitate  tlie  minute  sub- 
division of  the  results  of  labor  among  a  large  number  of  ])ersons, 
and  at  the  same  time  make  it  possible  to  gather  up  small  values 
from  an  infinite  number  of  customers  in  a  way  to  promote  great 
enterprises.  The  great  daily  press  depend  on  a  copper  coinage,  as 
the  retail  trade  generally  depends  on  one  of  silver.  So  of  cheap 
fares,  drinks,  and  food. 

The  pound  sterling,  or  twenty  shillings,  of  England  has  contin- 
ued for  centuries  to  be  the  unit  of  account,  though  seldom  any 
silver  coin  rej^resentiug  it  existed  or  could  circulate,  owing  to  the 
fact  that  gold  was  continually  tlie  cheaper  and  cheapening  metal. 
The  sovereign,  the  broad,  the  double-angel,  and  the  guinea  have 
at  various  times  stood  for  the  pound  sterling  because  tlie  quantity 
of  gold  in  these  coins  was  worth  less  than  the  standard  value  of 
the  coin,  while  the  quantity  of  silver  required  for  the  silver  pound 
would  have  been  worth  far  more.  As  silver  pounds,  if  coined, 
would  have  been  melted,  it  was  impracticable  to  coin  them.  It  is 
usual  to  say  that,  prior  to  1717,  England  had  the  silver  basis,  with 
gold  rated  according  to  its  value  in  silver  ;  that  from  1717  to  1816 
gold  and  silver  both  had  free  coinage  and  unlimited  legal  tender; 
and  after  1816,  silver  has  constituted  a  subsidiary  coinage  and  gold 
has  been  the  one  standard  unit  of  coinage.* 

*  Mr.  S.  Dana  Horton  ("  The  Silver  Pound,"  Introduction)  shows  that  in  common 
discussion  the  term  standard  may  have  one  or  ihe  other  of  nine  distinct  meanings,  viz., 
jt  may  mean  — 


DIVERSITY  IN  MONEY.  343 

130.  The  Standard. —The  influence  of  the  volume  of  each 
kind  of  money,  or  means  of  iiayment,  in  circulation,  upoii  the 
value  of  the  other,  forms  one  of  the  most  complex  topics  in  finance. 
An  increase  in  the  volume  of  each  kind  of  money,  including 
paper,  tends  first  to  cheapen  itself  relatively  to  the  others.  If  its 
convertihility  into  the  others  be  so  sustained,  as  to  prevent  it  from 
dropping  out  of  currency  into  a  mere  commodity,  it  must  soon 
efi'ect  a  greater  absolute  cheapness  in  all  kinds  of  money,  rela- 
tively to  commodities.  This  cheapness  of  money,  or  fall  in  its 
purchasing  power,  is  indicated  by  a  rise  in  the  prices  of  commod- 
ities generally,  and  is  known  as  inflation.  It  has  usually 
attended  periods  of  special  prosperity  and  activity.  The  disputes 
among  economists,  as  to  the  effect  of  an  incx-ease  in  the  volume  of 
money  on  prices,  grow  largely  out  of  their  differences  of  opinion 
as  to  what  shall  be  called  money.  The  bullionist,  who  deems 
only  gold  and  silver  money,  will  hold  either  that  paper  money 
does  not  raise  prices,  or  that,  if  it  does,  the  rise  is  mischievous. 
The  inflationists  will  vary  also  among  themselves  as  to  the  kinds 
of  paper  credit  which  have  the  effects  of  money,  in  increasing  or 
lowering  its  pui'chasing  power.  Many  who  freely  admit  that 
large  issues  of  bank  notes,  or  government  notes,  may  inflate  prices, 
will  deny  that  bank  deposits  and  discounts,  or  interest-bearing 
government  bonds,  or  railway  bonds  or  other  forms  of  exchange- 
able credit,  will  have  the  like  effect. 

Thus  money  is  a  subject  which  begins  on  the  solid  earth,  and, 
without  well-defined  lines  of  demarcation,  passes  upward  into  the 
clouds.  The  degree  in  which  it  is  comiiosed  of  value,  or  of  credit, 
changes  by  insensible  gradations.  Economists  strive  to  draw  a 
line  where  it  shall  stop,  but  cannot  agree  on  the  line.  One,  with 
Amasa  Walker,  says  only  coin   of  full  weight  and  fineness  is 


1.  The  fineness  of  money  metals,  or  whether  it  has  a  giveu  proportion  of  pure  metal 
to  cheap  alloy. 

2.  The  fineness  prescribed  by  law  for  a  coin. 

3.  The  weight  prescribed  by  law  for  a  coin. 

4.  The  national  uniL  of  account  (jjound,  dollar,  franc,  marc),  regarded  as  a  denomiDa 
tion,  name,  or  title,  as  distinguished  from  the  coin  which  may  at  various  times  be  its 
bofly  or  substance, 

5.  The  national  unit  of  coinage,  being  the  coin  in  body  and  substance  of  which  the 
unit  of  account  is  the  abstracted  idea. 

6.  The  full  legal  tender  money  of  a  country. 

7.  The  kind  of  such  money  chiefly  in  use. 

8.  The  kind  of  money  the  manufacture  of  which  is  free,  and  which  is  the  par  or  nom- 
inal standard  by  which  the  other  moneys  of  a  country  are  rated. 

9.  The  monetary  system  of  a  country  in  general  terms. 


344 


ECONOMIC  PHILOSOPHY. 


money.  Another  says  coin  and  notes  issued  on  deposits  of  coin, 
after  the  nietliod  of  the  Bank  of  England,  are  money.  Another 
"will  include  all  bank  notes,  while  redemx^tion  in  coin  is  main- 
tained on  them.  Another  defines  money  to  include  all  exchange- 
able credit,  and  atlirms,  with  MacLeod,  that  even  coined  money 
cii'culates  on  credit.  Another  includes  bank  deposits  and  dis- 
counts, and  .so  on. 

The.se  differences,  as  to  what  constitutes  money,  are  accompanied 
by  divergent  views  as  to  the  nature  of  the  actual  standard,  or 
measure  of  values,  against  which  values  of  property  balance  and 
prices  result.  The  bullionist  will  say  it  is  the  quantity  of  coin  in 
use.  The  banker  will  say  it  is  the  quantity  of  coin  and  redeem- 
able paper.  The  advocates  of  a  credit  currency  will  say  it  is  the 
aggregate  volume  of  gold  and  silver  coin,  and  of  exchangeable 
credit,  in  any  one  country.  Finally,  the  internationalist  will  say, 
it  is  tlie  general  volume  of  all  three,  in  all  countries  which  ex- 
change together.  The  former  quantities  are  nearly  computable 
for  a  single  countiy.  The  latter  is  incomputable,  even  for  one 
country.  Still  more  so  for  all.  Thus  money,  like  the  ladder  in 
Jacob's  vision,  has  its  feet  on  the  earth  and  its  summit  in  the 
clouds.  It  may  be  added  that  such  is  its  utility  in  whatever  form, 
that  there  are  never  wanting  those  who  can  see  the  angels  of 
heaven  descending  and  ascending  upon  it. 

137.  Tlie  Ratio  between  the  Money  Metals.— England 
uses  more  silver  money  than  the  United  States,  because  she  makes 
no  pi'ovision  for  the  issue  of  small  notes  of  from  $1  to  $10  in 
denomination.  Germany  also,  though  aiming  to  have  a  cui'- 
rency  of  gold  only,  uses  far  more  silver  than  France  or  the 
United  States,  because  the  condition  of  the  German  people,  their 
frugality  and  low  I'ate  of  production,  render  silver  more  indispen- 
sable to  them  than  gold. 

The  coined  and  paper  money  of  thirty-eight  of  the  world's  prin- 
cipal nations  (excluding  China)  was  compiled  by  the  director  of 
the  mint  in  1883,  in  the  following  chart  (in  which  each  number 
represents  millions  of  dollar.s)  : 


Gold. 

Silver. 

Total  specie. 

Paper. 

Full  tender. 

Limited 
tender. 

Total  paper 
and  specie. 

3,a32 

3,3:i3 

2,277 

434 

6,045 

9,875 

Gold  and  silver  bullion  maintain  the  same  value  relatively  to 
other  commodities,  only  proximately  and  not  absolutely.    Usually 


THE  RATIO.  345 

for  a  century,  and  in  a  less  perfect  manner  for  several  centuries, 
gold  has  been  worth  from  fifteen  and  one-half  to  sixteen  times  its 
own  weight  in  silver,  and  on  this  expected  ratio  the  coinage  of 
the  two  metals  in  Eui-ope  and  America  has  been  adjusted,  the 
legal  ratio  being  one  to  sixteen  in  America,  and  one  to  fifteen  and 
one-half  in  Europe.  Since  1878  silver  bullion  has  declined 
relatively  to  gold  bullion  in  purchasing  power,  until  at  the 
present  time  it  requires  about  twenty-two  times  a  given  weight  in 
silver  to  equal  in  value  the  same  weight  in  gold. 

Adam  Smith  says  that,  before  the  discovery  of  the  mines  of 
America,  an  ounce  of  gold  was  worth  only  from  ten  to  twelve 
ounces  of  silver,  bvit  by  1650  they  came  to  bear  the  relative  values 
of  one  to  fourteen  or  fifteen.  Both  metals  sank,  in  their  pur- 
chasing power,  relatively  to  labor  and  commodities,  but  silver  the 
more  rapidly,  owing  to  its  more  rapid  increase  of  production. 
The  Western  continent  has  ever  since  been  the  soui'ce  of  supply 
to  the  Eastern — the  migration  of  the  precious  metals  being  al- 
ways in  the  opposite  direction  to  the  migration  of  population. 
In  India  silver  has  always  been  held  in  higher  esteem,  relatively 
to  gold,  than  in  Europe,  as  both  the  money  and  the  ornaments  of 
the  people  are  of  silver.  At  the  mint  of  Calcutta,  a  century  ago, 
an  ounce  of  fine  gold  was  held  worth  only  fifteen  ounces  of  silver, 
and  in  the  markets  of  Bengal  and  Madras  somewhat  less.  In 
China  the  proportion  was  then  and  is  now  only  one  to  ten,  and 
in  Japan,  at  least  until  recently,  one  to  eight.  The  population  of 
China  and  India  are  so  large,  and  their  customs  so  fixed,  that 
they  maintain  a  higher  relative  value  on  silver,  as  compared  with 
gold,  than  is  maintained  by  Western  nations. 

Silver  and  gold  are  produced,  in  America,  in  about  the  relative 
quantities  of  twenty-two  in  weight  of  the  former,  to  one  of  the 
latter,  but  of  these  twenty-two  pai*ts  about  seven  were,  for  a  cen- 
tury, drawn  off  annually  to  India,  leaving  only  fifteen  parts  of 
silver  to  one  of  gold  to  supply  Europe  and  America.  The  theory 
was  propounded  more  than  a  century  ago  by  Mr.  Meggins,  and 
combated  by  Adam  Smith,*  that  the  relative  values  of  gold  and 
silver  depended  on  the  relative  quantities  produced  for  circula- 
tion in  Europe.  Meggins  lield,  therefore,  that  if  the  drain  of  silver 
to  India  should  stop,  the  ratio  between  tlie  two  metals  woidd  fall 
to  one  of  gold  to  twenty-two  of  silver.  Smith  thought  it  would 
not.     But  in  1873-G  the  drain  to  India  stopped,  or  nearly  so,  and, 


♦  "  Wealth  of  Natio;i8,"  Book  i.  i».  97.    McCuUocirs  Ed. 


346  ECONOMIC  rillLO^UPlIY. 

whether  from  this  or  other  causes,  the  relative  value  of  silver  fell 
as  Meg'gins  predicted. 

All  European  nations,  and  the  United  States,  have  judged  fit, 
in  consequence  of  this  fall,  to  cease  to  coin  silver,  at  the  will  of 
the  holder,  in  the  i^roportions  of  one  to  fifteen  and  one-half,  or 
sixteen,  as  they  had  previously  done. 

138.  Exchangeable  Credit  as  Quasi  Money.— Credit 
consists  in  giving  faith  or  belief  to  a  promise  or  to  a  statement  of 
a  fact.  If  the  promise  or  statement  relates  to  a  value,  and  is  of 
a  kind  which  many  persons  will  have  faith  in,  one  of  these  per- 
sons will  take  it  from  another,  as  equivalent  to  the  fact  which  it 
states  or  the  value  it  pi'omises.  Hence,  about  as  easily  as  goods 
became  exchangeable,  credit  becomes  exchangeable.  Exchange- 
able credit  has  so  many  effects  analogous  to  money  that  certain 
economists  treat  it  as  credit  money.  It  is  not  necessary  to  the 
creation  of  credit  money,  so-called,  that  its  issuers  shall  suppose 
or  intend  it  to  be  money.  It  is  only  necessary  that  it  shall  act 
as  a  convenient  substitute,  and  perform  the  functions,  of  money. 
In  finance  as  in  the  enlistment  of  troops,  the  substitute,  being  ac- 
cejjted  for  service,  fights  as  principal,  and  that  for  which  it  acts 
as  substitute  goes  about  other  business,  or  is  retired. 

Bills  of  exchange,  and  promissory  notes  of  private  persons  and 
firms,  bank  notes  issued  to  circulate  as  money,  bank  deposits 
aiad  checks,  government  notes,  commercial  accounts,  store  orders, 
government  and  corporate  debts,  all  help  to  make  up  this  indefi- 
nite volume  of  exchangeable  credit.  It  includes  all  credits  which 
are  capable  of  easy  subdivision,  like  bank  accounts,  or  ready 
exchangeability,  like  negotiable  notes,  so  as  to  be  used  with  more 
or  less  frequency  and  regularity  as  means  of  payment  of  debts, 
and  purchase  of  goods  and  services. 

In  so  far  as  commodities  are  exchanged,  through  the  use  of 
either  of  these  media,  without  any  payment  for  them  in  coin,  they 
become  substitutes  for  money,  doing  its  work  upon  very  differ- 
ent terms  as  to  cost. 

139.  Bills  of  Exchange  and  Notes. — Bills  of  exchange  are 
used  as  substitutes  for  gold  and  silver  in  international  trade.  A 
bill  of  exchange  is  a  draft  or  order  for  the  payment  of  a  certain 
sum  of  money,  drawn  by  the  vendor  or  consignor  of  merchan- 
dise, either  sold  or  sent  to  the  consignee  to  be  sold,  whereby  the 
consigner  of  the  goods  requests  the  consignee  to  pay  their  price 
to  a  person  named,  or  to  some  one  to  whom  he  shall  order  it  paid. 
As  to  the  bill,  the  consignor  becomes  the  drawer.     The  person,  on 


DILLS  OF  EXCUANGE.  347 

whom  it  is  drawn,  becomes  the  drawee.  The  person  who  is  to 
receive  the  payment  is  the  payee,  and  when  he  transfers  the  bill 
he  becomes  endorser.  If  but  one  such  bill  existed,  it  would  not 
supersede  coin,  but  would  have  to  be  paid  in  coin  by  the  drawee. 
But  when  many  such  bills  are  drawn,  they  come  to  represent,  not 
only  the  several  prices  of  all  the  merchandise  shipped  from 
place  A  to  place  B,  but  also  all  the  return  merchandise  shipped 
from  B  to  A.  The  bills  drawn  by  Rio  Janeiro  merchants  on 
London  merchants  for  the  price  of  cotfee,  hides,  caoutchouc, 
diamonds,  silver,  wool,  and  tropical  fruits,  shipped  from  Rio  to 
London,  are  found  to  nearly  equal  in  amount  the  bills  drawn  by 
London  or  other  foreign  merchants  somewhere,  on  those  in  Rio 
for  cloth,  hardware,  furniture,  machinery,  etc.,  shipped  by  them 
to  Rio.  If  both  classes  of  bills  could  be  got  together  in  one  place, 
with  the  persons  from  whom  they  are  due,  and  to  whom  they  are 
due,  it  would  be  found  that  the  Rio  exporters  had  shipped  to 
London  just  coffee,  hides,  caoutchouc,  diamonds,  silver,  wool, 
and  fruits  enough  to  pay  for  the  cloth,  hardware,  furniture,  etc., 
shipped  by  the  London  merchants  to  Rio.*  London  and  Rio  are 
even  within  a  few  dollars,  not  more  than  two  or  three  per  cent, 
of  the  whole.  Obviously,  therefore,  no  gold  need  be  paid  or 
shipped  on  any  of  these  bills.  It  is  only  necessary  for  the  Brazil- 
ian importer,  who  owes  money  in  London,  to  pay  it  to  the  Bra- 
zilian exporter,  to  whom  money  is  owed  in  London,  and  for  the 
London  mei'chants  to  do  the  same,  provided  what  each  pays  at 
home  is  credited  on  what  he  owes  abroad.  This  is  done  by  the 
importer  in  Rio  buying  the  draft  made  by  the  exporter  in  Rio, 
and  the  importer  in  London  buying  the  draft  made  by  the 
exporter  in  London,  and  using  it  in  payment  of  his  own  debt. 
The  price  of  exchange,  or  the  rate  at  which  drafts  can  be  bought, 
is  said  to  be  in  favor  of  Rio  when  drafts  on  London  are  so  plenty 
in  Rio  that  they  can  be  bought  there  for  a  small  discount  from 
their  face  value.  It  is  against  Rio  when  drafts  in  Rio,  on  Lon- 
don, sell  at  a  premium.  The  amount  of  this  premium  or  discount 
is  supposed  to  be  adequate  to  cover  the  risk  of  being  obliged  to 
incur  the  cost  of  transmitting  the  specie,  including  interest,  in- 
surance, and  profits. 

Thus  no  payment  at  all,  in  money,  need  be  made  for  these  pur- 
chases, on  either  side,  so  far  as  their  values  offset  each  other,  and 

♦Where  this  is  not  in  fact  true  na  to  the  shipments  between  any  two  places,  it  is 
made  true  in  elli;ct  by  taking  in  sucli  other  places  as  have  made  shipments  and  drawn 
drafts  which  in  the  aggregate  will  bulauce. 


348  ECONOMIC  riULOSOPlIY. 

money  as  a  medium  of  excliange  is  disijeused  with,  but  the  bills 
on  both  sides  become,  for  the  time  being,  substitutes  for  the 
money,  and  hence  a  form  of  credit  money. 

Promissory  notes  of  private  persons  and  firms  become  sub- 
stitutes for  money,  and  a  species  of  credit  money,  when  given 
in  payment  for  merchandise  in  such  numbers  as  to  be  offset 
against  each  other,  and  so  paid  by  cancellation.  When  the  con- 
dition of  private  credit  is  such  that  notes  of  ordinarily  solvent 
customers,  payable  two  or  three  months  ahead,  can  be  taken  by 
their  holder  to  a  bank  or  broker,  and  cash  or  ci-edit  obtained  for 
them  by  their  holder,  wherewith  to  pay  his  old  debts,  or  buy 
new  goods,  and  when,  over  long  periods  of  time,  private  credit 
remains  so  stable  and  secure  that,  on  the  maturing  of  each  set  of 
notes,  they  can  be  taken  up  or  paid  with  the  proceeds  of  the  sale 
of  the  goods  for  which  they  were  given,  and  when  these  proceeds 
are  often  themselves  the  notes  of  persons  to  whom  the  goods  were 
sold,  it  is  obvious  that  many  goods  will  pass  from  producers  to 
consumers  on  a  currency  or  means  of  jjayment  which  consists 
wholly  of  private  promises  to  pay.  And  when  all  the  promises 
to  pay  given  by  merchants  in  Syracuse  for  cloth  and  iron  are 
taken  to  New  York,  and  there  compared  with  like  promises  given 
by  New  York  merchants  for  salt,  purchased  in  Syracuse,  it  is 
obvious  that  the  system  of  offsetting  these  notes  against  each 
other  will  pay  them,  as  in  the  case  of  bills  of  exchange.  To  the 
extent  this  is  done  all  the  merchandise,  for  which  they  were  given, 
is  in  fact  exchanged  without  any  interposition  of  money.  And, 
to  the  extent  this  is  done,  the  notes  themselves  have  been  a  sub- 
siitute  for  money,  and  therefore  a  form  of  credit-money. 

140.  Money  of  Account. — Commercial  accounts  of  all  kinds 
may  assume  a  payment  in  coin  as  to  be  made,  which  in  fact  is 
never  made  in  coin.  Hence  the  term  money  of  account  comes  to 
mean  ideal  money — not  coined  money.  A  shoemaker  and  farmer 
reside  near  each  other.  The  shoemaker  can  do  $1,000  worth  of 
work  each  year  in  making  shoes,  and  wants  $500  worth  of  crops 
from  the  farm,  but  the  farmer  can  only  take  $100  worth  of  shoes. 
He  opens  an  account  with  the  shoemaker,  and  in  the  course  of 
the  year  sells  him  $500  worth  of  food  and  buys  from  him  $100 
woi'th  of  shoes,  leaving  the  shoemaker  owing  hina  $400.  But  the 
shoemaker  has  also  made  and  sold  $100  worth  of  shoes  each  for 
the  butcher,  blacksmith,  wagon-wright,  and  carpenter,  against 
each  of  whom  he  has  accounts  for  shoes  furnished,  $100  each,  be- 
ing just  enough  to  pay  the  farmer.      If  now  the  butcher,  black- 


DEPOSITS  AND  CHECKS.  o49 

smith,  wagon-wright,  and  carpenter  have  also  done  work  for  the 
farmer,  whereby  he  owes  tliem  $100  each,  evidently  the  shoe^ 
maker  need  only  cancel  his  accounts  against  them  and  let  them 
cancel  their  accounts  against  the  farmer,  to  place  the  farmer 
where  he  can  cancel  without  loss  his  accounts  against  the 
shoemaker.  Thus  $1,200  worth  of  services  have  been  ex- 
changed nominally  for  money,  but  really  for  the  abstract  idea  or 
conception  of  money.  Each  service  when  rendered  was  charged 
for  at  a  certain  suna  in  money,  but  really  no  money  was  used. 
Hence,  the  book  accounts  were  a  substitute  for  money,  had  the 
effect  of  money,  and  are  therefore  a  form  of  credit-money.  From 
these  the  term  "  money  of  account  "  has  been  borrowed,  to  mean, 
at  first,  that  kind  of  money  which  consists  of  accounts  which  off- 
set each  other,  and  enable  payments  to  be  made  without  the  act- 
ual use  of  money.  From  this  the  term  "money  of  account "  rises 
to  mean  money  considered  as  an  intellectual  and  financial  concep- 
tion merely,  as  one  might  say  "  money  in  your  mind's  eye,"  or 
money  in  thought,  as  distinguished  from  money  physically  pre- 
sent. ' '  Money  of  account "  is  thus  the  pound,  the  dollar,  the 
marc,  the  franc,  when  considered  not  as  a  coin,  but  as  a  denomi- 
nation, name,  or  title — a  mere  idea  of  which  the  coin  is  the  body 
or  substance.  *  All  forms  of  credit  tend  thus  to  idealize  money,  and 
enable  exchanges  of  commodities  to  be  made,  by  the  use  only  of 
instruments  which  express  money  of  account,  without  the  inter- 
vention of  coined  money,  t 

141.  Bank  Deposits  uiitl  Checks. — These,  also,  become  a 
form  of  credit-money.  The  system  of  bank  checks,  on  deposits,  is  a 
system  devised  by  the  minor  banks  of  England  to  thwart  an  act 
of  Parliament  which  was  designed  to  limit  to  the  Bank  of  En- 
gland, and  a  few  others,  the  privilege  of  issuing  their  own  notes 
as  a  means  of  discounting,  or  "cashing"  the  notes  of  their  cus- 
tomers. The  minor  banks  said  to  their  customers  :  "  We  can  not, 
owing  to  this  act  of  Parliament,  issue  to  you  our  notes,  but 
we  can  give  you  a  credit  oii  the  notes  you  may  leave  with  us,  as 
if  a  sum  named  had  been  deposited  by  you  in  our  bank,  and 
on  this  you  can  draw  at  pleasure,  by  your  check.  In  this  way 
the  act  of  Parliament  was  wholly  thwarted,  and  a  new  form  of 
credit-money  was  created,  mom  effectually  than  if  every  bank 
had  been  permitted  to  discount  its  customers'  notes  with  its  own 
bills.  To  such  an  extent  have  the  deposits  and  checks  become  a 
substitute  for  money,  and  a  meajis  of  payment  and  of  credit,  that 

*  "  The  Silver  Pound,"  by  G.  Dana  Horton,  p.  xxi.    t  Vide  Note  to  Sec.  Ib7 post. 


350  ECONOMIC  PlllLOSOPHT. 

ill  the  payments  made  through  checks,  for  goods  sold,  in  tlie  city 
of  New  York,  amounting  to  from  $80, 000, 000  to|100,000, 000  daily, 
only  about  three  per  cent,  are  usually  paid  in  coin  or  bank  notes. 

142.  Bank  Notes. — Bank  notes  are  the  form  of  exchangeable 
credit  which  it  is  most  easy  and  natural  to  regard  as  money.  A 
bank  is  a  shop  for  the  sale  of  money  and  credit,  coined  money, 
and  credit  money,  in  exchange  for  securities  which  ensui'e  to  it 
the  payment  of  money  after  an  interval  of  time.  All  the  obliga- 
tions of  a  bank  to  its  customei'S  are,  at  all  times,  payable  on  demand. 
Most  of  the  securities  and  assets  will  be  obligations  payable  at  a 
future  period.  .  It  is  of  the  essence  of  all  banks  that  they  are  in- 
.solvent  if  all  the  holders  of  their  obligations  call  for  them  at  once, 
since  they  have  not  the  right  or  power  to  call  upon  all  the  pei'sons 
indebted  to  them  to  pay  at  once.  Banks  are  founded  upon  aggre- 
gated credit,  deal  in  credit,  rest  on  credit,  and  requii'e  a  certain 
condition  and  stability  of  general  credit  for  their  continuance. 
They  are  storehouses  for  the  aggregation  and  storage,  jjurchase  and 
sale,  of  credit  and  cash,  in  the  same  manner  as  merchants'  ware- 
houses are  storehouses  for  the  aggregation  and  sale  of  goods,  and 
as  elevators  and  boards  of  trade,  together,  constitute  a  market  for 
the  collection  and  sale  of  grain  and  agi"icultural  produce.  In 
Russia,  grain  is  dealt  with  in  a  manner  so  nearly  analogous  to 
banking,  that  grain  markets  are  called  grain  banks. 

Credit  must  be  aggregated,  in  founding  a  bank,  before  banking 
business  can  be  done,  because,  if  a  bank  loaned  only  its  own  capi- 
tal, it  would  no  sooner  get  all  its  capital  loaned  than  it  would  be 
out  of  business.  But,  by  pi'esenting  to  the  business  community 
an  imposing  aggi-egation  of  credit,  and  compelling  confidence,  it 
attracts  the  deposits  of  its  customers  to  an  amount  from  two  to 
six  times  greater  than  its  capital,  and  thereupon  its  profits  chiefly 
ensue  from  lending  the  money  of  its  dejiositors. 

The  credit  aggregated,  in  the  degree  necessary  to  give  the  bank 
the  confidence  of  the  public  and  of  depositors,  in  various  ways, 
in  banks  of  large  business  and  long  standing,  is  due  chiefly  to 
many  yeai-s  of  safe,  prompt,  and  honorable  dealing.  In  the  fii-st 
instance,  however,  there  is  usually  a  stacking  together  of  public 
securities,  or  ci'edits  of  some  kind,  such  as  government  or  state 
bonds,  national  debts,  gold  or  the  like,  in  whose  stability  the 
public  have  confidence,  and  the  bank  virtually  says  to  the  public  : 
"Look  at  these  and  trust  us  on  their  account."  * 

*  When  the  government  of  Russia  desired,  in  1834,  after  "  scaling  "  the  government 
paper  money,  which  had  circulated  at  only  oue-fourth  its  par  or  nominal  value,  to 


A  NATIONAL  BANK.  351 

The  banks  of  Venice  (founded  in  1711),  Genoa,  and  England 
originated  in  loans  made  to  governments,  on  the  faith  of  which 
government  revenues  were  indirectly  or  directly  pledged,  and  the 
banks,  as  chief  creditors  of  the  government,  became  its  fiscal 
agents.  The  Bank  of  Prance,  Imperial  Bank  of  Germany,  that 
of  Austria,  of  the  Netherlands,  of  Russia,  are  national  institutions 
of  great  magnitude,  modelled  in  a  more  or  less  imitative  spirit 
after  the  Bank  of  England.  One  of  the  burning  questions 
pending  in  the  politics  of  the  United  States  from  1790  to  1833  was 
whether  the  United  States  should  have  a  national  "Bank  of  the 
United  States,"  which  should  perform  like  functions  toward  the 
government  and  banks  of  the  United  States  as  those  performed  by 
the  Bank  of  England.  Alexander  Hamilton  was  the  principal 
advocate  of  the  policy,  Andrew  Jackson  its  final  opponent.  The 
first  national  bank  was  founded  nearly  simultaneously  with  our 
government,  under  Mr.  Hamilton's  mfluence,  and  the  second 
national  bank  expii-ed  under  the  veto  of  the  bill  to  renew  its 
charter,  which  veto  constituted  one  of  the  salient  features  of 
Jackson's  administration. 

Banks  of  issue  and  redemption  issue  paper  money,  and  purport 


enter  into  a  joint  arrangement  with  the  banks  of  Russia,  wliereby  the  banks  should, 
as  agents  of  the  government,  redeem  at  par  the  new  government  notes,  to  be  issued 
in  exchange  for  tlie  old  at  the  rate  of  one  of  the  new  for  four  of  the  old,  the  Czar 
collected  in  the  fortress  of  St.  Petersburg  130,000,000  roubles  in  gold  as  this  basis  of 
redemption,  and  invited  the  bankers  and  merchants  of  the  empire  to  come  in  and 
look  at  his  gold,  as  a  means  of  inspiring  confidence  in  the  ability  of  the  government 
to  redeem  the  new  currency  at  par. 

Again,  under  the  existing  national  banking  system,  in  founding  a  national  bank, 
$100,000  in  government  bonds  were  purchased  by  the  founders  and  deposited  in  the 
Treasury  at  Washington,  as  security  for  the  redemption  of  every  $90,000  of  bills  issued 
by  the  bank,  all  of  which  were  furnished  them  by  the  government,  engraved  at  the 
government  office  and  delivered  to  tliem  in  exchange  for  the  bonds.  This  secures 
the  redemption  of  the  bills.  At  present  the  government  of  the  United  States  leaves 
the  business  of  banking  open  to  free  competition,  so  far  as  banking  consists  in 
receiving  deposits  and  discounting  notes.  So  far  as  it  consists  in  issuing  notes,  the 
redemption  of  the  notes  is  secured  by  pledge  of  government'  bonds.  No  system  has 
yet  been  devised  or  conceived  wliereby  depositors  can  escape  the  risk  involved  in  the 
custody  and  lending  of  their  money  by  the  banks  on  losses  by  defalcations  of  its 
officers.  The  capital  of  the  bank,  however,  when  called  in  from  its  function  of  securing 
the  redemption  of  the  bills  of  the  bank,  which  is  iis  primary  liability,  is  then  liable  to 
depositors  to  the  extent  it  will  go,  for  any  inadequacy  in  the  assets  on  vrhich  the 
bank  has  made  its  loans  to  pay  its  depositors.  The  quarterly  statements  which  our 
national  baiikini;  law  rc'cinires  tlu!  bank  to  publish  of  heir  assets  aiid  liabilities  is  sup- 
posed to  throw  some  light  to  guide  depos  tors  as  to  \\a:  dogr('e  of  credit  in  wliicli  the 
bank  should  be  hold,  and  the  government  syHtem  of  inspection  is  supposed  (o  lie  inii)er- 
fectly  and  in  some  small  degree  adapted  to  detect  substantial  untruths  in  these  qnar- 
terly  statements.    It  has,  however,  seldom  been  cqiml  to  the  task. 


352  ECONOMIC  PHILOSOPHY. 

to  redeem  it  in  coin.  Banks  of  deposit  and  discount  are  those 
which  make  loans  on  time  bills,  and  derive  their  incomes  chiefly 
from  lending  deposits.  As  to  their  foi'm  and  oi-ganization,  they 
may  be  either  (1)  quasi  government  banks,  like  the  Bank  of  En- 
gland, Bank  of  France,  Imperial  Bank  of  Germany,  etc.,  or(2)  cor- 
porate and  joint-stock  banks,  founded  wholly  by  private  capital ; 
and  the  latter  are,  in  the  United  States,  still  further  divided  into 
(1)  national  and  (2)  private  banks,  the  former  meaning  those 
which  issue  bills  secured  by  deposit  of  government  bonds,  and 
the  latter  those  which  at  present  issue  no  bills,  being  restrained 
from  issuing  bills  by  a  federal  law,  taxing  them  more  for  issuing 
bills  than  they  could  afford  to  pay. 

What  have  been  known  in  the  United  States  as  State  banks 
were  covporate  banks,  based  chiefly  or  wholly  on  private  capital, 
but  authorized  by  the  laws  of  the  several  States.  In  a  few  cases 
as  in  that  of  the  State  bank  of  Iowa,  and  of  Indiana,  they  were 
institutions  in  which  the  State  held  stock  and  had  a  part  control. 
In  most  cases,  however,  they  were  formed  under  a  general  law 
which  authorized  any  three,  five,  or  seven,  or  more  persons  to  go 
into  the  business  by  putting  up  securities  to  the  amount  of  the 
alleged  capital,  which  might  consist  of  bonds  of  the  State,  or  of 
some  city  or  town,  or  private  mortgages  on  real  estate.  So  pre- 
carious were  many  of  these  securities  that  the  currency  or  notes 
issued  upon  them  had  a  vei-y  fluctuating  value.  The  banks 
acquired  an  unsavory  reputation,  being  called  "  wild-cat  banks," 
and  the  like,  until  at  the  outbreak  of  the  rebellion  in  1861  most 
of  them  collapsed  and  the  circulating  notes  of  the  remainder  were 
retired.  The  national  banking  system  was  devised  to  take  their 
place.  Among  these  State  banks,  however,  those  of  Massachusetts, 
Rhode  Island,  New  York,  Indiana,  and  Iowa  bore  a  good  repu- 
tation and  in  great  part  redeemed  their  paper.  So  unpopular  had 
the  principle  of  banking  become  in  many  of  the  newer  States  that 
in  one  at  least,  Mifhigan,  the  constitution  prohibited  the  creation 
of  a  bank. 

l-t3.  Government  Notes  and  Debts.— Government  debts 
are  seldom  recognized  as  an  issue  of  credit-money,  and  some  mis- 
takes in  legislation  have  been  due  to  this  oversight.  In  the  war 
of  the  American  Revolution,  1776  to  1783,  the  paper  money  known 
as  "Continental  money  "  was  an  issue  of  government  debt  in- 
tended to  circulate  as  money,  which  was  repudiated  and  became 
worthless  ultimately,  for  lack  of  any  provision  for  redeeming  it 
in  coin,  for  funding  it  into  interest-paying  bonds,  or  for  making 


HANDLING  THE  WAR  DEBT.  353 

any  other  valuable  financial  use  of  it.  A  government  debt  must 
be  made  a  source  of  income  to  its  possessor  or  it  will  lose  all  value. 
Hence,  to  issue  such  a  debt  without  pi-ovision  either  for  redeem- 
ing it,  paying  interest  on  it,  or  funding  it  into  interest-paying 
debt,  is  to  repudiate  it  in  advance. 

The  Confederate  debt  of  1861-4  met  the  same  fate  as  the  Con- 
tinental money,  for  the  same  reasons.  The  last  official  sale  of 
Confederate  money  was  made  at  tlie  rate  of  $1  of  coin  for  $1,200 
of  the  notes.  The  government  avoided  repudiation  by  what  was 
then  deemed,  and  felt  to  be,  the  most  drastic  system  of  taxation 
the  people  could  bear.  The  duties  on  imports  were  raised  to 
rates  which  could  only  have  been  enacted  after  the  majority  of 
the  representatives  of  the  free-trade  idea  in  Congress  had  with- 
drawn, leaving  the  protectionists  in  the  ascendency.  Fifteen 
years  after  the  war  was  over,  the  free-trade  tlieorists  and  oppo- 
nents of  "inflation,"  including  Prof.  Adams,  in  his  work  on 
'  'Debts, "  Prof.  Laughlin  in  his  '  'Elements, "  and  others,  have  raised 
the  cry  that  the  timidity  of  the  government  caused  the  debt,  as  it 
should  have  raised  the  entire  expense  of  the  war  by  taxation  as 
fast  as  it  was  needed.  In  fact,  it  was  only  by  getting  anti-infla- 
tionists and  free-traders  of  these  views  out  of  Congress,  or  into  a 
helpless  minority,  that  the  potency  of  the  revenue  laws  could  be 
increased  in  the  degree  that  they  actually  were.  The  ' '  boom  in 
prices,"  and  the  confidence  in  profits,  caused  by  the  rapid  inflation 
through  government  money,  set  on  foot  an  energy  of  pro- 
duction, by  means  of  which  heavy  taxes  were  freely  paid.  The 
feeling  of  capacity  to  pay  heavy  taxes  arose  only  as  the  people 
found  that  the  stagnation  in  business,  which  had  oppressed  the 
country  for  the  seven  years  prior  to  the  war,  had  given  place  to 
an  era  of  large  profits  and  intense  pi'osperity. 

The  duties  on  imports  were  pledged  sacredly  to  the  payment  of 
interest  on  the  bonds.  Holders  of  notes  bearing  no  interest  were, 
until  near  the  close  of  the  war,  invited  to  exchange  them  for  the 
bonds. 

The  bonds,  during  the  war,  fell  with  defeat,  and  rose  with  vic- 
tory. As  the  notes  kept  pace  with  them,  and  were  the  nominal 
standard,  in  wliich  even  goldcoin  was  quoted,  the  fall  in  both  bonds 
and  notes  was  indexed  by  what  was  called  the  premium  on  gold. 

With  tlie  final  success  of  the  Union  arms,  the  bonds  rose  to  75 
per  cent.,  and  at  the  end  of  fifteen  years  passed  to  a  premium. 
The  bonds  at  6  and  7  per  cent,  were  then  exchanged  for  those 
bearing  a  lower  rate  of  interest,  until  a  3  per  cent,  bond  could  be 


354  ECONOMIC  PHILOSOPHY. 

neg:otiated  at  par.  The  greenbacks  remained  below  par,  as  was 
indicated  by  gold  being  quoted  at  a  premium,  until  1879-80,  when 
specie  payments  were  resumed. 

No  portion  of  the  national  debt,  except  the  greenbacks,  was 
regai'ded  as  credit-money  within  the  United  States.  In  our  ex- 
changes with  Europe,  however,  the  national  interest-bearing 
bonds  performed  a  most  impo'tant  function,  in  which,  by  virtue 
of  their  easily  transferable  credit,  they  came  to  resemble  money. 
At  the  close  of  the  war,  about  $2,700,000,000  of  them  had  been 
issued,  and  of  these  all,  but  a  few  scores  of  millions,  were  held  in 
the  United  States.  They  formed,  however,  an  excellent  security, 
more  acceptable  in  Europe  than  private  or  corporate  bonds, 
because  better  known  and  better  secured  as  to  their  interest  by 
our  coin  revenue.  The  people  holding  them  could  make  more 
than  their  rate  of  interest  in  other  investments,  as  industries  of 
all  kinds  were  intensely  active  to  the  verge  of  "  kiting,"  which 
is  the  phrase  when  profits  are  rapidly  and  easily  made  on  many 
things.  The  bonds  were  therefore  exported  at  the  rate  of  about 
$200,000,000  per  year,  until  1873,  when  it  was  computed  at  least 
$1,900,000,000  had  been  sent  abroad.  At  this  period  the  supply  of 
bonds  available  for  export  was  exhausted,  and,  hence,  the  period 
of  inflated  prices  came  to  a  sharp  conclusion,  known  in  finance 
as  the  panic  of  1873.  From  1873  to  1879-80,  we  were  engaged  in 
buying  back  these  bonds  or  calling  them  in,  and  paying  them 
off.  Tlie  process  pleased  the  people.  They  resisted  or  ignored 
the  argument  that  the  principal  of  the  debt  would  earn  more  in 
the  hands  of  tlie  taxpayei^s  than  in  those  of  the  creditors.  It  has 
continued  ever  since,  and  the  debt  is  now  less  than  one-half  its 
amount  in  1865.  The  United  States,  at  least,  won  the  fame  of 
being  the  only  nation  in  the  world  which  pays  off  the  principal 
of  its  debts.  The  easy  exportability  of  the  bonds  enabled  the 
country,  from  1865  to  1873,  to  consume  more  than  it  could  pay 
for  in  products.  This  postponed  for  nine  years  the  sense  of 
exhaustion  and  impoverishment  which  it  Avas  the  natural  effect 
of  the  war  to  produce.  In  these  respects  the  debt  acted,  inter- 
nationally, as  a  substitute  for  an  export  of  gold,  and  as  a  form  of 
paper  money  and  inflation,  sustaining  jirices  and  prosperity,  both 
in  Europe  and  America.  Since  1873,  on  the  other  hand,  the 
rapid  return  and  extinguisliment  of  the  debt,  at  the  rate  of  nearly 
$200,000,000  a  year,  has  operated  in  Europe  and  America  as  a 
contraction  or  withdrawal  of  currency,  the  effect  of  which  has 
been  everywhere  visible  in  a  declining  scale  of  prices  and  a  pre- 


COST  OF  com  AND  CREDIT.  355 

carious  condition  of  profits,    with   great  shrinkage  in  values, 
timidity  in  enterprise,  and  discontent  on  the  part  of  labor. 

\4:4t.  The  Voliiiiie  of  Credit. — This  survey  of  the  nature  of 
credit  shows  that  it  consists  of  the  aggregated  faith  of  millions 
of  individuals,  in  the  future  of  the  declared  intentions  of  millions 
of  other  individuals,  as  to  whether  such  intentions  will  be  per- 
formed or  not.  The  law  can  neither  regulate  the  formation  of 
these  intentions,  the  faith  of  others  therein,  nor  their  perfoi*m- 
ance.  Hence,  it  can  only  regulate  the  volume  of  certain  forms 
of  credit,  not  of  all  forms.  If  it  forbid  bank  notes,  government 
notes,  small  bills,  it  will  increase  the  degree  in  which  the  note 
which  A  gives  to  B  on  sale  of  a  horse,  or  for  a  day's  work,  will 
circulate,  perhaps  with  the  endorsements  of  C,  D,  E,  F,  and  G. 
If  it  enact  that  only  the  Bank  of  England  shall  issue  its  own 
notes  for  the  notes  of  its  customers,  the  other  banks  will  check- 
mate the  law  by  the  system  of  deposits  and  cliecks.  If  it  make 
paper  money  scarce,  mei'chants  will  be  obliged  to  give  long 
credits,  which  are  another  form  of  credit-money  neither  so  secure 
nor  satisfactory  as  paper  money.  Hence,  in  legislation  con- 
cerning the  volume  of  paper  or  credit,  the  legislator  is  liable  to  be 
foiled  by  the  elusiveness,  subtlety,  and  vai'iabilityof  the  principle 
of  human  faith. 

145.  Relative  Cost  and  Economy  of  Coin  and  Credit — 
Fiat  Money. — However  simple  may  be  the  object,  or  commod- 
ity, of  which  we  attempt  to  compute  the  ultimate  and  true  cost, 
the  calculation  carries  us  out  into  an  infinitude  of  values  which 
are  incomputable,  and  back  to  the  very  origin  of  things.  To  com- 
pute the  ultimate  and  true  cost  of  the  inkstand  from  which  I  take 
my  ink,  I  must  assess  it  with  its  share  of  the  losses  that  have  been 
made  in  the  manufacture  of  glass,  and  this,  at  the  outset,  is  im- 
possible. How,  then,  shall  we  attempt  to  solve  a  problem  so 
much  more  difiicult  as  the  I'elative  economy  of  coin  and  credit 
currency  ?  Each  is  as  essential  to  the  other  as  sunshine  is  to  rain, 
and  air  to  sunshine.  Economists,  with  the  exception  of  Amasa 
Walker,  are  nearly  united  in  the  belief  that  credit  money  is  more 
economical  than  coin,  by  nearly  the  whole  cost  of  the  coin. 

The  employment  of  gold  and  silver,  exclusively,  as  money,  is  a 
matter  no  moi-e  within  our  choice  than  it  would  be  to  employ 
artificial  ix-rigatiou,  exclusively,  as  a  means  of  moistening  the 
fields.  Credit  attaches  to  those  who  show  that  they  possess  the 
gold  and  silver,  as  naturally  as  the  rain  descends.  But  if  a  cur- 
rency of  coiji  only,  without  credit,  were  possible,  it  would  sub- 


356  ECONOMIC  PHILOSOPUT. 

ject  the  nation,  or  ag-gregate  society,  using  it,  to  an  annual 
charge  nearly  or  quite  equal  to  the  annual  interest  on  the  whole 
volume  of  currency  so  used,  relatively  to  the  comparative  cost  of 
credit  money  in  any  of  its  forms.  But  even  this  would  be  a  vast 
saving  on  barter.  For  gold  and  silver  have  an  intrinsic  value 
equal,  in  every  instance,  to  the  commodities  they  exchange.  This 
intrinsic  value  keeps  parallel  with  the  cost  in  labor  of  producing, 
thovxgh,  as  we  have  seen,  it  is  the  value  they  have  that  causes  the 
requisite  labor  to  be  expended  iu  their  production,  and  not  the 
labor  so  expended  which  causes  their  value.  Having  this  in- 
trinsic value,  the  ability  of  a  possessor  of  cloth  to  effect  an  ex- 
change thereof  with  the  possessor  of  u'on,  through  the  services  of 
an  intermediate  possessor  of  gold,  involves  the  previous  expendi- 
ture of  as  nmcli  labor,  to  produce  the  gold  necessary  to  the  ex- 
change, as  to  produce  the  cloth  or  iron.  But,  by  means  of  either 
of  the  foi'ms  of  credit  money  we  have  named,  the  same  exchange 
is  effected  through  a  medium  which  has  no  intrinsic  value,  and 
whose  existence,  ordinarily,  does  not  involve  an  investment  of  an 
amount  of  actual  capital  equal  to  its  whole  volume.  Hence  Adam 
Smith  says  :  "  The  substitution  of  i)aper,  in  the  room  of  gold  and 
silver  money,  replaces  a  very  expensive  instrument  of  commerce 
with  one  much  less  costly,  and  sometimes  equally  convenient. 
Cii'culation  comes  to  be  carried  on  by  a  new  wheel,  which  it  costs 
less  both  to  erect  and  to  maintain  than  the  old  one. " 

Yet  we  must  not  fall  into  the  common  error  of  supposing  that 
the  actual  cost  of  credit  money  is  merely  the  cost  of  printing  or 
engraving  the  instrument  of  credit  ? 

It  is  the  cost  of  maintaining  the  credit,  of  wliich  the  printed  or 
engraved  x^aper  is  merely  the  instrument  of  transfer.  In  the  case 
of  the  greenback  note,  the  form  of  credit  money  most  familiar  to 
Americans,  the  cost  of  maintaining  the  credit  may  have  been 
the  whole  cost  of  maintaining  the  Government  against  the  Re- 
bellion, say  $9,000,000,000,  and  the  liv^es  of  one  milHon  men.  On 
the  other  hand,  some  may  assert  that  had  the  Southern  Rebellion 
not  been  subdued,  the  Northern  States  would  still  have  had 
wealth  and  honor  enough  to  have  paid  the  debt  incurred,  and 
redeemed  the  greenbacks  issued  iu  the  effort.  But  this  no  man 
knows.  It  is  certain,  however,  that  the  money  cost  of  maintain- 
mg  the  credit  represented  by  the  greenback,  in  the  mode  in  which 
it  was  actually  maintained,  was  far  greater  than  the  volume  of 
both  the  greenbacks  and  the  national  bonds,  since  to  these  must 
be  added  the  swollen  volume  of  ainiual  taxation,  from  1861  to 


COST  OF  CREDIT  MONET.  357 

date  of  payment.  Such  complex  facts  are  not  reducible  to  accu- 
rate computation,  but  it  is  clear  that  the  greenback  note  cannot 
be  instanced  as  a  form  of  credit  money  that  cost  little,  or  that 
cost  only  the  cost  of  engraving  the  paper  on  which  it  was  written. 

The  Bank  of  England  note  is  just  as  far  from  being  cheap, 
when  we  estimate  the  whole  cost  of  maintaining  the  Imperial 
Government,  whose  national  debt  constitutes  the  basis  on  which 
the  first  £17,000,000  of  Bank  of  England  notes  are  issued.  For 
every  note  issued  by  the  bank,  over  this  sum,  there  must  be  a  sov- 
ei'eign  in  gold  deposited,  to  remain  in  the  vaults  of  the  bank  until 
the  note  for  which  it  is  issued  returns  for  redemption. 

An  accurate  computation  of  the  exact  cost  of  maintaining  the 
credit  of  the  various  foi-ms  of  credit  currency  is  a  very  difficult 
one  to  make.  The  losses  incurred  on  those  forms  of  credit  cur- 
rency which  have  failed  of  ultimate  redemption,  such  as  the  Con- 
tinental money  of  the  American  Revolution — both  that  issued  by 
Congress,  and  the  similar  issue  by  the  several  colonies — the  losses 
by  bank  failures  to  redeem,  which  were  common  in  the  United 
States  prior  to  1860,  the  losses  by  the  failure  of  the  French  assign- 
ats,*and  of  Law's  credit-money  schemes,t  and  the  more  recent 
losses  by  the  collapse  of  the  Confederate  debt  and  money,  all  con- 
stitute pai't  of  the  general  tax  imposed  by  credit  money  on  the 
world.  The  annual  cost  of  paying  interest  on  the  credits,  or  secu- 
rities, on  which  a  system  of  redeemable  credit  money  is  usually 
based,  cannot,  of  coui'se,  be  wholly  charged  to  that  credit  system. 
England  would  still  have  had  a  debt  if  no  Bank  of  England  notes 
had  been  issued.  America  would  still  have  incurred  a  vast  ex- 
penditure if  no  greenback  note  had  been  issued,  perhaps  a  greater 
one  than  was  actually  incurred,  Still  the  forms  of  credit  that 
actually  exist  are  involved  in  origins  so  expensive  that  tliey  re- 
mind us  of  Lamb's  ingenious  story  of  the  discovery  of  the  excel- 
lence of  roast  pig  by  the  Chinese,  in  burning  down  a  barn  in  which 
a  pig  was  accidentally  roasted.  It  is  difficult,  in  such  a  case,  to  sep- 
arate the  cost  of  burning  down  the  barn  from  the  cost  of  roasting 
the  pig.  So,  great  aggregations  of  credit  money  have  usually  been 
connected,  directly  or  indirectly,  with  the  struggles  of  govern- 
ment for  self-preservation.  It  may  seem  severe,  or  even  absurd, 
to  say  that  great  credits  cannot  be  built  up  without  great  sacri- 
fices, and  it,  at  least,  amuses  us  to  suggest  that  this  is  as  unneces- 
sary as  it  is  to  burn  down  a  barn  in  order  to  roast  a  pig.  In  fact, 
however,  thus  far  all  ert'orts  to  establish  a  sound  and  redeemable 
credit  money,  apai't  from  the  concurrence  of  national  struggles 

♦  Vide  p.  369.  t  Tide  p.  309. 


358  ECONOMIC  PHILOSOPHY. 

and  great  debts,  heavy  taxation  and  stringent  popular  burdens, 
have  only  resulted  in  a  bogus  form  of  credit  money,  which  was  a 
discredit  to  all  parties.  Experience  leads  us,  therefore,  to  doubt 
whether  this  particular  kind  of  pig  can  be  roasted  without  burn- 
ing down  a  barn.  But  if  the  cost  of  maintaining  a  credit  cur- 
rency is  not  accurately  computable,  how  can  it  be  known  to  be 
absolutely  economical  ? 

It  is  not  so  clearly  known  to  be  economic,  by  computation,  as 
felt  to  be  economic,  by  experience  and  use.  In  periods  when  the 
e£Ports  to  maintain  a  credit  currency  have  failed,  and  involved 
a  gi-eat  loss,  the  system  has  been  severely  denounced.  In  periods 
when  the  basis  for  its  maintenance  has  existed,  its  great  popular- 
ity has  caused  visionary  schemes  to  be  pro])ounded  for  maintain- 
ing it  without  any  basis  whatever.  Proposals  to  establish  "  labor 
money,"' and  "flat  money,"  on  the  theory  that  credit  money  is 
merely  an  implement  of  exchange,  which  requires  only  common 
consent  to  manufactux'e  and  use  it,  overlook  the  nature  of  credit 
itself  as  being,  not  an  independent  and  original  fact,  but  only,  as 
it  were,  the  shadow  or  effect  of  an  antecedent  fact,  viz. :  achieve- 
ment. Credit  can  only  be  made  to  folloAv  where  achievement, 
power,  victoiy,  success  of  some  kind,  has  gone  before.  Some- 
thing creditable  must  be  done  before  credit  can  exist.  It  cannot 
be  conferred  of  man's  voluntary  will.  Hence  the  notion,  pro- 
pounded by  visi()naries,  that  men  can  agree  together,  to  give  every 
man  who  will  work  an  hour  a  certificate  that  he  has  done  an 
hour  s  work,  which  certificate,  on  presentation  to  any  person 
having  a  meal  of  victuals  to  sell,  will  cause  him  to  sell  the 
meal,  is  merely  one  of  the  amusements  of  idle  minds.  It  has  no 
place  in  economic  science,  and  will  never  be  actual  in  human  ex- 
perience. 

The  exti'emists  called  bullionists  contend  that  no  money  but 
that  which  has  intrinsic  value  should  circulate.  The  opposite  ex- 
tremists called  "  fiatists  "  propose  to  adopt  a  money,  by  consent, 
behind  which  there  is  no  previous  basis  of  achievement,  power 
or  capital  capable  of  commanding  confidence  oi-  consent.  Between 
these  two  the  average  common -sense  world  must  walk,  continu- 
ing to  accept,  as  money,  that  which  the  circumstances  of  their 
environment  and  education  enable  them  to  believe  will  exchange 
for  money  when  they  want  it. 

146.  A  ariations  in  the  A'olimie  of  Money. — Mr.  Hume 
says: 

"In  every  kingdom  into  which  money  begins  to  flow  in  greater 


MONEY  FREES  MEN.  359 

abundance  than  formerly,  every  thing  takes  a  new  face ;  labor 
and  industry  gain  life  ;  the  merchant  becomes  more  enterprising, 
the  manufacturer  more  diligent  and  skillful ;  and  even  the  farmer 
follows  the  plow  with  more  alacrity  and  attention." 

It  is  claimed  that  a  signal  service  was  rendei^ed  by  the  Mace- 
donian Empire  to  mankind  in  seizing  the  collected  treasure 
stores  of  uncoined  gold  and  silver  which,  according  to  the 
barbarous  customs  of  an  earlier  epoch,  the  monarchs  of  the  East- 
ern world  had  massed  at  Gaza,  Persepolis,  and  like  points,  coining 
it  into  money,  and  issumg  it  to  the  world  in  payment  for  labor. 
All  payments  become,  in  the  last  analysis,  payments  for  labor.  It 
is  asserted  that  more  gold  and  silver  coin  were  in  the  hands  of 
men,  in  the  third  and  fourth  century  before  Christ,  than  all  Eu- 
rope possessed  at  the  beginning  of  the  eighteenth  century  after 
Christ.  The  civilization  and  the  emancipation  of  man  under  the 
Roman  Empire  were  largely  due  to  an  increase  in  the  volume  of 
money.  Certainly  the  tendencies  toward  the  abolition  of  slavery, 
and  the  equalization  of  races  and  conditions,  which  marked  the 
culmination  of  the  Empire,  were  but  the  legal  expressions  of  an 
industrial  equality,  wherein  money  had  superseded  the  lash,  as  the 
inducement  to  labor.  It  is  doubtful  if,  without  money,  it  is  pos- 
sible to  oi'ganize  labor  on  any  large  scale,  or  bring  about  the 
association  of  men,  except  by  force  and  in  slavery.  Money,  by 
affording  the  medium  in  which  wages  can  be  paid,  and  services 
and  commodities  obtained,  by  an  easier  mode  than  fighting,  be- 
comes the  first  substitute  for  force,  and  hence  the  most  efficient 
cause  of  emancipation.  On  the  other  hand,  "  the  fall  of  the 
Roman  Empire,"  says  Sir  Archibald  Alison,  "  so  long  ascribed  in 
ignorance  to  slavery,  heathenism,  and  moral  corruption,  was  in 
reality  brought  about  by  a  decline  in  the  gold  and  silver  mines  of 
Spain  and  Greece,  from  which  the  precious  metals  for  the  circu- 
lation of  the  world  were  drawn,  at  the  very  time  when  the  vic- 
tories of  the  legions  and  the  wisdom  of  the  Antonines  had  given 
peace  and  security,  and  with  it  increase  in  numbers  and  riches,  to 
the  Roman  Empire."  Commenting  on  this  remarkable  passage, 
Gen.  F.  A.  Walker  (in  "Money,  Trade,  and  Industry,"  p.  114) 
says:  "  Doubtless  this  claim  is  far  too  large.  Causes  distinctly 
political  and  social  had  to  do  with  the  downfall  of  that  mighty 
fabric  of  military  enterprise,  legislative  wisdom,  and  administra- 
tive skill;  but  it  seems  to  me  that  there  can  not  be  an  intelligent 
doubt  that  the  steady  rise  in  the  value  of  money,  due  to  its  in- 
creasing scarcity,  contributed  greatly  to  the  impoverishment  of 


360  ECONOMIC  rUILOSOPHY. 

the  people,  the  decay  of  commercial  enterpi'ise  and  the  abandon- 
ment of  agricultural  lands,  which  sapped  the  foundations  of  the 
Roman  Empire." 

Equally  evident  is  the  connection  between  the  modern  revival 
of  liberty  and  learning  in  Europe,  since  the  fifteenth  century,  and 
the  return  of  gold  and  silver  into  abundant  circulation,  through 
the  draining  of  the  Mexican  and  Peruvian  treasures  by  Cortez 
and  Pizarro  and  theu-  followers,  and  the  subsequent  active  work- 
ing of  the  American  mines.  Even  the  recent  additions  to  the 
supply  of  the  precious  metals,  by  California,  Australia,  Nevada, 
and  Coloi'ado,  have  imparted  a  wonderful  impetus  to  all  indus- 
trial movements  and  changes  in  social  condition.  This  expansion 
in  the  volume  of  money  increases  the  rapidity  of  industrial  pro- 
duction. By  means  of  its  apparent  effect  in  raising  the  prices, 
ultimately,  of  all  commodities,  even  including  land,  but  imme- 
diately of  the  more  exchangeable  and  exportable  ones  in  a  higher 
degree  than  others,  it  thus  appeals  to  the  sense  of  profit  in  all 
men  and  causes  them  to  trade  with  more  rapidity.  In  order  to 
trade  they  produce,  for  purposes  of  trade,  and  in  order  to  produce, 
they  employ,  and  in  order  to  employ  they  raise  wages,  thus  stimu- 
lating all  to  a  larger  production  of  commodities,  and  furnishing 
all  with  the  means  to  maintain  a  lai-ger  consumption  of  com- 
modities. The  rise  in  prices  of  commodities,  which  results  from 
an  increase  in  the  volume  of  money,  is  due  to  a  decline  in  the 
purchasing  power  of  the  money  itself,  and  not  to  any  actual  in- 
crease in  the  value  of  commodities. 

In  theory  it  must  be  admitted  that  the  rise  in  prices  felt  by  the 
speculative  public  in  such  periods,  is  at  first  an  economic  illusion 
rather  than  an  increase  of  real  values,  but  the  illusion  is  so  fruit- 
ful in  calling  into  employment  all  idle  time,  idle  money,  and  idle 
capital,  by  the  appearance  of  being  able  to  make  money  in  every 
way  and  out  of  every  thing,  that  a  far  larger  amount  of  work  is 
actually  done,  and  more  commodities  are  made,  and  to  absorb 
these  all  men  rise  to  a  higher  standard  of  living.  Illusions  may, 
therefore,  be  more  fruitful  of  prosperity  than  facts,  since  the  in- 
creased volume  of  mutual  service  they  cause  to  be  rendered  by  the 
members  of  society  to  each  other  is  not  an  illusion,  but  is  a  part  of 
the  fact  called  Wealth,  which  is  the  subject  of  our  study.  It  would 
not  matter  if  every  belief  under  which  an  increase  of  service,  and 
an  increased  production  of  commodities,  should  occur  among  man- 
kind, were  an  illusion.  The  growth  of  wealth  caused  thereby 
would  be  none  the  less  substantial  and  solid. 


CHEAP  AND  DEAR  MONEY.  361 

It  must  be  confessed  also  that,  simultaneously  with  this  expan- 
sion of  prices  and  production  by  the  cheapening  of  money,  there 
are  tendencies  to  charge  immorality  on  those  who  are  flooding 
the  country  in  question  with  the  cheap  money,  and  on  those  who 
are  availing  themselves  of  the  cheaj)  money  to  pay  off  their  debts 
or  to  speculate  in  commodities.  Yet  the  country  that  allows,  or 
causes  its  people  to  redeem,  at  par,  with  their  commodities,  this 
cheap  currency,  is  enriched  in  a  threefold  way — (1)  it  increases 
its  own  volume  of  cun-ency,  prices,  and  production  ;  (2)  it  stimu- 
lates its  exports  ;  (3)  it  finds  the  currency  after  all  as  good  as  that 
possessed  by  any  other  country.  Nor  does  it  matter  whether  the 
country  is  taking  in  a  flood  of  new  gold  and  silver,  as  Portugal, 
Spain,  and  ultimately  all  Europe  were  in  the  sixteenth  century, 
or  a  flood  of  new  paper,  as  England  was  during  her  wars  with 
Napoleon,  and  the  United  States  during  her  struggle  with  the  re- 
bellion. Hence  it  has  often  restilted  that  the  most  direct  way  to 
have  good  times  was  to  have  what  the  bankers  would  call  bad 
money  ;  as  the  money  gets  better  (dearer  and  scarcer)  the  times 
get  woi'se. 

147.  The  Single  and  Double  Standard. — A  country  is 
said  to  have  the  single  standard  when  it  makes  money,  coined  of 
one  metal  only,  an  exclusive  legal  tender  in  payment  of  all  debts, 
public  and  private,  and  receivable  for  all  taxes,  and  provides  for 
its  free  coinage  at  its  mints.  England  is  a  single  standard  coun- 
try on  the  gold  basis,  because  since  1816  its  mints  have  coined  no 
silver  coins  which  are  by  statute  unlimited  legal  tender,  and  it 
gives  free  coinage  to  gold,  however  abundantly  it  may  be  pi'o- 
duced.  By  free  coinage  is  meant  that  the  holder  of  the  quantity 
of  bullion,  required  by  law  to  be  in  a  standard  coin,  may  tender  it 
to  the  mint,  together  with  the  cost  of  coinage,  called  seignorage, 
and  will  receive  the  coin  in  return.  England,  the  United  States, 
Germany,  and  France  give  free  coinage  to  gold  only. 

In  England,  from  1256  to  1663,  the  statutes  made  certain  coins 
of  gold  and  others  of  silver  a  legal  tender  in  payment  of  debts,  or, 
as  it  was  called,  the  "  legal  measure  "  of  property.  The  quantity 
of  silver  circulating  greatly  exceeded  the  gold  until  about  1710. 
In  1663  silver  was  made  the  exclusive  standard  or  legal  measure, 
and  so  continued  until  1717,  when  gold  again  divided  the  mone- 
tary throne  with  silver,  the  standard  continuing  bimetallic  until 
1816. 

In  1816,  by  the  statute  ascribed  to  Lord  Liverpool,  gold  was  for 
the  first  time  accepted  as  the  material  of  which  the  unit  of  coinage 


n  G  2  ECONOMIC  PIITL  0 SOPHY. 

was  made,  and  silvei*  coins  ceased  to  be  legal  tender  in  sums 
greater  than  £3.  Mr.  S.  Dana  Horton  *  seems  to  show  that  the 
Act  of  181G  contemplated,  on  its  face  a  free,  coinage  of  silver,  but 
that  this  result  has  failed  for  reasons  of  detail  which  were  not 
fully  contemplated  by  its  framers.  India  gives  free  coinage  to 
silver  only,  and  is  therefore  a  single  standard  country  on  the  sil- 
ver basis.  France  and  the  United  States  had,  prior  to  the 
fall  in  the  value  of  silver  bullion  in  1873,  given  free  coinage  to 
both  metals.  France,  since  1873,  in  company  with  Italy,  Greece, 
Spain  and  other  countries,  forming  what  is  called  the  Latin 
Union,  has  suspended  the  coinage  of  silver,  to  avoid  the  supposed 
drain  of  gold  involved  in  its  further  coinage,  while  it  is  depreci- 
ated. France,  Italy,  and  the  United  States,  therefore,  are  double 
standard  countries  in  princi])le,  but  are  temporarily  denying  free 
coinage  to  silver,  and  therefore  are  temirorarily  running  with 
gold  as  the  only  metal  of  unlimited  coinage.  Still,  in  all  these 
countries,  their  own  silver  standai'd  coins  are  absolute  legal  tender, 
to  an  unlimited  amount,  for  all  debts.  They  are,  therefore,  bi- 
metallic in  practice,  with  a  temporary  preference  for  the  single 
gold  standard  not  stronger  than  has  on  former  occasions  pre- 
vailed in  behalf  of  the  silver  standard. 

Germany  began  in  1871  an  effoi't  to  change  from  the  silver  to 
the  gold  basis,  under  the  mistaken  impression,  as  Lord  Beacons- 
field  declared,  that  it  was  the  gold  basis  that  made  a  country 
foremost  in  commerce,  instead  of  its  being  its  foremost  position  in 
commerce  that  would  make  the  gold  basis  possible  or  fit  for  it.f 
Prior  to  tliis  experiment  of  1871,  Germany  had  a  total  coinage  of 
539  million  marks  of  gold  to  1,940  million  marks  of  silver,  or  3  2-3 
marks  of  silver  to  1  of  gold.  After  twelve  years  of  the  exijeri- 
raent,  the  nature  of  the  reserves  held  by  the  Imperial  Bank  of 
Germany,  and  which  fairly  indicate  the  kind  of  money  in  circu- 
lation among  the  people,  was  as  follows  : 

*  "  The  Silver  Pound,"  by  S.  Dana  Horton,  p.  161. 

+  "  Our  gold  standard,"  said  Lord  Beaconsfleld,  "  is  not  the  cauge  of  our  commercia' 
prosperity,  but  the  consequence  of  our  commercial  prosperity  ;  and  it  is  very  well  fOp 
us  to  have  it ;  but  you  can  not  establish  a  gold  standard  by  violent  means.  It  must 
arise  gradually  from  the  large  transactions  of  a  country,  and  the  consequent  command 
it  may  have  over  the  precious  metals.  When  the  various  states  of  Europe  suddenly 
determined  to  have  a  gold  standard,  and  took  steps  to  carry  it  into  effect,  it  was  quite 
evident  that  we  must  prepare  ourselves  for  commotions  in  the  money  market  not  occa- 
sioned by  speculation  or  any  old  causae  which  has  been  alleged,  but  by  a  new  cause 
with  which  we  are  not  yet  sufBciently  acquainted,  and  the  consequences  of  which  are 
very  embarrassing."    (Speech  at  Banquet,  Nov.  19, 1873,  at  City  of  Glasgow.) 


VALUE  OF  GOLD 

PRODUCED  IN 

357  YEARS. 

1493-1050. 

3,314,553,000 

DOLLARS. 


VALUE  OF  SILVER 

PRODUCED  IN 

357  YEARS. 

1493-1850. 

6,741,705,000 

DOLLARS. 


VALUE  OF  GOLD 

PRODUCED  IN 

25  YEARS. 

1851-1875. 

3,317,625,000 

DOLLARS. 


VALUE  OF  SILVER 

PRODUCED  IN 

25  YEARS. 

1851-1875. 

1,395,125,000 

DOLLARS. 


RELATIVE   VALUES  OF  GOLD    AND   OF    SILVER   PRODUCED    IN   TWO 

SUCCESSIVE   PERIODS. 


SILVER  IN  GERMANY 


36;} 


Bank 

of 

Germany. 


Aug.  2,  1883. 

GOLD.  SILVER. 


Aug.  2,  1882. 

GOLD.  SILVER. 


£7,667,850  £23,003,550  I  £6,985,000      £20,955,000 


The  circulation  was  still  34  times  as  largely  composed  of  silver 
as  of  gold.  In  her  experiment.  Germany  called  in  one  hundred 
million  marks  of  her  old  gold  coinage,  and  left  out  440  millions 
Avhich  she  was  not  successful  in  calling  in — ])erliaps  in  circula- 
tion, perhaps  gone  into  other  countries.  But  of  her  old  silver  she 
called  in  two  hundred  million  marks,  and  left  440  million  marks 
not  found.  Thus  she  had  called  in  one-fourth  of  her  gold,  and 
two  thirds  of  her  silver.  Bet^veen  1871  and  November,  1878,  Ger- 
many coined  1656  million  marlcs  of  new  gold  coins  and  426  mil- 
lion marks  of  new  silver,  or  four  of  gold  to  one  of  silver.*  But 
she  did  not  succeed  in  changing  her  circulation,  in  the  degi-ee  that 
she  changed  her  coinage. 

In  the  Imperial  Bank  of  Austria-Hungary  the  I'eserves  are 
nearly  two-thirds  of  silver,  and  in  the  Bank  of  the  Netherlands 
they  are  about  four  of  silver  to  one  of  gold. 

The  standard  of  coinage  of  a  country  furnishes  no  index,  there- 
fore, to  the  relative  proportions  in  which  the  two  metals  will  cir- 
culate in  it.  It  may  fix  upon  the  single  standard  of  gold  and  yet 
the  chief  part  of  its  circulation  may  be  silver. 

The  economic  judgment  of  Europe  and  America  concurs  with 
substantial  unanimity,  both  among  practical  bankers  and  theo- 
retical economists,  in  the  proposition  tliat  the  two  metals  make  a 
better  equipoise  against  commodities  than  one  alone  would.  If  we 
suppose  at  random  two  lines  of  variation  in  value  relatively  to 
commodities,  one  for  silver  and  one  for  gold,  and  then  i-un  a  line 
midway  between  the  two,  the  last  will  be  most  nearly  straight. 
Thus: 


*  Prof.  Soetbeer  in  1878  stated  the  coin  circulation  at,  gol(i,  1,500  million  marks,  and 
silver,  807  million  marks.  lie  both  ignored  the  old  silver  not  called  m,  and  assumed 
that  the  ratio  of  the  two  coins  circulating  was  correctly  indicate  i  by  the  chant,'P  in  the 
coinage,  whereas  much  of  tlie  new  German  gold  coinage  went  immediately  into 
France. 


364  ECONOMIC  PIIIL080PUY. 

So  the  line  of  fluctuation  in  prices  influenced  by  the  joint  action 
of  both  metals  must  be  more  uniform  than  one  would  be  which 
was  influenced  by  either  singly. 

Prices  of  commodities,  however,  are  not  influenced  solely  by 
their  own  volume,  and  those  of  gold  and  silver,  but  also  by  the 
volume  of  credit  money  which  may  be  put  forth,  and  by  the  ex- 
tent to  which  people  may  choose  to  give  each  other  credit,  and  so 
substitute  faith  for  value.  Thus  if  A  bave  a  house,  or  mer- 
chandise, which  he  wishes  to  sell  for  $10,000  in  order  to  meet  a 
note,  when,  were  it  not  for  the  note  coming  due,  he  would  not 
sell  for  less  than  $12,000,  no  sooner  does  a  friend  offer  to  cash  his 
note  or  advance  the  credit,  than  his  merchandise  or  house  advances 
from  $10,000  to  the  $12,000  in  price.  So  if  silver  bullion  be  sell- 
ing in  London  at  46d.  per  ounce,  and  a  purchase  of  1,000,000 
ounces  would  shift  the  market  to  47d.  per  ounce,  as  it  probably 
would,  then  a  loan  of  $1,000,000  to  a  person  willing  to  invest  in 
silver  would  enhance  the  price  of  the  silver  by  two  cents  on  tlie 
dollai".  Thus  the  pi'ice  of  the  precious  metals  themselves  would 
be  gauged,  to  a  degree,  by  the  condition  of  the  credit  market.  It 
has  been  objected,  by  a  few  theoretical  economists,  that  the  so-called 
double  standard  is  in  their  view  only  an  alternative  standard — 
mankind  always  in  fact  making  an  exclusive  standard  of  the 
money  metal  which  is,  for  the  time  being,  the  cheaper  of  the  two, 
and  virtually  relegating  the  dearer  to  the  rank  of  a  commodity, 
not  only  as  to  its  bullion,  but  its  coined  value.  Upon  this  point, 
Baron  Alphonse  de  Rothschild,  testifying  before  the  French  mone- 
tary commission  of  1869,  said:  "  Whether  gold  or  silver  domi- 
nates for  the  time  being,  it  is  always  true  that  the  two  metals 
concur  together  in  forming  the  monetary  circulation  of  the  world, 
and  it  is  the  genex'al  mass  of  the  two  metals  combined  which 
serves  as  the  measui'e  of  the  value  of  things.  In  countries  with 
the  double  standard,  the  principal  circulation  will  always  be  es- 
tablished of  that  metal  which  is  the  most  abundant. "  It  is  also 
faintly  and  undecidedly  estimated,  by  Gen.  F.  A.  Walker,*  that 
the  process  of  substitution  of  the  cheaper  for  the  dearer  of  two 
metals,  in  a  nation  which  maintains  the  double  standai'd,  involves 
some  degree  of  loss,  or  friction,  to  the  latter  nation.  Let  us  see 
whether  this  is  true.  Suppose  silver  to  have  fallen  in  value  five 
per  cent,  relatively  to  gold,  and  France  to  be  the  double  standard 
country,  while  England  and  Portugal  have  the  single  gold  stand- 


*  " 


Money,  Trade,  and  Industry,"  p.  178. 


57 

56 

55 

54 

53 

52 

51 

— 

SD 

.49 

.48 

— 

47 

46 

45 

44 

43 

^ 

42 

41 

40 

39 

38 

- 

37 

30 

35 

34 

33 

32 

31 

30 

29 

28 

:27 

26 

25 

24 

23 

22 

21 

1 

20 

19 

18 

17 

IC 

15 

14 

— 1 

13 

12 

U 

— 

-'' 

10 

0 

8 

7 

6 

5 

4 

3 

2 

1 

1 

T'T'TT'7  1T''TT'T7'T77'T77T'rT'T2'T2''I"'' 


^      C^     C>l      CS     N      04     04 


Ratio  in  weight  of  Silver  iirodiiction  to  Gold  production— on  a  scale  of  one  (perpen- 
dicnlar)  Bcction  to  the  total  production  of  Gold. 


PRODUCTION  OF  GOLD  AND  SILVER.  3G5 

ard.  As  bullion  lias  but  one  market  and  one  price  for  the  whole 
world,  the  fall  in  silver  bullion  in  London  is  the  same  as  in 
Paris.  There  is,  however,  in  London,  silver  bullion  enough  to 
coin  5,000,000  francs  from,  and  it  goes  to  Paris  to  be  coined. 
Being  coined,  it  is  worth  five  per  cent,  more  than  uncoined, 
hence  it  can  not  be  melted  up  or  returned  to  England.  It  is 
an  addition  to  the  volume  of  French  currencj- — not  tempora- 
rily but  permanently.  It  may  be  said  it  releases  5,000,000  francs 
of  gold  in  France,  which  will  therefore  go  to  England;  but 
wherefore  will  it  ?  Money  does  not  flow  to  the  points  where 
there  is  least  of  it,  but  to  those  where  there  is  most  of  it,  i.  e., 
where  there  is  most  use  for  it.  The  addition  of  the  silver  sup- 
posed, has  a  definite  tendency  toward  a  rise  of  prices  in  France. 
But  wherever  prices  are  rising,  money  has  a  new  chance  of 
profit.  Gold  may  stay  to  get  this  profit.  If  it  is  at  five  per 
cent,  premium  in  France  and  at  no  premium  in  England,  who- 
ever changes  the  imported  silver  into  the  French  gold  pays  the 
premium  in  France,  and  it  stays  there.  France  gets  it.  If,  on 
taking  the  gold  over  to  England,  there  is  no  premium  on  it 
there,  then  the  premium  is  lost  to  the  exporter.  If  the  pre- 
mium there  is  the  same  as  it  is  in  France,  he  has  made  nothing. 

But  if  France  steadily  coins  all  silver  that  is  presented  into 
standard  coin,  which  circulates  in  France  on  a  level  with  gold, 
then  silver  bullion  must  inevitably  advance  to  a  level  with 
gold  bullion.  Conceding  that  the  double-standard  country  parts 
with  a  portion  of  her  gold  in  the  process,  she  makes  two  profits 
in  doing  so,  viz.,  the  premium  on  the  gold  she  sells  while  silver 
is  below  par,  and  the  rise,  on  the  silver  she  buys,  from  its  de- 
preciated price  to  par.  An  a  priori  probability  exists,  of  the 
intrinsic  profitableness  of  a  country  acting  as  a  double  standard 
country,  and  accepting  a  cheapened  currency  in  exchange  for 
the  dearer  one,  since  it  always  gets  the  premium  on  the  dearer 
one,  and  the  profit  or  rise  to  par  on  the  cheaper  one.  There  has, 
heretofore,  been  no  other  outcome  to  the  double -standard  process, 
when  continued  long  enough,  than  that  the  two  money  metals 
return  to  an  equivalent  value  with  each  other  at  some  ratio. 
This  theory  is  confirmed  by  the  fact  that  France,  the  most  pei-- 
sistent  of  double-standard  countries,  has  also  been  the  country  at 
all  times  most  abundantly  supplied  with  the  coin  of  both  metals. 

148.  Rate  of  Production  of  Gold  and  Silver. — The  ac- 
companying chart,  of  the  rate  of  production  of  gold  bullion  and 
silver  bullion,  shows  that  nature  imposes  no  limit,  and  exacts  no 


30G 


ECONOMIC  FHILOSOPHT. 


equality  or  ratio,  in  the  production  of  the  money  metals,  gold, 
however,  having  been,  since  1850,  the  most  unequal  of  tlie  two. 
The  far  greater  inequality,  in  the  production  of  gold  than  of 
silver,  appears  in  the  fact  that,  in  the  twenty-five  years  from 
1851  to  1875,  the  gold  production  of  the  world  exceeded  the  total 
gold  production  of  the  world  for  the  preceding  357  years,  making 
the  inequality  one  of  fourteen-fold  for  a  period  of  twenty-five 
years.  On  the  other  hand,  the  silver  ])roduced  in  the  latter 
period  was  only  one-fifth  that  produced  in  the  former,  while  the 
time  was  one-fifteenth,  being,  therefore,  only  three-fold  the  pre- 
vious rate  of  production,  an  inequality  only  one-fifth  as  great  as 
pertained  to  gold.  Dr.  Soetbeer's  estimate  on  this  point  is  as 
follows : 


1493-1850, 
1851-1875. 


Gold. 
$3,314,553,000 
3,317,625,000 


Silver. 
$6,741,705,000 
1,395,125,000 


Upon  this  basis,  Prcff.  Laughlin*  presents  the  annexed  dia- 
gram, illustrating  the  relative  rate  of  production  of  the  two 
metals  by  areas  dui'ing  these  two  pei-iods.  The  diagram  is  in- 
genious. It  seems,  at  first  sight,  to  make  out  a  case  of  equality 
in  the  production  of  gold,  the  nature  of  the  equality  being  be- 
tween two  periods,  one  of  whicii  is  14^  times  greater  than  the 
other.  If  the  rate  of  production,  per  year,  over  the  average  of 
of  the  two  periods,  had  been  made  the  basis  of  comparison,  gold 
would  have  shown  a  rate  14^  times  greater  in  one  period  than 
in  the  other,  and  silvei*  a  rate  2|  times  greater. 

Prof.  Laughlin,  however,  computes  from  Dr.  Soetbeer's  table  of 
tlie  production  of  the  precious  metals,  the  following  figures,  show- 
ing the  comparative  rate  of  production,  by  weight,  of  the  two 
metals,  viz.  : 


Number  of  times 

Average  yearly  pro- 

Average yearly  pro- 

tiie average    yearly 

PERIOD. 

duction   of   silver   in 

duction    of    gold    ill 

production  of  silver 

kilogrammes. 

kilogrammes. 

was    greater     than 
that  of  gold. 

149:i-]520 

47,000 

5,800 

8.1 

1521-1544 

90,2(X) 

7,160 

126 

1545  1.560 

311,600 

8.510 

.36.6 

1.5(il-1580 

299,500 

6,840 

437 

*  "  Bimetallism  in  U.  S.,"  p.  110. 


N  DIFFERENT 


AUSTRALIA. 

1852-1875, 
lOLD,  $1,263,870,000 


>F 


GOLD, $183, i 
SILVER, 117, 'i 


61,000 
05,000 


MILLIONS 

—225- 


-20O- 


175— 


-150— 


-125- 


-lOO— 


-75 — 


-50— 


o 
o 

n 
n 
> 


O 
O 

r- 
> 


17G1-17S0 


1781-lSOO 


ISOl- 
IKIO 


1.S20 


1821- 
1830 


1831- 
1810 


1811- 
1850 


:Z^ 


MEXICO. 

1521-1875. 

GOLD, $184,865,400 

SILVER.    3,429.243,000 


CHART  SHOWING  THE  PRODUCTION  OF  GOLD  AND  SILVER  IN  DIFFERENT 
COUNTRIES  ACCORDING  TO  VALUE,  1493-1880. 


POTOSI  AND  BOLIVIA. 

1545-1875. 
GOLD,-_»205.065.000 
SILVER,.-I.697, 292.000 


Silver.^ 
OolfJ.. 


UNITED  STATES. 

I82r-I875. 

GOLD,       SI,4I3, 204,750 
SILVER, 237,217,500 


PERU. 

I833-I87S. 


GOLD.-_ 
SILVER,. 


._SM4,07«,IS5 
.404.990.000 


AUSTRALIA. 

1852-1875, 

OOLD,  $1,263,870,000 


NE 

M   GRENADA. 

,».-.»7B. 

COLO 

-.|MJ,11 

no 

RUSSIA. 

ooi.o,.._»;jo,n;*.aei 

"«"■■ 

AFniCA. 

SILVER, 34S, Ml  ,07B 

CHART  SHOWING  THE  PRODUCTION  OF  GOLD  AND  SILVER 
ACCORDING  TO  VALUE,  BY  PERIODS,  1493-1880. 


QuIJ  _ 


.^C^U 


HATE  OF  PRODUCTION. 


367 


Number  of  times 

Average  yearly  pro- 

Average yearly  pro- 

the average    yearly 

PERIOD. 

duction   of    silver  in 

duction     of    gold    in 

production  of  .silver 

kilogrammes. 

kilogrammes. 

was    greater     than 

that  of  gold. 

1581-1600 

418,900 

7.380 

56.8 

1601-1620 

432,900 

8..520 

49.6 

1631-1640 

393,600 

8,300 

47.4 

1641-1660 

306,300 

8,770 

41.7 

1661-1680 

337,000 

9,260 

36.4 

1681-1700 

341.900 

10,765 

31.7 

1701-1730 

355,600 

12,820 

27.7 

1731-1740 

431,200 

19,080 

22.6 

1741-1760 

533,145 

24.610 

21.6 

1761-1780 

6.52,740 

20,705 

31.5 

1781-1800 

879  060 

17,790 

49.4 

1801-1810 

894.150 

17,778 

50.2 

1811-1820 

540.770 

11,445 

47  2 

1821-1830 

460,560 

14,216 

3J.4 

1831-1840 

596.450 

20,389 

29.4 

1841-1850 

780,415 

54,759 

14.2 

1851-1855 

886,115 

197,515 

4.4 

1856-1860 

904,990 

206,058 

4.4 

1861-1865 

1,101,150 

185,123 

5.9 

1866-1870 

1,339,085 

191,900 

0.9 

1871-1875 

1, 969,420 

170,675 

11.5 

1876-1880 

2,500,575 

172,325 

14.5 

To  accompany  tins  table,  I  have  constructed  a  chart,  which 
shows  very  clearly  the  ratio  of  production  of  the  two  metals  (the 
unit  of  measurement  being  the  total  gold  production  of  each 
period,  whatever  its  quantity  might  be,  by  weight  or  quantity  and 
not  by  value)  from  the  discovery  of  America  to  date. 

The  accompanying  charts  show  the  production  of  gold  and 
silver  in  different  countries,  according  to  value,  and  in  all 
countries  over  the  period  of  time  from  1492  to  1880.  (From  Dr. 
Soetbeer's  "Edel.  Metal  Production,"  1879.) 

The  very  considerable  difference  in  quantity  between  the  aggre- 
gate of  the  gold  and  silver  produced,  and  the  portion  used  in  the 
coinage,  expresses  the  portion  used  in  the  arts  and  as  jewelry, 
and  lost  by  abrasion  and  wear.  Standard  gold  coin  in  use  loses 
about  ^^u  part  of  its  weight  each  year  by  abrasion. 

We  are  now  in  possession  of  most  of  the  facts  essential  to  de- 
termine what  is  called  the  silver  question  of  1872,  to  the  present 
date.  The  cau.ses  of  the  cheapness  of  silver  for  fifteen  years  past 
may  be  divided,  as  to  their  relative  potency,  about  as  follows: 


TENTHS. 

1.  Increased  production  of  silver,  from  18C3-73, 1 

2.  Diminished  production  of  gold,  and  rise  in  value  of  gold 

relative  to  commodities, 1 


368  ECONOMIC  PHILOSOPHY. 

3.  Cessation  of  the  drain  of  silver  to  India, 3 

4.  Attempted  cliange  of   Germany  fi-om   silver  mono-metal- 

lic standard  to  gold  standard,- 3 

5.  Declaration  for  limited  coinage  of  silver  by  France  and  . 

other  European  States, 1 

6.  Cessation  of  free  coinage  by  U.  S.  in  1873,       1 

Total, 10 

Of  these  influences,  the  latter  five-tenths  are  reversible.  Mean- 
while, the  action  of  the  United  States,  in  refusing  to  discredit 
silver  altogether,  has  done  something  to  sustain  its  value.  The 
disastrous  consequences  of  diminishing  the  world's  money  one- 
half  by  discrediting  silver  altogether  have  been  averted.  Either 
Germany,  the  United  States,  or  France,  could  probably  have 
!  brought  silver  to  par  with  gold  by  giving  it  fi-ee  coinage  at  any 
time  since  1878.  Not  having  done  so,  silver  will  probably  remain 
at  a  discount  until  one  or  more  governments  concur  in  giving 
it  a  freer  coinage,  or  until  an  increase  in  the  production  of 
gold  relatively  to  silver,  or  in  the  use  of  silver  relatively  to  gold, 
either  in  coinage  or  in  the  arts,  restores  the  parity.  The  relative 
rate  of  pi'oduction  of  the  two  metals  has  no  necessary  or  natural 
ratio.  The  rock  on  which  Bimetallism,  as  a  theory,  rests,  is 
that  the  perturbations  in  value  of  a  currency  depending  on  the 
production  of  two  metals  will  be  less  than  in  a  currency  depend- 
ing on  the  production  of  either  singly. 

The  quicksand  which  has  done  most  to  undermine  this  rock 
has  been  the  frequent  and  fallacious  citation  of  what  certain 
partially  informed  weather-prophets  have  supposed  to  be  the 
operation  of  "  Gresham's  law."  Sir  Thomas  Gresham  stated  very 
truly  that  if  part  of  the  gold  or  silver  coins  of  a  given  denomi- 
nation were  adulterated,  or  made  cheaper  than  the  rest,  by  the 
extraction  of  part  of  their  true  metal,  and  tlie  substitution  of 
alloy  therefor,  the  more  alloyed  coins  would,  if  they  succeeded 
in  circulating  at  par,  cause  the  melting  or  exportation  of  the  pure. 
In  this  sense  he  taught  that  "bad  money  would  expel  good." 
But  he  never  taught,  as  monometalists  have  so  persistently 
urged,  that  if  the  entire  bulk  of  pure  bullion  of  the  one  metal, 
whether  silver  or  gold,  should  fall  in  value  relatively  to  the 
other,  such  a  fact  would  tend  to  the  exportation  of  the  metal  of 
higher  bullion  value.*    As  there  would  be  no  other  country  in 

*  Jevons,  in  "  Money  and  the  Mechanism  of  Exchange,"  on  p.  72,  says  :  "  Gresham's 
remarks  concerning  the  inability  of  good  money  to  drive  out  bad  only  referred  to 
moneys  of  one  kind  of  metal." 


CREDIT.  369 

which  the  fall  would  not  be  the  same  as  in  this,  obviously,  the 
coin  of  dearer  metal  would  have  no  motive  to  tlee  to  auother 
market,  since  it  could  not  gain  in  value  by  doing  so.  Yet  on  this 
basis,  the  years  since  1878  have  lowered  with  predictions  that  if 
if  the  United  States  continued  to  coin  silver  it  would  lose  its  gold. 
In  fact,  its  stock  of  gold  never  increased  so  rapidly  as  during  the 
next  seven  years.  • 

The  factor  which  is  more  potential,  in  controlling  prices  of  all 
commodities,  than  the  supply  of  either  gold  or  silver  is  credit. 
Credit  does  not  have  to  be  mined,  assayed,  coined,  or  weighed. 
In  health,  no  economic  factor  is  more  useful.  But  in  its  epidemic 
fevers  it  becomes  a  fierce  intoxicant.  It  then  becomes  a  form  of 
social  insanity  which  may  bear  all  before  it.  At  the  head  of 
these  epidemics  of  credit  stand  the  Mississippi  scheme  of  1717  to 
1720,*  the  assignats  of  the  French  National  Assembly  in  1790, t 
and  the  silkworm  speculations  of  1829-30.  J 

*  John  Law  incorporated  his  Company  of  the  West  in  1717,  with  a  capital  of  200,000 
shares  of  500  livres  each,  with  power  to  trade  in  Louisiana.  It  then  comprised  the 
present  territory  of  the  United  States  from  the  Gulf  eastward  to  Florida  and  the  Atlan- 
tic States,  northwaid  to  the  Hudson's  Bay  Company's  grant,  and  west  to  the  Pacific.  It 
was  to  have  exclusive  power  to  trade,  farm  the  taxes,  and  coin  money,  and  was  to  be 
to  two-thirds  of  the  present  territory  of  the  United  States  what  the  British  East  India 
Cempany  was  to  India.  To  this,  in  1719,  it  added  all  the  privileges  of  the  French  East 
India  Company,  with  the  monopoly  of  trading  in  the  East  Indies,  China,  and  South 
Seas.  Not  only  the  street  in  which  Law  lived,  but  all  Paris,  was  blocked  by  the  hun- 
dreds of  thousands  anxious  to  get  stock  in  the  new  concern.  Law  had  been  made 
Director-General  of  the  Finances  of  France.  'The  "  Company  of  the  Indies  "  merged 
with  the  National  Bank,  and  300,000  persons  applied  for  its  shares.  Law  promised  an 
annual  d'vidend  of  200  livres  per  share,  and  received  in  payment  the  depreciated  billets 
debat  (state  notes),  which  made  the  promised  dividend  virtually  120  jxr  cent.  Early 
in  1720,  holders  began  to  convert  their  shares  into  gold  and  secrete  the  gold.  Severe 
laws  were  passed  against  hoarding  gold.  But  in  July,  1720,  the  Bank  stopped,  the 
scheme  collapsed,  and  Law  fled  from  France. 

tThe  amgna/«  purported  to  ass-ign  to  the  holdernational  domain  to  the  value  of  a 
certain  sum.  The  land  supposed  to  be  assigiud  were  the  confiscated  estates  of  the 
Church,  and  of  the  wealthy  emigrants  who  fled  to  escape  the  terrors  of  revolution.  The 
assiffnatfi,  after  falling  (in  1796)  to  l-30th  their  parvalue,  were  redeemed  at  that  rate  in 
»nan(/ate,  which  gave  the  holder  the  right  to  take  possession  of  lands  at  an  estimated 
value,  without  a  sale.  These  in  turn  fell  to  l-70th  their  value,  in  which  stage  they  were 
gradually  re-absorbed  by  the  [government  in  taxes  or  converted  into  I'eiites, 

$  See  "Silk,"  inch.  lO,  pof^l. 


CHAPTER  X. 

CRISES. 

149.  Crises  Defined. — A  crisis,  panic,  or  revulsion  is  a  with- 
drawal of  confidence,  and  a  reign  of  distrust,  during  which  busi- 
ness is  brought  to  a  standstill,  or  to  a  chaos,  by  the  voluntary  re- 
fusal of  those  who  are  dealing  in  money  or  goods,  to  let  them  go 
on  the  ordinary  terms.  It  maij  be  a  refusal  of  the  holders  of 
gold  or  goods  to  accept  bank-notes  in  payment,  whereupon  the 
holders  of  the  notes  present  them  for  redemption  in  quantities 
larger  than  the  banks  can  redeem.  This  is  a  run  of  notes  for  re- 
demption. It  arises  from  a  belief  in  the  public  mind  that  more 
notes  have  been  issued  than  the  banks  can  redeem.  It  was 
one  feature  of  the  crisis  of  1837,  in  the  United  States,  when 
the  volume  of  notes  was  thirty-nine  times  in  excess  of  the 
quantity  of  specie  held  for  redemption.  It  had  no  part  in  the 
crises  of  1797,  1807-9,  1816  to  19,  1825,  1847,  nor  1867  in  England, 
nor  in  that  of  1857  in  the  United  States. 

It  may  be  a  refusal  of  depositors  to  allow  their  deposits  to  re- 
main in  the  custody  of  the  banks,  which  were  previously  deemed 
secure.  In  such  cases  they  withdraw,  either  to  hoard  privately,  or 
to  place  them  in  .some  other  bank.  Private  hoarding  is  very  cum- 
bersome, as  a  man  would  need  a  cart  to  carry  away  a  very  mod- 
erate sum.  Removal  to  another  bank  immediately  becomes 
a  void  act,  if  all  the  banks  stand  together.  A  run  for  deposits  as- 
sumes that  the  bank  loans  have  been  unwiselj^  made.  But  it 
would  be  necessary  that  it  should  not  have  loaned  its  money  at 
all,  if  it  is  to  pay  all  its  deposits  without  breaking.  A  bank  should 
be  ready  to  redeem  its  notes,  but  solvency  does  not  imply  that  it 
can  stand  a  run  for  all  its  deposits,  without  selling  out  or  collect- 
ing the  securities  on  which  tlie  deposits  have  been  loaned.  But 
to  be  forced  to  do  this  instantly  is  liquidation,  not  banking.  The 
crisis  of  1857  in  the  United  States  was  a  run  for  deposits,  and  was 
met  by  all  the  banks  shutting  down  together.  The  crisis  of  1868  in 
England  was  a  run  on  three  or  four  leading  banks,  and  the  ci'isis 
or  "  obstruction  ''consisted  in  the  fact  that  only  the  Bank  of  Eng- 


PRICES  AUD  PAmVS.  071 

land  could  issue  the  additional  quantity  of  bank-notes  needed,  and 
it  refused  to  ask  permission  to  do  so,  on  the  ground  that  it  did  not 
need  them  itself.  More  than  one  of  the  twenty  leading  banks  could 
have  drawn  a  check  on  the  Bank  of  England,  which  would  have 
closed  its  dooi's,orcompelled  it  to  ask  permission  to  issue  bank-notes 
on  a  deposit  of  securities,  which  wasall  that  was  required  to  relieve 
the  other  banks.  Failijig  to  do  so,  the  business  and  deposits  of 
the  banks  which  could  not  obtain  the  notes,  were  frightened  into 
the  Bank  of  England,  genei-osity  being  thus  rewarded  with  bank- 
ruptcy and  churlishness  by  profit.  The  bank  gained  one-half  in 
its  deposits,  and  made  the  largest  profit  ever  made  bj'  it  in  one 
year.  There  has  been  no  general  run  on  deposits  in  the  United 
States  since  1857. 

All  the  above-mentioned  are  bank  crises,  monetary  crises,  or 
"money  panics."  These  are  a  loss  of  faith  by  merchants  in 
their  banks.  Where  banks  lose  faith  in  merchants,  by  refusing 
to  discount  notes  and  bills,  it  is  a  commercial  crisis.  This  usually 
winds  up  a  period  of  several  years  of  ascending,  prices  and  quick- 
ened speculation,  which,  if  they  apply  equally  to  all  forms  of 
property,  are  the  exterior  signs  of  a  decline  in  the  pui^chasing 
power  of  money,  and  will  generally  be  traceable  to  an  increase  in 
the  volume  of  money  itself,  or  of  some  one  or  other  of  its  many 
credit  substitutes. 

In  the  crisis  of  1825-6  in  England,  prices  of  all  commodities 
rose  from  70  to  100  per  cent,  within  one  year,  and  fell  to  their 
former  level  in  the  next,  besides  the  whole  people  engagmg 
in  wild  investments  in  South  America  mines.  Insurance  bubbles, 
Mexican  projects,  Darien  Canal  companies,  etc.  Shares  would  no 
sooner  be  put  out  than  they  would  be  eagerly  bought  up  at  par 
and  sent  whirling  up  by  competing  bidders,  as  if  their  profits 
were  certain,  instead  of  impossible. 

A  rise  in  prices  precedes  nearly  all  panics,  whether  commercial, 
banking,  or  financial.  Hence  it  sometimes  becomes  a  question 
whether  the  rise  in  prices  has  caused  the  inflation  of  paper  money 
and  credit,  or  whether  the  inflation  of  pai)er  money  has  caused 
the  rise  in  prices.  In  the  crisis  of  1825-6  ni  England,  three  causes 
concurred  to  produce  the  inflation  which  began  in  1821-2,  and  cul- 
minated in  four  years.     These  were  : 

1.  The  resumption  of  specie  payment  in  1820-1,  after  the  business 
of  the  country  had  been  running  on  paper  only  for  nearly  thirty 
years,  had  the  effect  to  add  to  the  effective  currency  the  whole 
quantity  of  gold   and  siver  coin  which,  during  suspension,  was 


S12  ECONOMIC  PHILOSOPHY. 

totally  out  of  circulation,  concealed,  and  selling  as  a  commodity  at 
a  premium — and  therefore  exercising  very  little  influence  over 
prices.  This  great  addition  of  coin  to  the  circulation  followed 
suddenly,  at  the  close  of  a  period  which  had  necessarily  been 
marked  by  the  issue  of  paper  enough  to  take  the  place  of  the  coin 
hoarded  during  the  war.  The  pajier  issues  themselves,  together 
with  the  .scarcity  and  high  profit  of  the  war  period,  had  main- 
tained a  Jiigh  rate  of  prices  during  the  period,  until  the  collapse 
in  prices  which  came  with  the  peace.  Low  prices,  on  all  home 
products,  concurred  with  a  lai'ge  increase  in  the  volume  of  effec- 
tive money,  to  stimulate  investment  in  foreign  loans.  Owing  to 
the  increase  in  tlje  volume  of  money,  something  had  got  to  go  up 
in  price.  Domestic  products,  and  means  of  subsistence,  could  not 
go  up,  because  known  to  be  so  abundant.  But  the  distant,  the 
novel,  and  the  unknown  can  always  be  niade  the  theme  of 
exaggeration. 

2.  In  1820  to  1822,  tlie  government  reduced  the  rate  of  interest  on 
consols,  and  in  so  doing  caused  many  holders  to  desire  new  invest- 
ments of  like  kind,  in  appearance,  i.  e.,  of  loans.  This  caused  a 
readiness  to  invest  in  that  peculiar  class  of  South  America  loans, 
and  mines,  and  joint  stock  companies,  which  marked  the  crisis  of 
1825.  A  vivid  picture  of  the  result  is  given  by  Miss  Martineau  * 
The  failure  of  returns  from  the  foreign  investments  came  first. 
Then  a  contraction  of  its  accommodations  by  the  bank  of  England. 
Then  failure,  in  December,  1825,  of  about  sixty  country  banks, 
besides  several  leading  banks  of  London.  Then  long  lists  of 
factories  closed,  riots  by  discharged  weavers,  who  in  one  day 
destroyed  every  power-loom  in  Blackbourn  or  within  six  miles  of 
it.  At  Carlisle  the  weavers  demanded  free  corn,  and  at  Trow- 
bridge people  insisted  that  the  gardeners  and  green-grocers  were 
cornering  the  potatoes.  In  Dublin  the  starving  silk-weavers  de- 
manded that  the  subscriptions  raised  for  them  be  applied  to  clear 
off  the  manufacturers'  stocks,  thus  creating  a  demand  so  that  they 
might  go  to  work  again,  t 

Economists  have  not  usually  applied  Gregory  King's  law  of  the 
effect  of  scarcity  and  excess  of  supply  of  commodities,  to  money, 
itself  the  standard  of  prices.  Evidently,  however,  as  in  the  case 
of  wheat  so  in  the  case  of  money,  a  scarcity,  or  superabundance, 
would  tend  to  produce  a  rise,  or  fall,  of  prices,  in  a  ratio  much 

*  "  History  of  the  Peace,  "  vol  i.  p.  3.54- 

t  Martineau's  "History  of  tlie  Peace,"  vol.  i.  p.  367. 


FALLACIOUS  PREDICTIONS.  373 

greater  than  the  actual  scarcity  or  superabundance.  Panics  break 
out  in  an  unexpected  manner,  without  definite  prognostication  on 
the  part  of  those  supposed  to  be  experts,  and  run  in  a  rattling 
thunder  of  successive  failures  and  downfalls,  concerning  which 
many  will  afterwards  say  significantly  "I  knew  it,"  but  of  which 
no  anterior  warning  could  by  the  most  inquisitive  process  have 
been  obtained.  The  financial  experts  frequently  predict  crises, 
and  crises  frequently  occur,  but  by  some  singular  maladjustment 
of  the  prophetic  power,  or  some  obstinacy  in  finance,  the  crises 
which  are  predicted  never  occur,  and  those  which  occur  ai'e  sel- 
dom predicted.  Thus  Cernuschi  came  from  France,  in  1878,  to 
assure  Congress  that,  if  it  should  adopt  the  act  for  the  limited  coin- 
age of  silver,  its  action  would  immediately  result  in  a  monetary 
ci'isis,  and  a  drain  of  gold.  The  act  was  adopted,  and  under  its 
operation  the  quantity  of  gold  in  the  country  accumulated  more 
rapidly  than  ever  before,  and  about  twice  as  rapidly  as  the  silver. 
Yet,  occasionally,  monetary  crises  are  foretold  with  a  degree  of 
accuracy,  through  some  correct  estimate,  based  upon  a  sound 
principle.  Thus  it  appears  from  Adam  Smith's  allusion  to  Mr. 
Meggins,*  that  that  nearly  unknown  economist,  reasoning  that 
the  annual  in-oduction  of  silver  was  twenty  times  greater  than 
that  of  gold,  but  that  the  drain  of  silver  for  India  left  its  sujjply 
for  Europe  only  from  fifteen  to  sixteen  times  greater,  inferred 
that  it  was  the  drain  of  silver  to  India  that  maintained  the 
ratio  of  values  between  the  two  metals  in  Europe  at  one  to 
fifteen  and  a  half  or  sixteen  ;  hence,  that  if  the  drain  should 
cease  the  ratio  would  fall  to  that  of  one  to  twenty,  or  one  to 
twenty-two — the  ratio  of  their  production.  Both  Smith  and 
McCulloch  combated  Meggins'  prediction  satisfactoi'ily  to  them- 
.selves,  but  in  1871  the  drain  from  India  ceased,  and  forthwith 
the  value  of  silver  fell  exactly  as  Meggins  more  than  a  century 
previously  had  predicted  ,  thus  producing,  at  least  in  part,  that 
monetary  crisis  in  the  precious  metals  which  has  now  prevailed 
throughout  the  world  for  sixteen  years.  The  pretended  ability 
to  predict  financial  crises  is  often  i^esorted  to  in  practical  politics 
as  a  means  to  the  accomplishment  of  immediate  results,  or  to 
carry  an  election.  Thus  in  1872  the  chief  and  most  effective  cry 
raised  to  defeat  Mr.  Greeley,  as  a  candidate  for  the  Presidency, 
was  that  his  pressure  for  an  early  z'esumption  of  specie  payments 
would  bring  on  a  financial  crisis.     General  Grant  was  elected, 

♦  "  Wealth  of  Nations,"  by  McCulloch,  p.  97. 


374  ECONOMIC  PHILOSOPHY. 

and  without  any  such  pressure  the  financial  crisis  came  in  1873, 
and  lasted  during-  his  entire  term. 

In  England  tliere  were  financial  or  commercial  crises  of  a 
marked  character  in  1793  to  1796,  1817  to  '19,  in  1824  to  '2Q*  in 
1836-7,  in  1846-7,  in  1857,  and  in  1867.  In  1877  there  was  a  wide- 
spread derangement  of  industry,  but  it  did  not  reach  the  banks. 
In  the  United  States  there  were  simultaneous  and  sympathetic 
crises  in  the  same  years,  except  in  1827,  1847,  and  1866.  It  is  a  cur- 
rent saying  among'  expei'ienced  merchants,  therefore,  that  in 
America  a  crisis  is  due  every  twenty  years,  and  in  England  eveiy 
ten  years.  The  trutli  of  this  saying  has  been  subjected  to  a  recent 
crucial  test  by  the  fact  that  according  to  both  maxims  a  crisis 
was  due  in  both  countries  during'  the  year  just  past.  In  the  United 
States  its  recurrence  at  the  accustomed  period  seemed  the 
more  probable  from  the  fact  that  a  long-continued  process  of 
extinguishment  of  national  debt,  which,  as  we  have  seen  in  a  pre- 
vious chapter,  is  a  form  of  international  credit  currency,  closely 
affiliated  in  its  effects  to  paper  money,  was  terminating  in  an 
impending  extinguishment  of  the  national  bank  currency  through 
the  calling  in  by  the  government  of  the  bonds  on  wliich  the  notes 
of  the  banks  rested,  and  the  enforced  retirement  of  the  notes  by  the 
banks  in  consequence.     Nevertheless,  no  crisis  came. 

150.  Crises  Produced  by  Excessive  Importation  of 
Competing-  Products. — The  incidents  of  commercial  crises  are 
so  much  alike,  and  are  told  by  all  writers  in  so  nearly  the  same 
tei'ms,  that  the  following  description  by  McCullochf  of  the  crisis  of 
1847  in  England,  which  followed  the  repeal  of  the  duties  on  the 
importation  of  corn  in  1846,  and  the  general  bankruptcy  of  the 
farming  interest  resulting  therefi'om,  may  be  taken  as  a  sample 
and  example  of  all  crises.  The  act  of  1844  had  provided  that  no 
new  joint-stock  banks  should  be  created,  that  the  banks  then  ex- 
isting should  be  limited  to  the  amount  of  notes  they  had  issued 
during  the  twelve  months  preceding  the  passage  of  that  act,  and 
that  the  Bank  of  England  should  issue  no  new  notes  except  on 
the  deposit  of  a  gold  sovereign  for  Qxevj  pound  note  issued.  This 
restriction  was  suspended  to  enable  the  Bank  of  England  to  sup- 
ply, by  paj)er,  the  money  that  could  not  be  obtained  in  coin.  It  will 
be  seen,  in  McCulloch's  statement,  that  the  "  unprecedented  im- 

*  A  detailed  account  of  the  exterior  incidents  of  the  commercial  crisis  of  1824-6  may 
be  found  in  Miss  Martineau's  "History  of  the  Peace.'"  The  economic  incidents  of  tlie 
periods  1819  to  1837  are  analyzed  in  "  Carey's  Harmony  of  Interests." 

t  Note  IX.,  on  Money,  to  "  Smith's  Wealth  of  Nations,"  by  McCulloch,  sect.  v.  p.  507. 


.1  DRAIN  OB'  GOLD.  375 

jjoi'tation  of  foreign  food  "  is  the  cause  of  that  drain  of  gold  which 
brings  in  tlie  crisis.  He  says:  "The  crisis  of  1847  was  a  conse- 
quence, partly  of  the  railway  mania  of  the  previous  year,  and  part- 
ly of  the  failure  of  the  potatocrops  of  1845  and  1846.  The  failure  in 
the  latter  ^-ear  deprived  fully  two-thirds  of  the  people  of  Ireland, 
and  a  considerable  portion,  also,  of  those  of  Great  Britain,  of 
their  accustomed  supplies  of  food.  In  consequence  of  this  de- 
ficiency, and  of  government  having  come  forward  to  provide  the 
means  for  its  relief,  there  was  an  nnprecedented  importation  of 
all  sorts  of  corn;  and  the  demand  for  bullion  for  exportation  to 
meet  this  impoi'tation,  occurring  simultaneously  with  a  vast  rail- 
way expenditure,  pecuniary  accommodations  were  obtained  with 
the  greatest  difficulty,  and  the  rate  of  intei'est  rose  to  an  extraor- 
dinary height.  Instead,  however,  of  being  increased  by  the  Act 
of  1844,  it  is  abundantly  certain  that  the  operation  of  the  latter 
contributed  to  alleviate  the  severity  of  the  crisis.  The  restraints 
it  imposed  on  the  issues  of  the  country  banks  had  hindered  them 
from  embarkmg  to  any  great  extent  in  railway  adventures,  so  that 
they  were  better  able  to  assist  their  customers  ;  and  it  also  pre- 
vented the  Bank  of  England  from  attempting  to  meet  the  exigen- 
cies of  the  case,  otherwise  than  by  raising  the  rate  of  interest, 
and  restricting  her  issues.  And  besides  being  the  natural  and 
pi'oper,  these  were,  in  fact,  the  only  means  by  which  the  value  of 
bullion  could  be  raised  in  this  country,  its  demand  for  foreign 
remittance  checked,  and  the  exchange  turned  in  our  favor.  A 
great  many  mercantile  houses  that  had  been  trading  upon  very 
insufficient  capitals,  or  which  had  previously  been  virtually  in- 
solvent, were,  of  course,  swept  off  during  the  crisis  ;  and  the 
alarm  that  was  thereby  occasioned,  though  for  the  most  part 
without  any  good  foundation,  gave  rise  to  a  .species  of  panic. 
During  the  prevalence  of  the  latter,  government  consented  (25th 
October,  1847)  to  a  temporary  suspension  of  the  Act  of  1844.  But 
there  is,  we  believe,  little  doubt  that  this  was  an  unwise  ijroceed- 
ing.  When  it  took  place  the  violence  of  the  crisis  had  abated. 
The  drain  for  gold  for  exportation  had  not  only  ceased,  but  it  had 
begun  to  set  in  our  favor  ;  and  the  probability  is  that  in  a  few 
days  all  alarm  would  have  passed  off,  without  the  dangerous  pre- 
cedent which  was  set  by  the  interference  of  ministers." 

The  repeal  of  the  corn  laws  had  not  made  corn  cheaper  to  the 
people  of  England  in  any  material  degree,  if  at  all.  It  had 
changed  the  source  of  sup))ly  from  Ireland,  Scotland,  and  Eng- 
land to  foreign  countries.  The  "  Encyclopedia  Britannica"  says, 


3  76  EOOXOMIC  PHIL  OSOPIIY. 

"The  production  of  wheat  in  Scotland  and  Ireland  fell  off  one- 
half,"  and  "in  the  seven  years  ending  Christmas,  1846,  the  prices 
of  wheat  and  its  substitutes  per  bushel  had  been  :  Wheat,  7s.  Id. ; 
barley,  4s. ;  oats,  2s.  8^id. ;  total,  13s.  9d. ;  while  the  prices  for  the 
seven  years  ending  1875  were:  Wheat,  6s.  6fd.;  barley,  4s.  lOd. ; 
oats,  3s.  2id. ;  total,  14s.  7id."  The  free  importation  of  foreign 
corn  did  not  permanently  i-educe  the  price  of  corn,  but  substituted 
the  foreign  for  the  domestic  supply.  The  domestic  production 
declined  one-half,  in  Ireland  and  Scotland,  to  make  room  for  the 
increased  importation  of  foreign  food.  The  drain  of  gold  required 
to  pay  for  this  increased  importation  caused  the  financial  and 
commercial  crisis  of  1847  in  England,  at  a  time  when  there  was 
no  financial  crisis  in  any  other  country.  Hence  has  resulted  two 
syllogisms,  which  are  alike  as  to  their  major  and  minor  premise, 
but  differ  only  as  to  the  conclusion.  They  may  be  called  the  corn 
law  syllogisms,  and  run  thus  : 

Major  Premise. — The  free  importation  from  abroad,  of  products 
which  a  country  has  the  natural  facilities  for  producing,  or  has 
produced  or  can  conveniently  produce,  does  not  cheapen  per- 
manently or  substantially  the  supply  of  the  product,  but  displaces 
the  domestic  by  the  foreign  product,  thus  tending  toward  a  dis- 
ruption of  domestic  industries,  a  drain  of  gold,  a  run  on  the 
banks,  and  a  financial  crisis. 

Minor  Premise. — England  attempted,  in  1846,  to  get  cheap  bread- 
stuffs  by  withdrawing  protective  duties  from  her  farmers  and 
accepting  free  importation  from  abroad,  and  in  so  doing  she  got 
no  cheaper  breadstuffs  and  no  more  of  them,  but  caused  a  cessa- 
tion in  her  domestic  production,  exactly  equal  to  her  importation, 
thus  resulting  in  a  disruption  of  her  industries,  a  drain  of  gold,  a 
run  on  the  banks,  and  a  commercial  crisis. 

Conclusion,  among  distant  economists,  that  the  repeal  of  the 
cor]i  laws  caused  the  crisis  of  1847. 

Conclusion,  among  English  economists,  that  the  crisis  of  1847 
was  due  to  causes  unknown. 

151.  Competing'  Imports  Again  the  Cause. — In  treating 
the  crisis  of  1857  in  England,  the  same  English  economist,  Mr. 
McCulloch,  fully  agrees  with  our  American  economists,  and  with 
the  American  people  generally,  in  holding  that  it  was  caused  in 
England  as  a  reflex  effect  of  general  bankruptcy  in  the  United 
States,  and  that  it  was  caused  in  the  United  States  by  buying  of 
England  goods  which  competed  with  and  displaced  our  own  pro- 
ducts, and  which  we  had  no  means  to  pay  for,  and  ought  not  to 


' '  0  VERTRADING. "  377 

have  bought.  The  deftness  with  which  Mr.  McCulloch  admits  all 
the  facts,  while  endeavoring  to  conceal  their  economic  inference, 
leads  us  to  quote  also  his  statement  of  the  crisis  of  1857.  He  says :  * 
"The  circumstances  that  led  to  the  suspension  of  the  Act  of 
1844,  in  1857,  were  somewhat  similar.  The  real  value  of  our 
exports  to  the  United  States  in  1856  amounted  to  21,476,000/., 
and,  in  addition  to  this  immense  sum,  a  large  additional  amount 
was  due  to  this  country,  on  account  of  dividends  on  state,  rail- 
way, canal,  and  other  stocks,  etc.  Unluckily,  however,  all,  or 
nearly  all,  the  American  banks  stopped  payments  in  1856  and 
1857  ;  and  the  losses  that  were  thus  occasioned,  coupled  with  the 
consequent  reduction  and  cessation  of  remittances,  produced 
much  distress  among  great  numbers  of  the  merchants  and  others 
engaged  in  the  American  trade.  And  it  was  among  them,  or 
those  immediately  connected  with  that  trade,  that  the  greatest 
overtrading  and  abuse  of  credit  had  taken  place.  Some  firms  in 
Glasgow,  which  had  been  notoriously  overtrading  for  a  number 
of  years,  were  the  first  to  give  way ;  and,  their  failure  being  on  a 
very  large  scale,  the  banks  by  which  they  had  been  principally 
supported  became  the  objects  of  suspicion,  and  from  suspicion  to 
distrust  there  is  but  a  step.  Notwithstanding  the  numbers  and 
wealth  of  the  shareholders  responsible  for  the  banks  in  question, 
they  were  subjected  to  a  run  on  the  part  of  the  inferior  class  of 
note-holders  and  depositors,  and,  their  resources  being  either 
anticipated  or  locked  up,  they  were  obliged  to  suspend  payments. 
And  had  they  only  failed  none  could  have  regi'etted  the  result. 
On  the  contrary,  it  would  have  been  nothing  more  than  they 
deserved,  for  they  had  for  a  lengthened  period  grossly  abused  the 
ample  resources  at  their  command,  and  resorted  to  the  most  ques- 
tionable means  to  bolster  up  the  speculators  with  whom  they  had 
become  identified ;  but  the  miscliief  is  that  the  disastrous  effects 
of  such  proceedings  can  not  be  confined  to  the  guilty  parties.  A 
fire  originating  in  a  pig-sty  may  destroy  a  palace.  The  suspension 
of  the  offending  banks,  by  generating  uneasy  feelings  and  sus- 
picions in  the  ])ublic  mind,  led  to  a  run  on  some  of  the  other 
banks.  And  to  provide  for  their  own  safety,  these  establishments 
immediately  began  to  sell  securities  and  to  ado])t  other  means  by 
which  to  obtain  supplies  of  gold.  Large  amounts  of  it  were  in 
consequence  carried  to  Scotland.  And,  in  addition  to  the  demand 
for  gold,  tlie  demand  for  discounts,  notwithstanding  the  high  rate 

*  "  Wealth  of  Nations,"  etc.,  p.  OW. 


378  ECONOMTG  nilLOSOPHY. 

of  ten  per  cent,  charged  b^-  tlie  bank,  continued  undiminished, 
so  that  the  reserve  in  her  possession  was  reduced  on  the  11th  of 
November  to  1,462,153/.;  and  it  was  the  general  behef  that  this 
inadequate  reserve  would  be  forthwith  either  much  reduced  or 
wholly  swallowed  up.  To  avert  the  possibility  of  such  an  event 
occurring,  the  directors  were  authorized,  on  the  12th  of  November, 
to  issue  notes  without  being  bound  by  the  conditions  of  the  Act 
of  1841.  This,  though  a  brief,  is  a  sufficiently  accurate  account  of 
tlie  leading  circumstances  that  occasioned  the  suspension  of  the 
Act  in  1857." 

Victories  and  reverses  attend  all  forms  of  warfare.  The  com- 
petitions among  the  producers  of  populous  nations,  in  the  produc- 
tion of  the  same  products,  are  a  state  of  economic  war,  and  are 
attended  by  some  of  the  wastes  of  Avar.  These  are  shown  to  be  a 
leading  factor  in  causing  commercial  crises. 

152.  Exhaustion  of  Capital. — Crises  are  also,  by  some, 
attributed  to  the  exhaustion  of  capital  in  great  public  improve- 
ments, and  in  great  wars,  or  in  mines,  ships,  factories,  or  other 
forms  of  reproductive  wealth,  that  do  not  at  first  produce  a 
profitable  return.  Prof.  Bonamy  Price  has  pressed  this  theory 
strenuously.  He  says :  ' '  The  causes  which  make  the  receipts  of 
bankers  dwindle  away  are  in  the  main  two — first,  a  diminution 
of  the  sale  of  goods,  such  as  occurs  when  trade  is  bad,  and  stocks 
of  merchandise  accumulate  for  want  of  purchasers,  or  when  the 
harvest  is  deficient,  or  when  cotton  is  scarce  and  dear,  and  the 
consumers  of  cotton  goods  reduce  their  consumption;  and, 
secondly,  a  diminution  of  profits,  leaving  small  margin  for 
savings,  and  reducing  the  quantity  of  uninvested  savings,  which 
form  a  large  portion  of  the  means  at  the  disposal  of  bankers. 
These  two  causes  may  be  summed  up  in  one — loss  of  wealth, 
whether  positively,  by  its  actual  destruction,  or  negatively,  by  a 
failure  in  its  ordinary  rate  of  accumulation.  Here  I  must  point 
out  a  mode  of  impoverishing  a  nation  for  a  time,  which  is  little 
heeded  in  the  city,  though  it  tells  most  powerfully  on  the  resources 
of  bankers.  Most  persons  are  satisfied  if  an  undertaking  is  sound 
in  character — if  it  is  no  bubble,  but  a  solid  investment.  They 
make  no  further  inquiry ;  they  press  it  forward,  and  pi'each  to 
bankers  that  they  are  safe,  and  even  patriotic,  in  promoting  such 
enterjjrises.  Such  are  works  of  drainage,  railways,  docks,  canals, 
and  the  like.  No  doubt  they  are  all  highly  promotive  of  wealth. 
The  growth  of  a  nation  in  well-being  and  greatness  largely  turns 
on  the  prosecution  of  such  works.     But  no  one  stops  to  reflect 


PRICE  OX  CRISES.  379 

that  such  operations  desti'oy  wealth  and  dimmish  resources,  until 
they  are  capable  of  yielding  profitable  returns.  Nothing  enriches 
a  country  like  a  well-planned  railway ;  yet  railways  are  nothing 
but  a  gigantic  destruction  of  wealth  till  they  are  at  work.  They 
employ  an  enormous  mass  of  labor;  they  use  up  huge  quantities 
of  iron  and  other  materials  which  have  been  produced  by  the 
consumption  of  wealth.  Hosts  of  laborers  have  been  fed  and 
clothed  during  their  construction ;  tools  have  been  worn  out ; 
materials  have  been  used  up.  And  what  has  been  the  result  ?  A 
change  in  the  surface  of  the  land.  No  one  doubts  that,  if  the 
laborers  employed  in  making  the  railway  had  been  set  to  dig 
holes  in  the  ground  and  fill  them  up  again,  a  flood  of  poverty 
would  have  overspread  the  country.  The  food  of  the  laborers 
would  have  been  lost  and  not  rej)laced.  In  what  respect,  for  the 
time,  do  the  embankments  and  tunnels  of  a  railway  differ  from 
such  holes  ?  In  the  future  they  may  and  will  generate  vast 
wealth — for  the  present,  they  are  a  pure  and  uncompensated  loss 
of  the  public  wealth.  Nations  ought  to  make  railways ;  they  will 
be  far  richer  by  making  railways ;  and  bankers,  in  days  to  come, 
will  have  much  more  to  lend  to  borrowers.  But,  if  nations  are 
not  to  feel  imiwverishment  during  their  construction,  they  must 
be  made  out  of  savings,  that  is,  out  of  the  food,  clothing,  and 
materials  produced  in  the  country  in  excess  of  the  quantity 
consumed. 

' '  New  enterprises  there  ought  to  be  and  will  be  in  a  growing  na- 
tion ;  but  they  should  be  limited  by  its  means,  that  is,  by  its  sav- 
ings. It  is  a  most  momentous  question  to  determine  what  these 
savings  are,  as  a  matter  of  fact,  and  unfortunately  it  is  a 
most  difficult  one.  It  is  always  very  hard  to  say  how  much 
drainage,  how  many  railways  and  openings  of  mines  and  new 
factories  England  can  afford  to  make,  and  an  estimate  of  its 
amount  is  necessarily  vague.  Still,  the  signs  of  excess  become 
sufficiently  prominent  to  enable  a  watchful  e^^e  to  detect  them." 

Reduced  to  a  nut-shell,  Prof.  Price's  theory  would  be  that  a 
sufficient  lapse  of  time  between  the  investment  of  circulating  cap- 
ital (money)  in  the  creation  of  fixed  capital  (reproductive  wealth) 
and  the  reaping  therefrom  of  a  satisfactory  income,  might 
bring  on  a  financial,  monetary,  or  commercial  crisis.  This 
remains  a  mere  priori  speculation,  however,  until  it  shall  be  con- 
nected with  such  facts,  in  a  specific  instance,  as  satisfy  the  mind 
that  a  crisis  was  producfnl  by  lapse  of  time  between  investment 
and  the  returns  from  reproductive  capital. 


380  ECONOMIC  PUILOSOFIIY. 

153.  Great  Wars  Seldom  if  Ever  Produce  but  Often 
Avert  or  Remedy  Crises. — Great  wars  are  sometimes  assumed 
to  be  fitting  causes  to  wliicli  to  attribute  commercial  crises.  They 
involve,  liowever,  a  double  action.  They  exhaust  resources,  but 
if  these  resources  happen  to  be  a  glut  of  unsalable  products,  this 
exhaustion  by  removing  the  glut  sets  the  wheels  in  motion,  hav- 
ing the  effect  of  a  wider  market  or  an  increased  consumption. 
They  call  for  large  expenditures  of  money,  but  they  frequently 
manufacture  most  of  the  money  they  call  for,  and  by  adding  to 
the  volume  of  paper  money  they  raise  prices  and  induce  that  feel- 
ing of  profit  and  success  in  all  occupations  which  stimulates 
effort.  They  also,  by  endangering  the  accumulations  of  the  rich, 
render  them  generous  in  giving  part  to  save  the  whole.  They 
stimulate  the  feeling  of  mutual  dependence  and  reciprocal  sacri- 
fice in  both  poor  and  rich,  tei*minating  for  the  time  tlie  parsmiony 
of  the  latter  and  the  discontent  of  the  former,  and  welding  society 
into  a  more  highly  organized  unity.  All  these  influences  increase 
the  activity  of  the  societary  movement  and  the  rate  of  production. 

Hence  many  nations  have  made  their  most  rapid  advancement, 
and  the  rise  from  ]30verty  to  wealth  has  been  most  easy,  during 
or  immediately  after  great  wars.  In  the  Northern  States,  during 
their  war  with  the  Confederacy,  the  bounties  offered  by  Federal, 
State  and  municipal  authorities  on  enlistment  rose  to  from  $1,000  to 
$1,500  per  man,  thus  making  manhood  more  valuable  relatively  to 
capital.  Long  periods  of  peace,  however,  tighten  the  ascendency  of 
capital  over  labor,  and  it  is  doubtful  if  they  do  iiot  increase  the 
timidity  of  capital  in  embarking  in  new  enterprises.  The  period 
from  1805  to  1816,  both  in  the  United  States  and  England,  was  a 
period,  the  first  part  of  which  represented  partial  or  total  embar- 
goes on  foreign  trade,  and  the  last  years  of  Avhicli  were  war.  Yet 
these  were  yeai's  of  great  prosperity  to  the  common  people,  while 
the  ten  years  of  peace  and  free  intercourse,  immediately  following, 
were  years  of  destitution  in  both  countries.  Wheat  in  the  United 
States  for  the  five  years,  1810  to  1815,  held  an  average  price  as 
in  England  of  $11.60  per  barrel,  while  in  the  ten  years  after 
the  war  it  was  from  $4  to  $1.25  per  barrel,  or  twenty  cents  per 
bushel.  At  Pittsburg  a  ton  of  bar  iron  cost  eighty  barrels  of  flour. 
The  cotton  manufacture  had  increased  ninety-fold  under  non- 
intercourse.     Instead  of  absorbing  1,000  bales  it  absorbed  90,000. 

The  intimate  relation  between  the  high  prices  for  products,  that 
are  incident  to  periods  of  war,  and  the  prosperity  of  the  working 
and  business  classes,  may  be  seen  by  noting  the  rise  in  the  prices 


PEACE  AND  DISTRESS.  381 

of  cliffertMit  commodities  shown  by  the  accompanying  chart  pre- 
pared by  Prof.  Jevons  for  England,  with  modifications  by  Prof. 
Laughlin.  It  applies  equally  to  the  United  States  as  to  the  first 
war  period,  and  far  better  as  to  the  period  from  1860  to  1866,  since 
as  to  the  latter  the  chart  expresses  a  rise  in  England  which  was 
only  sympathetic  with  the  far  greater  rise  in  the  United  States. 

In  the  United  States,in  1816,  the  vast  importations  caused  by  the 
sudden  removal  of  the  discriminating  duties  which  had  prevailed 
since  1790,  caused  an  immense  cessation  iii  domestic  production. 
Young  as  our  industries,  and  sparse  as  our  population,  then  were, 
70,000  operatives  were  discharged  in  a  single  year,  and  driven 
into  idleness  or  agi"iculture. 

A.1  though  in  theory  the  woi-ld  was  open  to  our  products,  while 
during  the  war  it  had  been  closed  against  them  by  the  Berlin  and 
Milan  decrees  and  the  English  and  French  navies,  yet  in  fact  the 
breaking  down  of  our  manufactures  so  impaii'ed  the  prices  of 
agricultural  products  tliat  ci'ops  would  hardly  pay  for  marketing, 
and  the  cost  of  producing  them  was  a  net  loss. 

The  return  of  peace  caused  so  great  a  prostration  of  manufac- 
tures and  agi'iculture,  partly  because  the  commercial  treaty  of 
1816,  though  designed  to  be  protective,  provided  no  adequate  pro- 
tection to  the  industries  that  had  been  called  into  existence  by  the 
war.  Our  imports  rose  from  about  $20,000,000  in  1814  to  about 
$150,000,000  in  1815.  American  workmen  had  the  benefit  of 
cheap  markets  for  a  few  months,  and,  in  return,  were  turned  out 
of  employment  for  many  months.  Instead  of  buying  the  farmers' 
crops,  they  went  to  raising  them  as  long  as  there  was  a  hope  of  a 
market,  and,  when  that  stopped  agricultural  industry  was  as 
prostrate  as  manufactures.  England  could  sell  us  our  hardware, 
clothing,  tools,  furniture,  and  many  of  our  groceries  ;  but  she 
could  not  buy  our  hay,  potatoes,  oats,  very  little  of  our  corn,  and 
none  if  European  crops  were  abundant,  nor  any  of  our  timber, 
butter,  eggs,  cheese,  milk,  or  lard,  very  little  of  our  meats  ;  and 
she  could  not  hire  our  workmen,  or  employ  our  labor,  or  use  our 
idle  factories,  furnaces,  mines,  or  macliinery.  In  1818-19  there 
came  upon  the  country  the  severest  connnercial  crisis  it  had  ever 
known — the  result  of  three  years  of  that  kind  of  diminution  of 
domestic  production  which  results  from  freer  importation  of 
foreign  competing  goods. 

In  review  of  tliis  period,  1819  to  1824,  Andrew  Jackson,  then  a 
candidate  for  the  Presidency,  wrote  to  Dr.  Coleman  these  woi'ds  : 

"  I  will  ask  what  is  the  real  situation  of  the  agriculturist? 


382  ECONOMIC  PITILOSOPHY. 

Where  has  the  American  farmer  a  market  for  his  surplus  pro- 
duct ?  Except  for  cotton,  he  has  neither  a  foreign  nor  home 
mai'ket.  Does  not  this  clearly  prove,  where  there  is  no  market 
either  at  home  or  abroad,  that  there  is  too  much  labor  employed  in 
agriculture,  and*  that  the  channels  for  labor  should  be  multiplied  ? 
Common  sense  points  out  the  remedy.  Draw  from  agriculture 
the  superabundant  labor.  Employ  it  in  mechanism  and  manu- 
factures, thereby  creating  a  home  market  for  your  bread-stuffs, 
and  distributing  labor  to  the  most  profitable  account,  and  benefits 
will  ensue  to  the  country.  Take  from  agriculture  in  the  United 
States  six  hundred  thousand  men,  women,  and  children,  and  you 
will  at  once  give  a  home  market  for  more  bread-stuffs  than  all 
Europe  now  furnish  us  a  market  for.  In  short,  we  have  been  too 
long  subject  to  the  policy  of  British  merchants.  It  is  time  that  we 
shall  become  a  little  more  Americanized,  and,  instead  of  feeding 
the  paupei'S  "and  laborers  of  Europe,  feed  our  own ;  or  else,  in  a 
short  time,  by  continuing  our  present  policy,  we  shall  be  paupers 
ourselves." 

154.  The  American  Crisis  of  1837.— The  crisis  of  1837  is 
generally  known  as  a  bank  or  monetary  crisis,  due  immediately 
to  excessive  inflation  of  prices,  by  large  issues  of  paper  money  by 
banks. 

It  manifested  itself  in  a  general  susi^ension,  by  banks,  of  specie 
redemption  on  their  notes,  and  inability  to  pay  deposits  in  accept- 
able bills.  Among  merchants,  farmers,  and  business  men  of 
every  class,  there  was  no  money  of  any  value,  and  trade  returned 
largely  to  trust,  barter,  or  no  trade  at  all.  This  inflation  in  paper 
money,  however,  was  itself  an  eflPect  of  anterior  causes,  and 
rightly  to  apprehend  these  it  is  necessary  to  begin  with  the  year 
1824. 

In  1824,  after  ten  years  of  peace,  stagnation  in  trade,  and  agita- 
tion of  the  question  of  protection  to  American  industries,  a  pro- 
tective tariff  was  enacted,  and  in  1828  its  rates  were  increased.* 

*  The  changes  made  in  the  tariff  as  indicated  below  are  a  fair  exhibit  of  the  multi- 
plicity of  objects  on  which  a  protective  tariff  must  rest,  iu  order  to  do  justice  to  all  and 
be  invidious  towards  none  in  a  country  which  possesses  all  the  natural  facilities  for 
producing  nearly  every  thing,  and  where  the  object  of  ihe  duty  is  to  cause  the  artificial 
facilities,  capital,  machinery,  etc.,  to  be  applied. 

Adzes  andases,  free  from  1816  to  ]828,were  subjected  to  an  importduty  of  35  per  cent. 

Ale,  porter,  and  beer  paying,  15  cents  per  gallon  from  1816,  were  put  up  to  20  cents. 

Anvils,  free  from  1816,  paid  2  cents  per  pound  from  1824. 

Arms,  paying  20  per  cent,  in  1816,  paid  30  per  cent,  froai  1834. 

Bacon  and  hams,  at  first  free,  paid  3  cents  per  pound. 

Beef,  at  first  free,  paid  2  cents  per  pound. 


THE  TARIFF  OF  '28.  383 

The  effects  of  the  tariff  of  1824-28  were  to  stop,  and  reverse,  the 
export  of  gold  and  silver,  with  which  we  had  previously  been 
paying  for  our  excess  of  imported  merchandise  over  exported 
products.  Having  bought  more  than  we  could  pay  for,  with  our 
products,  we  were  in  the  position  of  a  farmer  who  is  compelled  to 
part  with  his  implements,  in  lieu  of  his  products,  in  order  to  pay 
his  debts.  The  fact  that  gold  and  silver  were  then,  in  some  small 
degree,  a  product  of  our  mining,  did  not  lessen  their  far  greater 
importance  as  the  implement  of  our  domestic  commerce. 

From  1821  to  1825,  according  to  H.  C.  Carey,*  the  excess  of 
exports  over  imports  of  specie  were  $12,500,000  per  year,  besides 
which  we  were  using  up  in  the  arts  as  much  more  of  gold  and 

Blacksmiths'  hammers  and  sledges,  free  from  1816,  were  made  to  pay  2)^  cents  per 
pound  from  1824. 

Blankets  of  wool,  free  from  1816,  were  placed  in  1824  under  a  duty  of  25  per  cent ., 
which  was  increased  in  1828  to  35  per  cent. 

Bonnets  of  silk  remained  at  30  per  cent,  as  in  1816,  but  those  of  straw,  palm  leaf,  leg- 
horn, and  chip  were  raised  in  1824  to  50  per  cent. 

Books,  for  schools,  colleges,  and  the  Congress  library  were  left  free,  but  those  in 
Latin  and  Greek  were  in  1824  put  up  to  15  cents  per  pound,  and  all  others  to  26  cents 
bound  and  30  cents  per  pound  unbound. 

Boots  and  shoes,  both  men's  and  women's,  remained  as  in  1816,  under  a  duty  of  $1.50 
per  pair. 

Brass  and  its  manufactures  were  raised  from  a  duty  of  20  per  cent,  to  one  of  25  per 
cent. 

Butter,  in  1816  free,  paid  from  1824  5  cents  per  pound. 

Carpets,  in  1816  free,  passed  under  a  duty  in  1824  of  from  20  to  50  cents  per  square 
yard,  which  was  increased  in  1838  to  from  30  cents  to  70  cents  per  square  yard.  Car- 
riages continued  at  30  per  cent.,  cheese  at  9  cents  per  pound,  china-ware  at  20  per  cent., 
and  cinnamon  and  cloves  at  25  cents  per  pound,  cocoa  at  2  cents,  and  coffee  at  5  cents 
per  pound. 

Raw  cotton  remained  at  3  cents  per  pound,  while  cotton  bagging,  which  had  been 
free  in  1816,  was  put  under  a  duty  of  3%  cents,  in  1824  increased  to  4i^,  and  5  cents  in 
1828.  Cutlfry  had  been  from  1816  under  a  duty  of  20  per  cent,  to  25  per  cent.,  and  on 
cutting  knives  30  per  cent.,  which  was  increased  in  1828  to  40  per  cent. 

Drugs  for  dyeing  were  advanced  from  a  duty  of  7i^  to  one  of  12}^  per  cent.  Russia 
duck.  Ravens,  and  Holland  were  advanced  from  a  duty  of  $1 .25  to  $2.50  a  piece  to  one 
of  9  cents  per  square  yard. 

Flannels,  free  in  1816,  were  raised  to  30  per  cent. 

Raw  flax  in  1828  was  dulicd  835  to  $60  per  ton. 

Duties  on  gla;<8  were  raised  according  to  quality. 

Raw  hemp  was  put  up  from  $1..50  per  cwt.  to  $45  and  $60  per  ton.  Hosiery  in  1828 
was  made  to  pay  35  per  cent.  Iron  was  scheduled  in  twenty-three  forms,  of  which  bar 
iron,  which  had  paid  $1  .50  per  cwt.  from  1816,  was  raised  in  1828  to  $37  per  ton.  Laces 
and  jewelry  were  put  up  from  a  duty  of  7J^  per  cent,  to  one  of  1214  per  cent.  Pig  lead 
was  put  up  from  1  cent  per  pound  to  3  cents.  Paper  was  taken  from  a  30  per  cent,  ad 
valcn-ejn  duty  and  placed  under  a.  scries  of  specific  duties  ranging  at  from  3  cents  to  20 
cents  per  pound.  Brown  and  white  sheetings  remained  unchanged  at  $1.00  per  piece 
for  brown  and  $2.50  for  white.  In  all,  821  articles  were  classified  as  paying  duty. 
•  "  Social  Science,"  condensed  by  McKeau,  pp,  292-5. 


384  ECONOMIC  VIIILOSOPnY. 

silver  coined  or  uncoined,  being  a  total  subtraction  from  circula- 
tion of  the  chief  instrument  of  commerce  of  $25,000,000  a  year. 
Nor  was  there  any  production  of  precious  inetals,  in  the  United 
States,  prior  to  1850,  or  coinage  at  the  mint,  adequate  to  supjily 
this  drain.  Frem  1790  to  1852,  the  mint  only  coined  $2,506,890 
in  silver  dollars  in  all  the  seventy-two  years,  and  only  about  twice 
that  sum  in  quarter-eagles.  From  1811  to  1834  we  coined  no  gold, 
and  from  1823  to  1834  no  standard  coins  of  silver.  Being  virtually' 
dependent  on  imported  Spanish  and  Mexican  coins  for  our  specie 
money,  a  drain  of  specie  such  as  that  which  ensued  from  1817  to 
1824  left  us  without  trustworthy  money,  and  dependent  wholly 
on  the  paper  issues  of  the  banks. 

By  the  tariff  of  1824  the  drain  of  gold  was  so  far  reversed  that 
the  following  four  years  witnessed  the  small  total,  net  excess  of 
import  over  export,  of  $4,000,000.  The  ensuing  yeai's  from  1830 
to  1834  show  an  active  growth  of  manufactures,  an  excess  of 
import  over  export  of  the  precious  metals  of  $4,000,000  a  year,  an 
extinguishment  of  the  national  debt,  and  an  agitation  of  the 
question  of  dividing  the  surplus  moneys  in  the  Treasury  of  tlie 
United  States  among  the  States,  which  did  not,  however,  become 
a  law  until  1836,  when  the  epoch  of  general  bankruptcy  was  ap- 
proaching. 

By  1832-3,  however,  a  tide  of  agitation  against  the  tariff  of 
1828  rose,  in  South  Carolina,  into  threats  of  secession.  Mr.  Clay 
proposed,  and  President  Jackson  sanctioned,  as  a  compromise,  a 
sliding  scale  of  reduction,  which  went  into  effect  March  3,  1833. 
The  effect  was  greatly  to  increase  the  importations  of  competing 
goods  in  many  lines,  which,  under  the  protection  of  1828-30,  the 
country  had  begun  to  produce  with  energy.  The  period  of  1828 
to  1830  had  been  marked  by  the  introduction  in  the  legislatures 
of  Virginia  and  Kentucky,  for  the  first  and  last  time,  of  a  propo- 
sal to  emancipate  the  African  slaves,  whose  average  value  was 
then  about  $250  jjer  head.  The  belief  was  then  gaining  ground 
that  emancipation  would  gradually  reach  t4ie  South,  in  the  same 
easy  manner  as  it  had  triimiphed  in  the  Northern  States.  The 
same  expansion  of  the  cotton  crop,  in  the  Southern  States,  which 
incited  South  Carolina  to  oppose  protection  to  the  cotton  manu- 
facture in  the  United  States,  also  caused  a  rapid  rise  in  the  price 
of  slaves  to  $1,000  and  $2,000.  This  put  a  quietus  on  all  projects 
looking  toward  emancipation.  Meanwhile,  imports  of  merchan- 
dise, which  had  been  $67,000,000  in  1829,  and  $62,000,000  in  1830, 
i'ose  to  101  millions  in  1833,  108  millions  in  1834,  101  millions  in 


THE  CRISIS  OF  1857.  385 

1835,  and  106  millions  in  1836,  resulting  in  an  excess  of  imports 
over  exports  of  $112,000,000  in  the  three  years  1835,  1836,  and 
1837. 

These  large  importations  of  foreign  goods,  sent  to  our  auction 
rooms  by  importers  and  traders,  were  sold  at  low  rates,  if  for 
cash,  and  on  long  credits,  if  for  time.  The  notes  given  for  them 
swelled  the  volume  of  commercial  paper  seeking  discount,  and 
the  large  "shave,"  or  rates  of  discount  paid,  increased  the  profits 
of  banking,  and  the  temptation  to  found  new  banks  for  the  issue 
of  paper  money  on  very  flimsy  securities.  With  the  proceeds  of 
these  notes,  new  goods  were  bought  abroad,  and,  with  the  infla- 
tion in  the  volume  of  paper  money,  prices  of  lands,  as  well  as  of 
goods,  rose  on  every  hand.  Hence  most,  if  not  all,  the  causes 
operating  to  produce  the  crisis  of  1837  begin  their  operation  with 
the  repeal  in  1833  of  the  protective  system  of  1828,  and  the  de- 
struction of  domestic  industries  by  the  large  influx  of  competing 
goods.  To  these  are  to  be  added  the  feverish  nature  of  the  pros- 
perity imparted  to  the  South  by  the  rapid  expansion  in  its  cotton, 
sugar,  and  tobacco  industries,  under  the  stimulus  of  cheap  Afri- 
can labor,  and  the  great  expectations  felt  in  the  North,  under  the 
stimulus  imparted  by  the  discovery  that  steam  transportation 
was  about  to  make  the  vast  and  fertile  territory,  to  the  north  and 
west  of  the  Ohio,  easily  accessible  to  the  markets  of  Europe. 

155.  Crisis  of  1857. — Commercial  crises  have  in  some  in- 
stances been  immediately  preceded,  and  possibly  in  part  produced 
or  heightened,  by  the  increase  in  the  volume  of  the  precious 
metals,  through  them  of  credits,  and  finally  of  importations. 

The  crisis  of  1857  in  the  United  States  followed  upon  an  expan- 
sion of  credits,  which  reached  its  climax  in  the  years  1851  and 
1852,  and  which  by  the  winter  of  1853  had  collapsed  intoapei-iod 
of  commercial  stagnation  known  as  the  "  hard  times  "  of  1853-4, 
which  continued  growing  more  severe,  until  the  bank  crisis  of 
1857.  Industries  generally  met  with  no  relief  until  the  revival 
of  business  in  1862  and  1863.  This  entire  period  seemed  to  have 
for  its  two  exciting  causes  the  heavy  importations  of  competing 
English  goods  induced  by  the  low  duties  adopted  in  1846,  and  the 
vast  expansion  of  credits  incident  to  the  additions  made  by  the 
gold  mines  of  California  and  Australia  to  the  world's  supply  of 
specie.  The  total  gold  coinage  of  the  United  States  from  17i)J2  to 
1849  had  been  only  $85,588,038. 

That  of  Great  Britain  from  1816  to  1851  had  been  only  $480,- 
105,755.    That  of  France  from  1793  to  1851  had  been  only  $314,- 


386  ECONOMIC  PHILOSOPHY. 

491,516.    In  the  fifteen  years,  from  1851  to  18G6,  there  was  corned 
of  gold  a  sum  equal, 

In  Great  Britain,  to,       .     .     .     ...     $455,233,695 

In  France,  to,         987.728,298 

And  in  the  United  States,  to  ...     .       665,352,323 


Total,     ....     $2,108,314,316 

At  first  it  would  seem  that  this  enormous  addition  to  the 
money  supply  ought  to  have  made  money  abundant,  and 
business  of  all  kinds  prosperous,  in  the  United  States,  instead  of 
producing  stringency  as  early  as  1853-4,  continuing  for  the  next 
seven  years.  In  tlie  winter  of  1853-4  processions  of  the  unem- 
ployed paraded  New  York.  Soup-houses,  for  the  gratuitous  feed- 
ing of  the  starving  poor,  were  opened  in  all  parts  of  the  city,  as 
well  as  in  the  other  cities  of  the  Atlantic  coast  ;  manufactures  and 
agriculture  were  in  a  state  of  prolonged  prostration,  and  at  the 
outbreak  of  the  war  of  the  rebellion  in  1861,  as  well  as  during 
most  of  the  preceding  seven  years,  there  was  neither  gold  nor 
silver  anywhere  to  be  had.  Secretar}^  Chase  computed  the  total 
amount  of  both  metals  in  the  country,  at  the  outbreak  of  the  re- 
bellion, at  not  to  exceed  $50,000,000.  The  quantity  coined  had 
never  gone  into  use,  in  the  United  States,  except  as  a  basis  of  re- 
demption for  bank-notes,  and  through  these  had  inflated  bank 
discounts,  deposits,  and  i>rices.  Bearing  in  mind  that  the  two 
years  of  financial  crisis  were  1837  and  1857,  and  that  the  premoni- 
tory symptoms  of  these  two  crises  were  an  inflation  in  the  cii'cu- 
lation  of  bank-notes,  and  in  the  bank  deposits  and  discounts,  the 
relation  between  this  cause  and  its  eff'ects  will  be  plainly  seen  in 
the  following  table,  prepared  by  the  Secretary  of  the  Treasury  in 
his  report  for  1863:  * 

On  or  Deposits         Circu- 

near  and  circii-        lution 

Janv-  lation  per         per 

uryl.            Circulation.              Deposits.  Specie.               capita.         capita. 

1834 194,840,000 $75,677,000 $11.83 $G.58 

1835 103,692,000 83,081,000 $43,937,000  1'3.61 7  00 

1836 140,301,000 115,104,000  40,019,000 16.77 9.15 

1837 149,186,000 127,397,000 37,915,000 17.66 9.52 

1838 116,139,000 84,691,000 35,184,000 13.46  7,21 

18.39  135,171,000  90,240,000 45,132,000 13.59 8.15 

1840  107,000,000 75,696,000 33,105,000  10.70 6.26 

1841... 107,290,000 64,800,000  a4.813,000. 9.79 6.10 

1842 &3,734,000 62,408,000 28,440,000  8.07 4.62 

*  With  an  addendum  of  the  last  column  showing  circulation  per  capita,  by  Mr. 
Weston,  "  Money,"  p.  195. 


EXPANSION  AND  PRICES. 


387 


On  or  Depoaits 

near  and  circu- 

Janu-  lation  per 

ary  1.  Circulation.  Deposits.  Specie.  capita. 

1843 58,564,000 56.168,000 33,000,000 6.15... 

1844 75,168,000 84,550,000 49.898,000  ;8.31... 

1845 89,608,000 88,021,000 44,241,000 8.96  .. 

1846 105,552,000 96,913,000 42,012,000 9.90.,. 

1847 105,500,000 91,812,000 35,1.32,000 9.35... 

1848 128,506,000 103,227,000 46,.300,000 10.65. . . 

1849 114,740,000 91,182,000 43,620,000 9.17... 

1850 131,367,000 109,586,000 45,.380,000 10..39. . . 

1851 155,165,000 128,957,000 48,670,000 11.87... 

.  13.31... 
.  13.66... 

,.  14.97  .. 
.  13.i)5  .. 

..  14,66... 

,.  1.5.52... 


1852 .... . 

1853 146,072,000 145,553,000  47.338  010 

1854 204,689,000 188,188,000 59.410.000. 

1855.... 

1856 

1857 

1858.... 

1859 

1860 207,102,000 

1861 202,005  000 


Circu- 
lation 
per 
capita. 
..   3.14 
..  3.91 
..  4.52 
..  5.11 
.  5.00 
..  5.90 
..  5.11 
.  5.68 
..  6.48 


5.71 
7.80 
6.92 
7.03 
7.48 
5.26 
6..37 
6.59 
6.21 


187,000,000 190,400,000 53  944.010  . 

195,747,000....    212,706,000  50,314,000... 

214,779,000 2.30,351,000  5S.300,000.... 

1.55,208,000 185,9.32,000 74  412.000 11.56. 

193,307,000 259,568.000  104,.537,0i)0 14.91. 

...25.3,802,000 8:3,594,000 14.66 

...2",229,00a 87,674,000  14.13. 

In  the  same  Treasury  Report  for  1863  are  tables  of  the  average 
wholesale  prices,  in  the  New  York  market,  of  ten  articles  (coflFee, 
leather,  molasses,  mess  pork,  cheese,  rice,  salt,  sugar,  tobacco,  and 
wool),  from  1834  to  1859,  both  inclu.sive.  The  following  tables, 
also  prepared,  in  part,  by  the  Treasury  Department,  and  in  part  by 
Mr.  Weston,*  show  how  closely  an  expansion  in  the  volume  of 
the  circulation  must  be  attended  by  an  expansion  in  prices  of 
commodities,  and  how  the  culmination  of  the  two  marks  a  finan- 
cial crisis. 


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Rise  and  Fall  in  Volume  op  Currenot  in  Crises  op   1837  and   18,'j7. 

BT   LiKB    RifK    AND   FaLIi    IN   PIUCE8  OP  TeN   COMMODITIES. 


ATTUNDKD 


*  Westou  "  On  Money,"  p.  201. 


388 


ECONOMIC  PHlLOSOPnY. 


Circulation 

Circulation 

Average 

per  capita, 

Average 

per  capita. 

Year. 

of  prices. 

January  1. 

Year. 

of  prices. 

January  1. 

1834 

$19.13f 

$6.58 

1847 

$20.82^ 

$5.00 

1835 

22.81^ 

7.00 

1848 

16.53i 

5.90 

1836 

29.465 

9.15 

1849 

16.45^ 

5.11    . 

1837 

28. 40^ 

9.52 

•    1850 

16.20i 

5.66 

1838 

28.35- 

7.21 

1851- 

19.42^ 

6.48 

1839 

22.21-  ■ 

8.15 

1852 

21.42^ 

No  returns 

1840 

20.73 

6.26 

1853 

22.47f 

5.71 

1841 

17.93; 

6.10 

1854 

20.84 

7.80 

1842 

13.80  ■ 

4.63 

1855 

22.78f 

6.92 

1843 

14.82: 

3.14 

1856 

25.07i 

7.03 

1844 

14.65^ 

8.91 

1857 

25.13^ 

7.48 

1845 

18.56;- 

4.52 

1858 

21.92 

5.26 

1846 

16.69 

5.11 

1859 

22.11^ 

6.37 

While  the  expansion  in  the  volume  of  specie  and  credits,  in 
England  and  in  Europe,  in  1851-7,  vpas  as  great  as  in  the  United 
States,  the  collapse  of  credit  in  England  was  less  severe  than  in 
the  United  States.  Indeed,  the  prevailing  view,  among  American 
protectionists,  is  that  the  crisis  was  due  in  1850-1  owing  to  the  great 
advantages  given  to  foreign  over  domestic  competing  productions 
by  the  low  "  Tariff  for  Revenue  only  "  adopted  under  the  lead  of 
Robert  J.  Walker,  in  1846.  Under  the  operation  of  this  ' '  Free 
Tx-ade  Tariff,"  there  was  an  excess  of  imports  of  merchandise  over 
exports,  and  an  export  of  gold  and  silver  to  pay  for  them,  as 
follows  : 


Year  ending 

Excess  of  Imports  over  Ex- 

Excess of  Exports  over  Im- 

June 30th. 

port  s ,  Merchandise . 

ports  of  Gold  and  Silver. 

1848 

$10,448,129 

$  9,481,333 

1849 

855,027 

1850 

29,133,800 

2,894,202 

1851 

21,856,170 

24,019,249 

1852 

40,456,167 

37.169,091 

1853 

00,287,983 

23,285,493 

1854 

60,663,479 

34,342,162 

1855 

38,899,205 

52,587,531 

1856 

29,212,887 

41,537,853 

1857 

54,604,582 
(Excess  of  importation  of 
commodities.) 

56,675,123 

1858 

8,672,620 

33,358,651 

1859 

38,431,290 

56,675,123 

1860 

20,040,062 

33,358,651 

1861 

69,756,709 

56,452,622 

The  great  outflow  of  specie  was  made  possible  by  the  influx  of 
new  gold  from  California  and  Australia.  But  happening  to 
occur  so  soon  after  the  tariff  of  '46,  it  deferred  until  1857  a  crisis 
due  in  1851-2. 


BAXK  OF  ENGLAND  FINANCE.  389 

156.  The  Crisis  of  1866.  —  Tooke  and  Miss  Mai-tineau, 
as  historians  of  tlie  panic  of  1825,  agree  that  the  Bank  of  Eng- 
land's liberahty  in  discounting  bills  stimulated  the  inflation  which 
preceded  the  panic. 

In  that  of  1865,  Mr,  R.  H.  Patterson  *  is  equally  sure  that  the 
Bank  of  England  virtually  created  the  paiiic  for  its  own  profit, 
as  well  as  reajjed  an  enormous  profit  fiom  it.  The  Act  of 
1844  authorizes  tlin  Bank  of  England  to  raise  its  rates  of  interest, 
at  discretion,  when  there  is  a  scarcity  of  money,  and  in  suspend- 
ing that  act  it  empowers  the  bank  to  issue  notes  in  excess  of  the 
statutory  limit,  but  does  not  oblige  it  to  do  so,  and  neither  author- 
izes the  other  banks  to  issue  notes  nor  to  demand  their  issue  by  the 
Bank  of  England.  That  bank,  though  performing  public  func- 
tions, is  still  a  private  bank,  and  not  a  government  bank,  so  far  as 
the  profit  on  its  capital  is  concerned. 

The  great  fall  in  values  and  prices,  which  attended  the  close  of 
the  American  war,  had  converted  an  extended  line  of  securities, 
on  which  certain  banking  houses  had  loaned,  into  doubtful 
stocks.  A  feeling  of  distrust  set  in,  relative  to  these  houses,  and 
the  Bank  of  England,  in  the  first  week  of  October,  raised  its  rate 
of  discount  from  four  and  a  half  to  seven  per  cent.  The  banking 
house  of  Overend,  Gurney  &  Co.  had  held  from  twelve  millions 
to  eighteen  millions  pounds  sterling  of  deposits.  A  slow  but  per- 
sistent run  on  these  had  obliged  it,  at  last,  to  ask  assistance  from 
the  Bank  of  England  on  other  than  valid  commercial  securities. 
The  aid  was  refused.  The  firm  failed,  and  the  result  showed  it  to 
be  entirely  rotten.  One  or  two  other  banks  failed  in  consequence. 
As  the  entire  deposits  of  the  kingdom,  in  all  its  banks,  were  £400,- 
000,000,  and  the  amount  of  banking  currency  was  only  £40,000,- 
000,  of  which  only  half  was  available  for  paying  them,  the  re- 
maining £20,000,000  would  have  to  circulate  very  nimbly  to 
suffice  for  the  payment  of  twenty  times  its  sum  in  deposits. 

Most  of  the  depositors  wlio  withdrew  from  the  other  banks 
would  transfer  their  deposits  to  the  Bank  of  England.  If  the  other 
banks  suspended,  the  law  transferred  tlieir  deposits  to  the  Bank 
of  England,  as  custodian,  until  they  were  out  of  bankruptcy  or 
chancery.  Every  failure  of  the  other  banks  only  added  to  the 
deposits,  the  coin,  the  discounts,  and  the  business  of  the  Bank  of 
England.  Hence,  when  the  government,  to  arrest  the  panic, 
authorized  the  Bank  to  extend  its  issues,  it  cliose  to  regard  tliis 
as  a  privilege  to  itself,  and  not  as  a  means  of  relief  to  the  otlier 


♦  "  Science  of  Finance,"  p.  231. 


o90  ECONOMIC  PHILOSOPHY. 

banks.  The  profits  of  the  bank  rose  to  £975,655  for  the  half- 
year,  of  which  £679,000  were  earned  during  the  fourteen  weeks 
when  its  rate  of  discount  was  ten  per  cent.  All  this  because  the 
law  enabled  the  Bank  of  England  to  issue  all  the  notes  it  chose, 
to  banks  or  merchants  who  applied  to  it  as  its  own  customers, 
but  did  not  compel  it  to  issue  any  "notes  whatever  to  banks  which 
desired  them  for  their  own  relief,  and  that  of  their  depositors. 
The  bank  was  thus  enabled  to  break  a  number  of  the  other  banks 
which,  until  the  act  was  suspended,  could  have  broken  the  Bank 
of  England  by  simply  checking  for  their  entire  deposit.* 

157.  The  Crisis  of  1873-9.  —  The  revulsion  of  1873 
in  the  United  States  is  sometimes  spoken  of  as  a  crisis, 
but  it  differs  widely  from  any  we  have  been  considering, 
in  the  fact  that  it  neither  brought  panic  to  the  banks,  nor 
bankruptcy  to  the  merchants  or  manufacturers  on  any  serious 
scale.  It  brought  only  a  period  of  falling  prices,  extending 
over  all  sorts  of  commodities  and  continuing  almost  uninter- 
ruptedly for  seven  years,  with  the  effect  of  checking  pro- 
duction and  causing  apprehension  and  great  caution,  with  fre- 
quent closing  of  large  factories  and  woi-kshops,  some  suffering, 
and  much  agitation  among  wage-workers,  followed  by  the  for- 
mation of  the  most  extensive  and  closely  bound  labor  organiza- 
tions, some  of  them  numbering  their  members  by  hundreds  of 
thousands,  and  commanding  large  treasuries,  with  able  officers, 
to  whom  were  paid  good  salaries.  In  one  sense,  tlie  fourteen 
years  following  1873  have  been  a  continued  labor  crisis,  meaning 
thereby,  not  a  period  of  starvation,  or  suffering,  or  extended  fail- 
ure of  employment,  but  leather  of  just  enough  closeness  in  busi- 
ness, and  meagerness  in  pay,  to  keep  working-men  dissatisfied, 
while  profits  in  many  lines  of  industry  seemed  hardly  to  justify 
employei's  in  keeping  their  establishments  running. 

The  causes  were  national,  and  grew  out  of  a  large  contraction 
in  the  volume  of  transferable  credits,  occasioned  partly  by  the 
policy  of  rapidly  paying  off  the  ijrincipal  of  the  United  States  war 
debt,  and  partly  by  the  fall  in  the  value  of  silver  relatively  to 
gold,  which  set  in  in  1873,  and  culminated  in  the  spring  of  1876. 

The  war  for  the  suppression  of  attempted  secession,  in  1861  to 
1865,  was  fought  out  to  its  close  with  American  capital.  European 
bondholders,  in  the  spring  of  1865,  had  not  been  induced  to 
lend  the  United  States  more  than  one-thirtieth  as  much  as  the 
Government  had  borrowed  from  its  own  people. 

*  "Science  of  Finance,"  by  R.  H.  Patterson,  p.  223-247, 


A  CONTRACTION^  CRISIS.  391 

With  tlie  advent  of  peace,  a  lively  European  demand  set  in. 
The  bonds  were  exported,  at  the  rate  of  from  two  to  three  hundred 
millions  worth  per  year,  until  1873.  Dr.  Edward  Young  esti" 
mates  that  in  1S73-6  from  twelve  hundred  to  one  thousand  three 
hundred  and  fifty  millions  of  dollars'  worth  had  gone  abroad,  and 
the  portion  held  at  home  was  narrowing  down  to  the  quantity 
needed  by  the  national  banks,  as  the  basis  of  their  note  circula- 
tion. While  these  bonds  were  going  abroad  our  balance  of 
trade  with  Europe  appeared  as  if  heavily  adverse  to  us,  the  fact 
being  that  our  export  of  bonds  was  paying  for  our  import  of  goods* 
Internationally,  tlie  bonds  performed,  for  the  time  being,  the 
function  which  gold,  or  other  products,  would  have  performed. 
They  added  to  the  buying  capacity  of  the  American  people, 
to  the  extent  of  their  face,  and  hence  deferred  the  real 
period  of  payment  of  the  very  debt  they  represented.  As  between 
America  and  Europe,  it  was  the  incurment  of  a  new  loan,  by  the 
people  of  the  latter  to  the  people  of  the  former,  pari  passu  with 
the  export  of  bonds. 

-  In  1873,  the  supply  of  bonds  was  exhausted.  The  borrowing 
resource,  which  had  made  the  American  people  appear  so  flush  of 
money,  for  the  eight  years  following  so  exhausting  a  war,  was 
ended.  It  was  now  necessary  to  greatly  restrict  importation, 
and  to  pay  for  what  we  got,  year  by  year,  in  goods  or  gold.  So 
long  as  money  was  flush  we  could  keep  on  building  railways  for 
the  profit  of  contractors,  though  the  prospect  of  paying  returns 
from  them  miglit  be  ten  years  ahead.  We  had  many  enterprises 
like  this  on  hand,  but  the  least  needed  of  them  all  was  Jay  Cooke's 
Northern  Pacific  scheme.  The  crisis  opened  with  the  failure  of 
Jay  Cooke  &  Co.,  and  collapse  of  the  Northern  Pacific,  and  con- 
tinued in  a  shaking  out  of  value  from  what  were  called  "  watered 
railway  stocks."  Many  of  the  railways  were  closely  identified 
with  the  iron  and  steel  manufacture,  which  had  a  chief  hand  in 
supplynig  their  tracks  and  rolling-stock.  This  greatly  depressed 
prices,  and  the  iron  manufacture  suffered,  the  consumption 
of  pig-iron — which  is  the  measure  of  the  aggregate  iron  industry 
— falling  uff  one-fourth,  viz.,  from  2,500,000  tons  in  1874  to  1,090,- 
000  tons  in  1876,  and  the  price  of  bar  iron  falling  from  $96  in  Janu- 
ary, 1873,  to  $40  in  January,  1879,  or  more  than  one-half.  Such 
a  decline  in  both  production  and  prices  marked  many  industries 
both  in  the  United  States  and  tliroughout  Western  Europe.  The 
decline  in  prices  extended  so  generally  over  all  commodities,  and, 
except  where  oscillations  were  occurring  in  modes  of  production. 


392  ECONOMIC  PUlLOtiOPlIY. 

or  in  the  extent  of  the  demand,  it  operated  so  evenly  on  all  that 
Mr.  Giffen,  Mr,  Goschen,  and  others  of  the  best  English  economists 
held  that  it  showed  an  advance  in  the  purchasing  power  of 
money,  equivalent  to  what  would  be  produced  by  some  extraor- 
dinary contraction  in  the  volume  of  money. 

Meanwhile,  the  bonds  which,  until  1873,  had  been  undergoing 
export  were  returning  to  America  for  payment,  nearly  as  rapidly 
as  they  had  been  exported.  The  American  people  cared  little  for 
the  economic  effect  of  extinguishing  this  large  issue  of  readily  ex- 
changeable credit.  They  thought  little  of  the  question  whether  it 
amounted,  in  its  effect  upon  j^rices  and  production,  to  that  which 
would  be  produced  by  sinking  $200,000,000  each  year  of  coin  into 
the  Atlantic,  or  by  extinguishing  an  equal  quantity  of  Bank  of 
England  notes  or  consols.  If  a  count  of  ayes  and  noes  wei-e 
taken,  whether  among  the  people,  the  statesmen  of  both  political 
pai'ties,  or  even  the  writers  on  finance,  the  very  general  verdict 
would  be  that  the  retirement  of  national  debt  of  whatever  mag- 
nitude, by  payment,  has  no  effect  whatever  on  prices.  The  burn- 
ing of  a  few  of  the  non-interest-bearing  notes  of  the  United  States, 
when  attempted  by  Secretary  McCulloch  in  1866,  was  promjjtly 
vetoed  by  Congress,  because  of  the  effect  such  a  contraction  was 
presumed  to  have  upon  prices.  But  the  burning  of  two  thousand 
millions  of  notes  (bonds)of  the  same  debtor,  bearing  interest,  after 
they  had  staved  off  national  distress  for  eight  years,  by  their 
paying  qualities  in  international  trade,  is  set  down  as  something 
that  should  not  be  discussed  in  any  connection  with  prices  what- 
ever. 

Bonds  that  bear  interest,  however,  are,  as  between  Europe  and 
America,  as  ready  a  means  of  purchase  as  coin,  bullion,  or  bills. 
Their  issue  is  inflating  to  the  money  markets  of  the  world,  and 
has  its  effect  on  pi-ices,  as  positively  as  if  they  were  bank-bills. 
Their  retirement  and  cancelment  must  therefore  be  a  correspond- 
ing contraction  of  the  price-making  medium.  Looked  upon  as  a 
contraction  in  the  volume  of  international  means  of  payment,  the 
retirement  of  the  American  debt,  in  the  degree  it  has  taken  place 
since  1865,  the  whole  of  which  has  been  felt  since  1873,  is  of  itself 
sufficient  to  account  for  the  fall  in  prices,  of  all  commodities, 
which  has  marked  this  period.* 

*  Mr.  W.  L.  Fawcett  in  "Gold  and  Debt"  describes  the  period  from  1850  to  1859  as  tlie 
Era  of  Gold,  and  estimates  that  prices  of  commodities  generally  were  enhanced  between 
1850  and  1854  by  45  per  cent., but  as  the  new  gold  supply  declined  in  annual  volume  from 
J855  to  1860,  commodities  lost  nearly  half  this  rise,  falling  back  to  a  scale  of  prices  35 


PAYING  FOR  IMPORTS.  393 

158.  The  Balance  of  Trade. — The  doctriue  of  the  balance 
of  trade  after  enjoying  the  highest  repute  for  two  centuries, 
has  passed  of  late  into  some  contempt,  and  is  often  treated 
as  an  exploded  theory.  The  growth  of  wealth  in  a  country, 
however,  must  be  proportionate  to  the  increased  activity  of 
its  production  and  exchanges  in  every  form.  As  these 
are  effected  chiefly  by  the  use  of  gold  and  silver,  these  two 
metals  will  move  towards  those  countries  whose  rate  of  pro- 
duction is  increasing,  and  from  those  whose  rate  of  production  is 
diminishing.  If  it  appear  that  a  country's  exports  of  commodi- 
ties, of  its  own  production,  exceed  its  imports,  it  is  to  be  inferred 
that  other  countries  are  becoming  indebted  to  it,  and  naust  pay 
the  debt,  sooner  or  later,  by  shipments  to  it  of  the  precious  metals. 
Therefore,  in  the  absence  of  other  causes,  an  excess  of  exports 
over  imports,  and  a  resulting  inflow  into  a  country  of  the  money 
of  other  countries,  are  to  be  deemed  evidences  of  its  prosperity. 
This  doctrine  was  fairly  stated  by  Lord  Bacon,  in  1615,  as  follows  : 
"  This  realm  is  much  enriched  of  late  years  by  the  trade  of  mer- 

per  cent,  above  those  of  1845.  This  was  the  effect,  on  prices,  of  increasing  the  stock  of 
gold  coin  in  the  world,  in  thirty-five  years,  from  1477  millions  of  dollars  to  2700  millions, 
or  nearly  doubling  it.  He  describes  the  period  from  1801  to  1876  as  the  Era  of  Debt , 
since  the  national  debts  of  the  world  were  Increased  in  about  this  period  from  9032  mil  - 
lions  to  23,439  millions,  or2H  times;  the  railway  debts  from  2,000  millions  in  18C0  to  5,000 
millions  in  1880,  also  2%  times ;  and  the  municipal  and  state  debts  in  the  same  proportion, 
This  increase  of  debt  was  accompanied  by  increase  in  average  prices  of  all  commodities, 
of  from  60  to  05  per  cent,  above  those  of  1845,  thus  giving  the  increase  in  debt  an 
efficiency  in  making  prices  as  great  as  that  in  gold. 

il/aci€0(f  ("  Principles  of  Econ.  Phil,,"  vol.  i.  p.  204)  says:  "Adopting  this  defini- 
tion, we  may  enumerate  the  different  species  of  currency  as  follows: 

"  1.  Coined  money;  gold,  silver,  and  copper. 

"  2.  The  paper  currency;  i.  «.,  promissory  notes  and  bills  of  exchange,  with  all  their 
varieties. 

"3.  Simple  debts  of  all  sorts;  such  as  credits  in  bankers'  books,  called  deposits,  book 
debts  of  traders,  and  private  debts  between  individuals. 

"  It  is  obvious  that  there  is  no  distinction  in  principle  between  the  two  latter  species. 
They  each  denote  that  a  transfer  of  some  sort  has  taken  place,  and  are  a  title  to  future 
payment.  As  a  matter  of  convenience  some  of  these  are  recorded  on  pieces  of  paper. 
It  is  certainly  true  that  some  of  these  descriptions  of  currency  are  more  eligible  and 
secure  than  others,  and  perform  the  same  duties  with  different  degrees  of  advantage. 
The  metallic  currency  rests  upon  the  credit  of  the  state,  that  it  is  of  the  proper  weight 
and  fineness,  and  the  universal  readiness  of  people  to  receive  it  in  return  for  services. 
Paper  currency,  in  this  country  at  least,  rests  entirely  upon  private  credit,  and  is  of  all 
degrees  of  security,  from  a  Bank  of  England  note  down  to  a  private  I  O  U.  These 
different  species  of  currency,  therefore,  though  they  possess  different  degrees  of  cir- 
culating power,  though  they  may  be  more  or  less  eligible  or  secure,  represent  but  one 
fundamental  idea — lir.v.T.  From  these  considerations  it  follows  that  the  amount  of 
currency,  or  circulating  medium,  in  any  country  is  the  sum  total  of  all  the  debts  due 
to  every  individual  in  It.^' 


394 


ECONOMIC  PHILOSOPHY. 


chandise  which  the  English  drive  in  foreign  parts  ;  and,  if  it  be 
wisely  managed,  it  must  of  necessity  very  much  increase  the 
wealth  thereof,  care  being  taken  that  the  exportation  exceed  in 
value  the  importation,  for  then  the  balance  of  trade  must  of  ne- 
cessity be  returned  in  coin  or  bullion."  That  a  country  may,  for 
a  period  of  years,  be  consuming  wealth  beyond  its  rate  of  produc- 
tion, and  hence  running  in  debt  to  other  countries,  and  that  this 
process  of  running  in  debt  will  be  indicated  by  an  excess  of  im- 
ports over  exports,  and  that  for  an  ensuing  period  it  will  be  as 
actively  engaged  in  paying  off  its  foreign  debt,  or  recalling  its 
bonds,  and  that  this  process  will  be  indicated  by  an  excess  of  ex- 
ports over  imports,  is  clearly  shown  by  the  experience  of  the 
United  States  from  1865  to  1883.  From  1865  to  1873  the  United 
States  was  exporting  its  national  bonds,  and  by  the  close  of  1872 
it  had  sent  abroad  about  $1,800,000,000  of  its  debt.  In  the  ensu- 
ing years  it  was  recalling  this  debt  and  paying  it  off.  The  result 
is  seen  in  the  following  table,  showing  the  excess  of  imports  over 
exports  in  the  first  of  these  periods,  and  the  excess  of  exports  over 
imports  in  the  second  : 


Excess  of 

Excess  of 

Domestic 

Foreign 

Total 

Exports  over 

Imports  over 

Exports. 

Exports. 

Exports. 

Imports. 

Imports. 

Exports. 

1832 

179,644,024 

11,026,477 

190,670,501 

189,356,677 

1,313,824 

1863 

186,003,912 

17,960,535 

203,964,447 

243,335,815 

39,.371,368 

1864 

143.504,027 

15,333.961 

158,837,988 

316,447.283 

157,609,295 

1865 

136,940.248 

29,089,055 

166,029,303 

2.38,745,580 

72,716,277 

1866 

337,518,102 

11,341,420 

348.859,522 

434,812,066 

85,952,544 

1867 

279,786,809 

14,719,332 

294.506,141 

395,761,096 

101,254,955 

1868 

269,389,900 

12,562.999 

281.952,899 

357,436  440 

75,4a3,541 

1869 

275,166,697 

10,951,000 

286,117,697 

417,5: '6,379 

131,388,682 

1670 

376,616,473 

16,155,295 

392,771,768 

435.958,408 

43,186  640 

1871 

428,398,908 

14,421,270 

442.820,178 

520,223,684 

77,403,506 

1872 

428,487,131 

15,690,455 

444,177,586 

626,59.5,077 

182.417,491 

1873 

505,033,439 

17,446  483 

522,479,922 

642,136,210 

119,656,288 

1874 

569,433,421 

16,849,619 

586,283,040 

567,406,342 

18,876,698 

1875 

499,284,100 

14,158,611 

513,442,711 

533,005,436 

19,562,735 

1876 

525,582,247 

14,802.424 

540,384,671 

460,741,190 

79,643,481 

1877 

589,670,224 

12,804,996 

602,475,220 

451,323,126 

151,152,094 

1878 

680,709,286 

14,156,498 

691,865,766 

437,051,532 

257,814,2.34 

1879 

698.340,790 

12,098,651 

710,439.441 

445,777,775 

264,661.666 

1880 

823,946,353 

11,692,.305 

835.438,058 

667,954,746 

167,683,912 

1881 

883,925,947 

18,4.51,399 

902,.377.340 

642,664,628 

259.712,718 

1882 

733,239,732 

17,302,525 

750,542,2.-)7 

724,639,574 

25,902,683 

1883 

804,223,632 

19,615,770 

82:^,839,402 

723,180,914 

100,658,488 

159.  Doctrine  of  Balance  of  Trade. — The  doctrine  of  the 
balance  of  trade  is  still  accepted  as  true  among  practical  states- 
men and  by  judicious  economists.  Even  McCulloch,  in  the  ex- 
tracts cited  concerning  the  crises  of  1847  and  1857,  virtually  rec- 
ognizes it  as  the  law  governing  both  crises.  Captious  writers  have 
made  so  much  of  certain  qualifications  of  the  doctrine  as  to  assume 


THE  USE  OF  CRISES.  395 

that  they  overthrow  the  original  doctrine.  In  fact,  they  are  in 
perfect  harmony  with  it.  For  instance,  a  creditor  country,  like 
England,  which  is  largely  engaged  in  lending  its  capital  on  in- 
terest, in  other  countries,  will  become  entitled,  in  payment  of  in- 
terest on  these  loans,  to  a  large  inflow  of  money,  and  it  may 
choose  to  take  this  inflow  in  food  and  raw  products  instead  of 
money.  In  this  case,  as  the  food  and  raw  products  imported  ap- 
pear in  its  trade  returns  as  imports  of  merchandise,  and  the  capi- 
tals it  loans  do  not  appear  as  exports,  there  will  be  a  continually 
increasing  apparent  balance  of  trade  against  it,  where  there  would 
be  none  if  the  foreign  loans  of  its  capital  were  treated  as  an 
export  of  a  commodity,  which  they  certainly  are.  Hence  this 
qualification  is  not  a  qualification  or  exception  in  principle  to  the 
doctrine  of  the  balance  of  trade,  but  only  a  fact  going  to  show- 
that,  owing  to  the  failure  of  the  trade  returns  to  include  exports 
of  capital  among  exports  of  commodities,  the  apparent  evidences 
of  the  balance  of  trade,  in  great  money-lending  countries,  is  marred 
by  an  error  of  statistical  omission,  which  needs  to  be  su^jplied 
before  attempting  to  state  the  true  balance  of  trade. 

Again,  where  the  money-lending  country  happens  also  to  be 
the  ship-owning  and  carrying  country,  it  will  be  entitled  to 
freights  on  the  imports  and  exports  of  both  countries.  These 
freight  earnings  will  lessen  the  quantity  of  domestic  merchandise 
it  needs  to  send  abroad  in  order  to  balance  its  accounts  with 
them,  and  hence,  by  lessening  its  necessary  exports,  will  appear 
on  the  trade  returns  as  increasing  the  excess  of  its  imports  over 
its  exports,  or  the  adverse  balance  in  its  trade. 

This,  also,  is  evidently  an  error  in  its  trade  returns  to  show  the 
true  balance.  In  correction  of  this  error,  its  annual  exports  need 
to  be  increased  by  its  annual  freight  earnings,  as  these  are,  in 
effect,  an  export  of  services  in  carrying  goods  to  the  countries  for 
and  to  which  the  carrying  is  done.  With  these  corrections  of  the 
trade  returns,  and  such  others  as  may  be  necessary  to  bring  them 
into  conformity  with  the  actual  facts,  the  doctrine  as  stated  by 
Bacon  remains  true. 

160.  Are  Crises  Useful  or  Penal? — Commercial  and 
monetary  crises  perform,  in  certain  ways,  a  useful  function  in 
industry,  and  tend  ultimately  to  promote  production,  while  at  first 
discouraging  it.  They  correct  a  tendency  of  industry  to  continue 
in  given  channels  after  they  liave  become  unproductive,  or  less 
productive  than  those  to  which  they  need  to  be  directed. 

The  production  of  gold  and  silver,  in  increasing  quantities,  is  at 


306  ECONOMIC  PRILOSOPHT. 

all  times,  in  one  sense,  one  of  the  most  profitable  of  industries. 
Yet  it  is  easy  to  conceive  that  a  sufficient  force  of  the  world's  labor 
might  be  diverted  from  producing  food,  clothing,  and  shelter,  to 
producing  an  increase  in  the  volume  of  money,  to  have  the  effect 
of  rendering  money  almost  valueless  and  food,  clothing,  and 
shelter  almost  unpurchasable.  The  severe  crises  which  follow 
large  additions  to  the  volume  of  money  of  either  kind,  whether 
it  be  bank  notes,  as  in  1837  in  the  United  States,  gold  and  notes,  as 
in  182-4  in  England,  and  1851-7  in  America,  or  government  debt, 
as  in  1865-73  in  the  United  States,  are  usually,  and  perhaps  neces- 
sarily, followed  by  a  diminution  in  the  number  of  persons  who 
seek  to  supply  a  circulating  medium  for  commerce  and  an  increase 
in  the  number  who  till  the  soil,  spin,  weave,  dig  ore,  build  houses, 
and  provide  food,  clothing,  and  shelter.  Commercial  crises  remit 
a  people  from  an  excessive  manufacture  of  media  of  exchange, 
such  as  money,  credit,  means  of  transportation,  ships,  railroads, 
and  the  like,  to  a  larger  I'elative  manufacture  of  products  for 
exchange,  whether  cloth,  corn,  or  iron.  They  rectify  the  steering 
of  industry,  which  tends  naturally  to  keep  on  forever,  unless 
checked,  in  routines  of  profit-making  which  have  for  a  time  been 
profitable,  but  which  become  unprofitable  to  the  world  at  lai'ge 
when  persisted  in  too  long.  Commercial  crises,  in  these  instances, 
are  a  means  of  correcting  undue  persistence  in  the  beaten  ways 
of  industry,  and  of  turning  labor  and  capital  into  the  new  and 
unbeaten  ways  where  they  are  more  needed.  Industry  needs  to 
be  migratory  in  order  to  attain  its  highest  evolution.  It  must 
carry  the  old  pursuits,  stock-raising,  farming,  lumbering,  and 
housebuilding,  to  new  countries,  and  carry  them  on  under  new 
conditions.  It  must  carry  them  on  in  the  old  countries  with  new 
methods,  x^rocesses,  and  machinery.  It  must  discover  new 
utilities  in  well-known  substances,  new  economies  in  familiar 
callings,  new  plants  and  animals  for  the  food  of  man,  new  soils 
for  producing  them,  and  new  manures  for  restoring  exhausted 
soils.  So  long  as  old  industries,  pursued  in  the  old  way,  continue 
to  be  a  means  of  certain  livelihood  to  those  engaged  in  them,  the 
tendency  of  employers  will  be  to  meet  that  declining  rate  of 
profit,  which  attends  the  long-continued  employment  of  capital  in 
any  one  direction,  by  cutting  down  wages,  rents,  and  interest. 
But  this  is  to  substitute  parsimony,  or  meanness,  for  enterprise  and 
migration.  The  interests  of  the  world  forbid  it.  A  commercial 
crisis,  sweeping  all  values  away  like  a  whirlwind,  by  making 
failure  universal,  prevents  it  from  being  mortifying  or  paralyzing. 


CRISES  STEER  TOWARD  PROFITS.  397 

All  conductors  of  industry  and  employei's  of  laboi*,  whose  position 
is  weak,  are  weeded  out  and  must  look  for  "something  new."  In 
the  universal  search  for  "something  new"  those  new  industries 
are  found  and  developed,  in  which  society  is  chiefly  interested 
because  in  them  lie  eventually  the  great  profits  and  the  great 
utilities.  The  crisis  of  1816-19  in  the  South  turned  capital  into 
the  production  of  cotton,  resulting  in  1846,  according  to  Dr. 
Carey's  computation,  in  the  production  of  six  times  as  great  a 
quantity  of  raw  cotton  for  the  same  cost.  The  crisis  of  1836-7  in 
America  diverted  vast  quantities  of  capital  and  labor  to  the  tillage 
of  land  in  the  Northwestern  States.  That  of  1857  turned 
American  capital  away  from  ship-owning  to  railway  building, 
away  from  foreign  transportation  to  domestic  transportation,  and 
resulted  in  the  development  in  America  of  a  railway  system 
equal  in  mileage  to  that  of  all  Europe.  In  some  cases,  as  in  that 
of  Vanderbilt,  the  very  men  who  had  struggled  against  the 
difficulties  of  conducting  a  profitable  carrying  business  at  sea, 
found  the  same  degree  of  enterprise  and  courage  rewarded  with 
overwhelming  success  when  diverted  to  the  development  of  the 
railroad  system  and  internal  commerce  of  the  United  States. 
That  there  was  an  immediate  economic  need  of  this  diversion  of 
capital,  is  shown  by  the  fact  that,  from  1851  to  1860,  the  fortunes 
invested  in  tiying  to  bring  us  into  relations  of  close  trade  depend- 
ence upon  England,  by  fast  steamer-lines  and  great  importing- 
houses  in  New  York,  were  all  wrecked,  shattered,  or  diverted  to 
other  channels,  while  from  1860  to  1880  those  invested  in  develop- 
ing the  internal  trade  between  different  portions  of  the  United 
States  by  railway,  and  in  evolving  American  industries  in  all 
forms,  rose  into  commanding  importance. 

In  other,  and  perhaps  the  more  numerous  class  of  cases,  com- 
mercial crises  are  the  penalty  for  economic  mismanagement,  and 
generally  on  the  part  of  government.  The  indirect  good  that 
may  come  of  them,  as  some  indirect  good  comes  of  all  evil, 
should  not  blind  us  to  the  fact  that  they  are,  as  a  rule,  the 
penalty  of  some  untoward  disaster  to  the  currency,  or  of  somesub- 
version  of  domestic  by  competing  foreign  industry.  Such  were 
the  crises  of  1817-19,  1838-37,  1857-1860  in  the  United  States, 
and  of  1824-6  and  1847  in  England. 


CHAPTEE  XI. 

THE    STATE. 

161.  Government  is  Natural.— All  mankind,  like  the  higher 
animals,  are  endowed  by  nature  with  a  desire  for  power,  and  a 
tendency  to  worship  such  powers  as  they  suppose  to  be  above  tlieir 
own  power.  The  former  induces  them  to  lead,  the  latter  makes  it 
their  pride  to  obey  leaders  whom  they  feel  to  be  sti'onger  than 
themselves.  By  this  conjunction  of  ambition  and  fear,  the  buffalo 
of  the  broadest  shoulders  and  stoutest  horns,  or  even  the  elephant 
of  longest  tusks  aiid  greatest  sagacity,  leads  the  herd.  The  wild 
goose  of  strongest  wing  guides  the  flock  in  its  migrations,  and 
the  sparrows  battle  in  the  road-dust  for  leadership.  In  the 
human  racethequalities  which  excel  in  fight — viz.,  courage,  craft, 
cunning,  and  prompt  assumption  of  responsibility,  or  readiness 
to  usurp  power,  together  with  physical  strength— are  those  whicli 
first  pi'omote  to  leadership.  It  is  only  when  men  are  far  advanced 
that  eloquence,  argument,  public  spirit,  and  later  a  sense  of  fair- 
ness and  equity,  begin  to  prevail.  In  the  first  instance,  the 
governing  class  incur  the  danger  and  contests  necessary  to  lift 
them  to  power,  because  they  crave  the  power  for  the  sake  of  the 
dignity  and  command  over  others  wliich  it  brings.  Later,  this 
harsh  selfishness  of  ambition  is  invested  in  politer  forms,  and  is 
softened  by  public  spirit  and  desii'e  for  the  general  welfare.  It 
would  not  be  safe  to  assume,  however,  that  the  dominant  passion 
of  ambition  or  love  of  power  ever  becomes,  in  fact,  wholly  sub- 
ordinated to  unselfish  aims,  or  that  any  system  of  society  would 
be  successful,  if  its  success  depends  upon  such  a  subordination  of 
ambition.  The  statesman  calculates  upon  the  perpetuity  of  the 
fundamental  and  basic  passions  of  human  nature,  such  as  the 
love  of  power,  of  freedom,  of  life,  of  property,  of  law,  of  sex,  of 
religion,  of  art,  of  beauty,  and  of  society,  as  being  constant  and 
nearly  unchangeable  factors,  with  which  government  must  deal, 
and  whose  existence  it  must  assume,  as  tlie  chemist  assumes  his 
simple  substances,  or  as  geometry  assumes  the  three  dimensions. 
Government  exists,  therefore,   because  man  is,    by   virtue  of  his 


GO  VEBNMENT  BY  INTEREST.  399 

inliereat  structure,  a  governing  and  obeying  creature,  in  the  same 
sense  as  life  exists,  because  lie  is  a  breathing  creature,  and  as 
pleasure  and  pain  exist  because  he  is  a  sentient  creature.  We 
could  as  easily  think  of  man  without  sensation,  or  without 
breath,  as  without  government.  Natui'e,  in  constituting  man, 
kindly  ordains  that  the  functions  of  life  which  are  essential  to  his 
existence,  shall  not  be  subject  to  his  will  iu  any  degree.  These 
are  the  circulation  of  his  blood,  the  digestion  of  his  food,  the 
transmission  of  his  sensations,  and  the  I'eaction  of  his  passions  of 
anger  and  resistance  against  those  forces  which  threaten  his  life. 
Above  these  are  a  class  of  functions  which  can,  in  a  partial 
degi'ee,  be  left  to  his  choice,  but  concerning  which  he  is  nerved 
to  action  by  forces  so  predominating  as  to  be  but  partially  repres- 
sible  factors  in  controlling  his  will,  leaving  him  a  measure  of 
choice  as  to  means,  opportunities,  and  occasions,  but  binding  him 
by  the  strongest  ties  of  emotion  to  the  general  result.  These  are 
the  maintenance  of  the  family,  the  reproduction  of  his  kind,  the 
accumulation  of  proi^erty,  and  the  appropriation  of  land.  In 
relation  to  these  duties  man  occupies  an  intermediate  position 
between  choice  and  necessity,  or  between  judgment  and  instinct. 
He  is  permitted,  as  a  race,  no  choice  as  to  the  general  result,  but 
is  permitted,  as  an  individual,  to  believe  iu  his  freedom  as  to 
means  and  occasions.  Midway  betvveen  the  first  and  second  class 
of  functions  is  that  of  government.  It  is  somewhat  more  con- 
sciously voluntary  than  the  circulation  of  the  blood  or  digestion, 
but  it  is  far  less  so  than  industry  or  reproduction. 

162.  Interest  Organizes  Industry. — In  the  broadest  sense, 
man  in  society  may  be  said  always  to  be  under  two  forms  of 
government,  one  of  which,  though  involuntary  in  its  origin,  is 
conscious  in  its  action,  and  this  is  that  which  is  ordmaril^^  called 
government,  or  the  state.  The  other  is  a  far  more  perfect  and 
searching  mode  of  government  than  the  state,  being  that  govern- 
ment of  interest,  inherent  in  human  nature,  arising  in  the  desire 
to  acquire  property,  whicli  places  mankind  iu  the  several  relations 
to  each  other,  of  merchant  and  customer,  employer  and  employee, 
seller  and  buyer,  landlord  and  tenant,  borrower  and  lender,  the 
aggregate  of  which  relations  constitutes  the  organization  of  modern 
industrial  society  through  capital.  Industry,  or  business,  is  not 
ordinarily  treated,  or  recognized,  as  a  mode  of  government,  because 
it  is  an  unconscious  government.  The  men  who  take  part  iu  it 
do  not  consciously  intend  to  govern  or  to  be  governed.  They  in- 
tend, each  and  all,  only  to  bcnelit,  each  man  himself,  and  those 


400  ECONOMIC  PHILOSOPHY. 

immediately  dependent  on  him.  But  the  whole  operates  through 
the  instinct  of  gain  to  effect  a  thorough,  though  unconscious, 
organization  of  society,  in  which  each  is  assigned  to  the  work  he 
shows  himself  most  nearly  competent  to  do,  is  rewarded 
according  to  the  value  of  his  service  to  society,  and  is  promoted 
according  to  his  skill.  In  it  promotion  in  command  depends  on 
economy  in  expenditure,  sagacity  in  investment,  and  activity  in 
promoting  production.  That  it  is  a  mode  of  service  is  shown  by 
the  ordinary  phrases  :  ' '  The  merchant's  success  depends  on  the 
assiduity  with  which  he  serves  his  customers."  "The  manufac- 
turer must  be  quick  to  pei'ceive  changes  in  the  public  taste  and 
comply  with  the  public  demand."  "  The  borrower  is  servant  to 
the  lender."  Those  who  would  secure  employment  and  thrift,  in 
serving  the  powerfuj,  must  defer  or  bend  in  judgment  to  those 
they  purport  to  serve,  as  neither  the  powerful  nor  the  weak  can 
make  any  trustworthy  use  of  the  services  of  one  who  substitutes 
his  own  judgment,  or  lack  of  judgment,  for  that  of  his  employer. 
This  rule  is  expressed  in  the  mottoes,  "  Obey  orders  if  you  break 
owners  ";  "  Hew  to  the  line,  let  the  chips  fall  where  they  may," 
etc.  The  same  social  action  is  subject  to  be  described  either  in 
terms  of  praise  or  dispraise,  according  to  the  momentary  bias  of 
the  describer.  Thus  Shakespeare  at  one  time  sneers  at  subser- 
viency, in  words  of  dispraise.     It 

" — Crooks  the  pregnant  hing(  8  of  the  knee 
That  thrift  may  follow  fawning." 

At  another  he  describes  the  opposite  feeling  of  pride,  which  will 
not  defer  as  a 

"  Vaulting  ambition  doth  o'erleap  itself. 
And  fall  on  'tother— " 

Merchants,  accepting  the  services  of  clerks,  require  that  they  shall 
be  "of  good  address  and  possessed  of  tact,"  meaning  thereby  the 
faculty  of  discovering  adroitly,  and  serving  readily,  the  wants  of 
those  seeking  to  buy.  Society,  outside  the  family,  is  thus  welded 
together  by  links  of  reciprocal.interest,  and  mutual  service,  into  an 
organized  body,  having  far  more  than  the  efficiency  of  an  ai'my, 
in  accomplishing  the  daily  miracle  of  equal,  or  nearly  equal, 
universal  supply  of  the  necessaries  required  for  human  consump- 
tion. That  this  unconscious  form  of  government,  through  in- 
dustry or  business,  is  more  searching  and  pervasive  in  its  influence 
over  human  conduct,  than  the  conscious  government  which  we 
call  the  state,  is  shown  by  the  fact  that  the  majority  of  men  are 


WANT  AND  WEALTH.  401 

seldom  brought  into  contact  with  the  state  in  any  manner.  It  is 
only  as  they  pay  taxes,  vote,  sue,  or  are  sued  in  the  courts  of  law, 
are  punished  for  some  crime,  sit  as  jurors  or  hold  an  office,  that  they 
are  reminded  of,  or  in  any  way  governed  b}^  the  state.  But  every 
time  they  do  any  act,  for  hire  or  profit,  buy,  sell,  or  produce, 
contract  or  discharge,  earn  or  pay  any  thing,  indeed  every  move 
they  make  to  better  their  lot,  or  increase  their  means  of  living,  is 
an  act  of  association  or  commerce  with  their  fellow-men,  whereby 
they,  by  an  instinct  of  which  they  are  themselves  unconscious, 
become  links,  cogs,  wheels,  weights,  pulleys,  or  pivots  in  the 
social  mechanism  commonly  called  industry  or  business,  the 
aggregate  eifect  of  which  is  to  compel  each  to  work  for  all,  and 
all  for  each,  in  mutual  helpfulness. 

163.  The  Motive  Force  in  Industry. — The  government, 
which  is  effected  through  industry,  knows  of  but  one  form  of 
coercion  or  punishment,  viz.,  want.  This  spectre,  stalking  behind 
and  stimulating  all  men  to  energy,  can  be  laid  only  by  one  exor- 
cism, viz.,  wealth,  which  is,  in  all  cases,  labor  performed. 

Between  these  two  natural  inducements,  want  and  wealth,  the 
human  soul  swings  like  a  pendulum,  in  all  its  efforts.  These 
driving  forces  impel  man  on  his  career,  being,  in  economics,  ex- 
actly what  ignorance  and  wisdom  are  in  thought,  what  right  and 
wrong  are  in  ethics,  what  hope  and  fear  are  in  emotion,  what 
pleasure  and  pain  are  in  sensation,  and  what  time  and  space  are 
in  being,  viz.,  the  ultimate  or  first  principles  which  must  be 
assumed  to  exist  before  we  can  think  of  economics,  ethics,  thought, 
emotion,  sensation  or  being,  as  having  any  existence.  Nor  is  any 
one  form  of  the  state  necessarily  more  favorable  than  another, 
to  the  promotion  of  Industry.  In  the  domain  of  economics,  the 
state  is  regarded  as  the  product  of  the  social  conditions  in 
which  it  arises,  although,  upon  being  created,  it  has  also  vast 
power  to  change  and  improve  social  conditions,  for  those 
who  are  to  come.  It  may  be  likened  to  an  individual.  Every 
man  •  is,  in  one  seiise,  produced  or  caused  to  be  what  he  is,  by 
his  envix'onment,  i.  e.,  his  parenj;age,  race,  health,  sex,  place 
of  birth,  education,  etc.  But,  being  so  produced,  he  becomes  an 
efficient  actor  in  controlling  the  conditions  into  which  future 
generations  are  to  be  born.  So  a  state  is  what  its  antecedents  in 
history  make  it,  l>ut  it  is  tlie  author  of  its  own  consequents,  and 
to  this  extent,  while  previous  history^makes  it,  it  makes  subsequent 
history. 

The  causes  of  the  constitution  of  a  state,  therefore,  must  be 


402  ECONOMIC  PHILOSOPHY. 

sought  in  the  material  conditions  of  its  people.  If  their  posses- 
sions are  both  equal  in  distribution,  and  small  in  value,  as  among 
the  North  American  Indians,  and  especially  if  their  land  be  held 
in  common,  their  mode  of  government  will  be  that  of  a  democratic 
tribe,  choosing  their  chief,  debating  as  equals,  but  as  savages.  If 
their  properties  are  more  considerable,  and  still  equal,  they  will  be 
a  democratic  state  like  Sparta,  or  if  like  the  Spartans  and  Athenians 
they  own  slaves,  the  state  will  still  be  democratic  as  to  the  free 
citizens,  and  aristocratic  as  to  the  slaves,  as  was  Sparta.  The 
ownership  of  equal  properties  by  the  citizens  of  a  state  will,  in 
,  turn,  usually  spring  from  certain  race  peculiarities,  such  as  were 
possessed  by  the  Greeks  and  early  Romans,  such  as  bravery  in  the 
contest  for  personal  rights,  monogamy,  the  inviolability  of  the 
family  relation,  and  the  mountainous  and  easily  defensible  condi- 
tion of  the  country,  a  diet  of  meat,  mixed  foods,  and  wines  on  the 
part  of  the  people,  a  moderately  fertile  soil,  such  an  access  to  rivers 
or  the  sea  as  favors  commerce,  and  such  a  variability  of  climate 
as  makes  forethought  necessary  to  existence.  A  population  of 
industrial,  physical,  and  mental  equals,  like  that  of  Switzerland, 
develop  into  a  demociacy  in  government.  If  they  acquire 
wealth,  like  Athens,  the  democracy  becomes  aesthetic,  poetic, 
philosophic,  artistic.  If  they  remain  poor,  like  the  Spartans, 
the  government  becomes  heroic,  truculent,  barren  in  art,  and 
warlike. 

Deprived  of  the  stimulus  of  a  changeable  climate,  as  is  China, 
which  is  shut  in  on  the  north  by  great  ranges  of  mountains,  and 
left  open  to  the  southward,  a  people  will  accept  a  vegetarian  diet, 
will  abhor  innovation,  and  will  shirk  all  contest,  change,  and 
revolution,— hence  will  come  under  a  bureaucratic,  paternal 
despotism.  If,  as  in  Tartary,  the  climate  be  sevei^ely  changeable, 
the  people  will  be  wandering,  nomadic,  and  tribal.  A  permanent 
subdivision  of  the  land  into  large  estates  gives  rise  to  a  nobility 
and  the  union  of  the  churcb  with  the  state  helps  still  more  to 
render  the  government  aristocratic.  Activity  in  manufactures 
and  commerce  causes  money  to  be  a  potent  factor  in  government, 
and  eloquence  to  decline.  In  tlie  infancy  of  society,  power  is  apt  to 
be  in  either  the  soldiers  or  the  priestiiood.  Later  on  it  is  in  the  sol- 
diers and  lawyers.  As  suffrage  extends  to  the  masses  of  the  people 
it  passes  to  those  who  are  apt  popular  orators  or  political  leaders. 
Among  these  the  great  capitalists  and  corporations  often  buy  their 
way  to  power.  Rome,  and  probably  Eg3^])t,  reached  this  stage 
shortly  before  either  passed  by  conquest  under  barbarian  sway. 


GOVERNMENT  B Y  PARTIES.  403 

Hence  governments  grow  out  of  social  and  material  conditions. 
That  form  which  to  one  people  will  be  spontaneous  and  inevit- 
able, to  another  would  be  unnatural  and  impossible. 

164.  Forms  of  Governinent  Depend  on  the  Evolution 
of  Occupations. — Each  form  of  government  being  the  out- 
growth of  the  conditions  under  which  it  comes  into  existence,  the 
presumption  for  all  practical  purposes  is  that  each  government  is 
that  which  is  best  adapted  to  its  own  people,  at  the  time  and  un- 
der the  conditions  in  which  it  arises.  But,  under  every  govern- 
ment, there  is  a  majority,  to  whom  the  government  may  seem  to  be 
the  best  possible,  and  a  minority,  who  may  prefer  another,  or  think 
it  even  the  worst  possible.  The  question,  which  party  has  the  ma- 
jority, is  determined,  in  ruder  times,  by  conspiring  and  fighting, 
and  in  more  republican  periods,  by  debating  and  voting.  Under 
either  system,  the  change  of  a  small  number  of  influential  persons 
may  change  the  majority  into  a  minority,  and  thus  effect  a  change 
of  government.  The  inference  that  each  government  is,  for  the 
time  being,  the  one  which  is  best  adapted  to  the  welfare  of  its 
own  people,  is  subject  therefore  to  a  degree  of  doubt  proportionate 
to  the  numerical  strength  and  intensity  of  dissatisfaction  of  the 
minority,  and  the  probability  that  the  minority  will,  at  any  time, 
obtain  the  ascendency. 

To-day  a  secular,  anti-clerical  republic  exists  in  France.  It 
confiscates  the  prerogatives,  and,  in  a  degree,  the  property,  of  the 
church,  and  limits  and  curtails  the  power  of  the  priests  and 
religious  orders.  Its  strength  lies  in  the  fact  that  it  represents 
the  banking,  manufacturing,  and  business  men,  or  bourgeoisie,  of 
France,  and  therefore  its  material  interests.  Against  these  are 
arrayed  the  Catholic  or  ultramontane  party,  which  includes  the 
priesthood,  peasantry,  or  small  farmers,  and  the  Bonapartists 
and  Bourbonists.  It  rests  on  the  still  surviving  strength  of  those 
elements  of  rank,  loyalty,  moral  conservatism,  and  social  fealty 
which  once  organized  society,  almost  without  the  help  of  money, 
or  commercial  motives,  but  which  now  are  inferior  to  these  more 
modern  social  forces.  At  present  the  Republic  aff'ords  the  pre- 
sumption that  it  is  the  best  government  which  France  admits  of, 
by  being  in  power,  and  controlling  an  effective  majority.  It  is,  at 
all  times,  possible  that  the  numbers  opposing  it  exceed  the  numbers 
favoring  it.  Should  it  go  out  of  power,  in  behalf  of  a  government 
composed  of  the  elements  which  now  oppose  it,  the  like  presump- 
tion would  immediately  attach  to  its  successor,  subject,  like  the 
present  government,  to  a  doubt  pi-oportioned  to  the  numerical, 


404  ECONOMIC  PHILOSOPHY. 

intellectual,  economic,  and  military  strength  of  the  elements  of 
that  party  which  is  now  in  power,  but  would  then  be  out  of 
power. 

All  governments,  even  the  most  imperial,  hereditary,  or  des- 
potic, are  created  and  maintained  by  parties,  but,  in  periods  of 
militaiy  force,  the  co-existence  of  the  minority  party  is  a  sup- 
pressed fact.  However  despotic  the  form,  and  however  military 
force  may  be  necessary  to  maintain  and  change  it,  the  utmost  that 
any  government  can  obtain  is  a  party,  or  section,  of  the  people, 
in  its  favor.  Russia,  under  the  czars,  is  governed  by  a  Pan-Slavist 
party,  and  this  government  is  opposed  by  the  races  which  do  not 
like  the  ascendency  of  the  Slavs,  and  also  by  the  Nihilists. 
China  has  been  governed,  for  centuries,  by  a  Tartar  party.  Italy 
is  governed  by  a  party  favoi'ing  a  kingdom  distinct  from  the 
papacy,  and  resisted  by  a  party  desiring  no  king  but  the  Pope. 

The  persons  who  come  into  prominence  as  czars,  kings,  em- 
perors, caesars,  popes,  presidents,  or  governors,  legislators  and 
notables,  can  not  escape  being  the  representatives  of  majority 
Xmrties,  compelled  to  suppress,  by  coercion,  any  minority  party 
that  may  oppose  them,  by  methods  in  conflict  with  the  funda- 
mental law,  or  constitution,  of  the  countiy. 

All  countries  have  a  fundamental  law,  or  constitution,  or  body 
of  ancient  customs,  in  professed  subordination  to  which  the  mon- 
arch, executive,  and  other  officials  for  the  time  being,  hold  power. 

In  countries  which  have  no  written  constitution,  there  are  the 
ancient  customs  and  usages  of  the  realm.  Every  monarch  enters 
upon  his  duties  by  promising,  in  some  religious  form,  to  protect, 
defend,  and  obey  these  ancient  usages,  customs,  and  laws. 

165.  Governments  Classified. — A  government,  whose 
administrators  can  be  changed  only  by  fighting,  may  be  classed 
as  despotic.  One  whose  officers  can  be  changed  by  voting,  or 
the  ballot,  may  be  classed  as  popular,  or  free. 

Governments  are  frequently  classified  as  Monarchical,  Aristo- 
cratic, Bureaucratic,  Hereditary,  Imperial,  Kingly,  Pai'lia- 
mentary.  Republican,  Representative,  Democratic,  and  Respon- 
sible. 

These  are  useful  names,  but  are  liable  to  vary  greatly  in  the 
essence,  or  meaning,  they  are  made  to  cover.  In  Ancient  Rome, 
under  thoroughly  Republican  names,  Ccesars  and  tyrants  became 
dictators.  On  the  other  hand,  under  monarchical  forms,  as  in 
modern  Great  Britain,  a  comparatively  perfect  liberty  of  chang- 
ing the  government  by  ballot  may  come  to  exist.    Pope's  couplet, 


MODES  OF  RULE.  405 

"  For  forms  of  government  let  fools  contest, 
That  which  is  best  administered  is  best," 

to  express  the  American  view,  should  be  so  modified  as  to  read : 

"  For  forms  of  government  the  wise  contest, 
Since  that  wherein  the  people  rule  is  best." 

The  experience  of  republics,  and  especially  of  America,  has 
probably  served  to  satisfy  many  persons,  though  not  a  majority, 
that  the  prerogatives  of  government  may,  in  some  subordinate 
localities,  be  devolved  on  persons  who  will  make  so  bad  a  use  of 
them  as  to  bi'ing  limited  examples  of  free  government,  at  least  in 
great  cities,  into  unfavorable  contrast  with  the  governments  of 
other  cities  which  are  presumed  to  be  less  free.  There  is  strong 
ground  to  claim  that  London,  Paris,  Berlin,  Madrid,  Eome, 
Vienna,  and  St.  Petersburg  have  better  municipal  governments 
than  New  York,  Philadelphia,  Buffalo,  Chicago,  and  San  Fran- 
cisco. There  is  also  ground  to  claim,  however,  that  this  is  in  part 
owing  to  the  more  rapid  growth  of  the  American  cities,  in  wealth, 
and  the  more  unstable  and  shifting  character  of  their  population. 
If  so,  it  is  believed  that  it  may  be  corrected  in  time. 

The  concentration  of  all  the  elements  of  rule  in  one  person 
constitutes  monarchy.  Usually,  it  is  accompanied  by  the  principle 
of  the  hereditary  transmission  of  this  authority  to  the  heir;  but 
in  exceptional  cases,  like  tliat  of  the  Pope  of  Rome,  the  King  of 
Poland,  and  a  few  others,  the  transmission  has  been  by  election. 

An  aristocracy  occurs  wherever  a  small  number  of  persons  or 
families,  by  reason  of  wealth,  of  inherited  rank  which  originally 
implied  wealth,  or  by  military  services  and  rank,  or  priestly 
power,  or  learning,  or  other  personal  quality,  obtain  as  a  class  an 
ascendency  in  the  State,  which  mere  numbers  can  not,  by  voting, 
overcome.  As  the  word  aristocracy  means  a  government  by  the 
best  men,  and  those  who  oppose  aristocracies  always  deny  that 
they  are  composed  of,  or  result  in,  the  selection  of  the  best  men, 
the  words  "  oligarchy,"  meaning  government  by  a  few,  and  "  plu- 
tocracy," meaning  government  by  the  rich,  have  been,  by  those 
opposing  them,  substituted  for  the  word  aristocracy,  to  avoid  this 
implication. 

Athens  and  Sparta  were  aristocratic,  as  respected  the  relations 
of  the  citizens  to  the  helots.  Hence  Aristotle's  work  upon  econom- 
ics and  politics  breathes  throughout  a  most  aristocratic  spirit. 
Aristocracy  lias  been  a  strongly  molding  principle  in  all  the 
governments  of  modern  Europe,  and  in  the  Republic  and  Empire 


406  ECONOMIC  PUILOSOPHY. 

of  Rome,  from  which  they  are,  in  great  part,  derived.  In  England 
the  nobility  and  land-owning  gentry  represent  the  ai'istocratic 
spirit,  and  have  usually  furnished  the  entire  House  of  Lords,  two- 
thii'ds  of  the  members  of  the  House  of  Commons,  a  large  portion 
of  the  officers  of  the  army,  the  church,  and  the  civil  service,  be- 
sides contributing,  in  more  than  their  numerical  proportion,  to 
the  bar,  the  bench,  and  the  literature  of  the  country.  "Bureau- 
cratic" government  is  an  irregular  word  in  formation,  since  it 
is  compounded  of  a  French  word  with  a  Greek,  but  convenient  in 
use  to  express  a  govei-nment  by  a  monai'ch,  through  adminis- 
trative officers  only,  without  a  parliament,  or  national  deliberative 
assembly,  as  in  Russia.  Sometimes,  as  in  Germany,  it  indicates 
that  the  function  of  the  parliament  is  advisoiy  merely,  and  that 
the  monarch,  through  his  administrative  bureaus,  can,  if  he 
chooses,  govern  without  a  parliament.  Bureaucracy  signifies 
much  the  same  as  absolutism,  except  that  absolutism  relates  to 
the  principle  or  the  effect,  while  bureauci-acy  defines  the  means 
employed  to  render  the  monarch  ab.solute,  viz.,  the  bureaus  or 
departments,  or  subalterns  of  the  executive.  The  bureaus,  or 
departments,  correspond  to  what  in  Amei'ica  would  be  called  the 
cabinet,  the  civil  service,  or  postmasters,  revenue  collectors,  mar- 
shals, etc.,  and  the  judges.  Hence,  in  a  bureaucracy,  the  mon- 
arch dispenses  with  the  guidance  of  a  parliament,  or  legislature, 
by  substituting  for  it  the  advice  of  his  counsellors  and  officers  of 
every  grade,  civil,  military,  and  religious. 

166.  Parliamentary  and  Representative  States.  — 
Parliamentary  government  is  government  by  a  deliberative  body, 
or  a  government  wherein  the  nominal  monarch  is  under  a  con- 
stitutional obligation  to  defer  to,  and  obey,  tlie  will  of  the  national 
legislature.  England,  Italy,  Spain,  Austro-Hungary,  Greece,  and 
Servia  are  parliamentary  governments.  Germany  is  parliamen- 
tary in  a  proximate  degree,  but  its  present  monarch  denies  that 
he  is  bound  to  obey  parliament  any  farther  than  he  believes  its 
laws  to  be  right,  and  consistent  with  public  safety. 

Parliamentary  government  is  also  essentially  identical  with 
responsible  government,  though  the  latter  relates  to  the  position 
in  which  the  ministry  is  placed  under  the  system,  while  the 
former  expresses  the  supremacy  it  imparts  to  the  legislature. 

Responsible  government  is  the  system  wherein  constitutional 
advisers  of  the  crown,  usually  styled  his  ministers,  heads  of  de- 
partments, or  cabinet,  are  required  to  obey  the  dictation  of  the 
national  legislature.     The  mode  in  which  this  is  effected  is  by  re- 


RESPONSIBLE  RULE.  407 

garding  tliem  as  having  advised  every  act  of  legislation  proposed 
by  the  crown,  and  every  administrative  policy  or  order  adopted 
by  it  ;  and  by  holding  them  obliged  in  honor  to  resign,  if  an  ad- 
verse vote  is  given,  against  such  a  measm^e,  in  the  popular  branch 
of  parliament.  The  ministry,  however,  instead  of  resigning,  may 
dissolve  parliament,  which  is  called  appealing  to  the  country.  In 
the  new  election  of  members  of  parliament,  which  is  then  held, 
the  people  are  supposed  to  vote  for  members  who  will  either 
agree  with  the  previous  action  of  the  ministers,  or  with  the  pre- 
vious action  of  parliament.  If  the  new  parliament  agrees  with 
the  previous  action  of  the  ministers,  they  remain  in  office,  as 
legislation  can  then  move  on  in  harmony.  The  bill,  which  the 
previous  parliament  voted  down,  will  then  pass.  If,  on  the  con- 
trary, the  new  parliament  agrees  with  the  previous  parliament 
the  ministers  will  resign,  and  the  monarch  will  be  called  upon  to 
select  a  new  ministry,  in  harmony  with  the  views  of  the  two  suc- 
cessive parliaments.  Hence,  under  the  responsible  system,  the  veto 
power  of  the  monarch  becomes  obsolete,  and  parliament  becomes 
supreme.  The  governments  which  embody  the  responsible  sys- 
tem are:  England,  in  which  it  originated;  all  the  English 
colonies  which  have  legislatures,  except  West  Australia;  the 
French  Republic,  the  Empire  of  Austro-Hungary,  Italy,  Spain, 
Servia,  Greece,  Belgium,  Holland,  and  Denmark.  It  is  equally 
applicable  to  republics,  monarchies,  aristocracies,  democracies, 
and  empires.  It  had  not  taken  form,  in  England,  at  the  date  of 
the  separation  of  the  United  States  fi'om  England,  and  was  not 
therefore  known,  or  discussed,  by  those  statesmen  who  framed  the 
American  constitutions,  state  and  federal. 

Its  originating  germs  are  to  be  found  in  the  execution  of  Charles 
I.,  in  the  supersedure  of  James  II.  and  election  of  William  of 
Orange,  and  in  the  various  constitutional  laws  settling  the  suc- 
cession to  the  crown,  and  prescribing  the  qualifications  and  con- 
ditions on  which  it  may  be  held.  The  doctrine  that  the  throne  is 
bound  to  obey  the  House  of  Commons,  either  as  it  now  is  (when 
a  question  arises)  or  as  it  shall  be  after  one  election  has  tested  the 
popular  will  on  that  question,  has  grown  up  so  mysteriously  that 
it'is  difficult  to  find  a  date  for  its  origin.  It  is  the  exterior  sign  of 
the  evolution  of  England  from  the  military  through  the  aristo- 
cratic into  a  commercial  state.  The  kingly  office  originates  in  and 
is  vital  during  the  military  stage.  Of  dukes,  marquises,  earls, 
counts,  viscounts,  barons,  and  knights,  all  arc  military  titles,  and 
reflect  the  militax'y  life,  except  earls  and  barons.     It  is  beca,vise  the 


408  ECONOMIC  PHILOSOPHY. 

House  of  Commons  reflects  business,  commerce,  and  profit  that 
it  existed  only  by  sufferance  in  the  military  period,  but  leaves  the 
throne  to  exist  by  sufferance  in  this  modern  life.  We  find  George 
III.,  in  1782-83,  refusing  to  retire  Lord  North's  ministry,  which 
had  led  the  war  for  the  subjugation  of  America,  and  accepting  the 
new  Shelburne  ministry,  in  which  Pitt  and  Fox,  the  champions 
of  American  independence,  were  to  be  leading  spirits.  He  declared 
frequently  that  his  honor  demanded  that  he  should  abandon  the 
throne  and  return  to  Hanover,  rather  than  submit  to  the  aggres- 
sions of  the  Commons.  A  royal  yacht  was  actually  summoned, 
and  was  several  times  in  waiting  to  bear  him  away.  In  time  he 
yielded,  content  to  escape  the  threatened  necessity  of  having  Fox 
himself,  whom  he  chiefly  hated,  as  premier.  So  comparatively 
modern,  however,  is  the  blunt  statement  of  the  doctrine  that  the 
king  is  subordinate  to  the  Commons,  that  there  seemed  a  flavor  of 
radicalism  in  the  exclamation  of  Mr.  Roebuck  in  1858:  "  Tlie 
crown,  it  is  the  House  of  Commons  !  "  The  growth  of  the  House 
of  Commons  itself  is  as  gi'adual  as  is  the  rise  of  England's  indus- 
tries. Under  the  Saxon  constitution  (to  1060)  there  was  no  House 
of  Commons.  The  Witenagemot  *  included  in  a  crude  way  the 
rudiments  of  a  council  of  state,  a  court  of  justice,  and  a  house  of 
lords,  but  with  the  informality  of  a  town  meeting.  It  was  more 
like  the  consultation  of  an  Indian  chief  with  his  braves,  or  of 
the  leader  of  a  hunt  with  his  associates  in  the  chase.  Prof.  Free- 
man holds  that  it  was  a  council  of  all  who  chose  to  attend,  and 
that  the  pi'esent  House  of  Lords  is  the  regular  successor  of  the 
early  mass  conventions  of  the  people,  irrespective  of  rank,  reduced 
to  paucity  of  numbers  only  by  the  inability  and  disinclination  of 
the  poorer  classes  to  sustain  the  expense  of  attending.  Gviizot  f 
holds  that  at  fii'st  the  clergy,  nobles,  county  knights,  and  burgh- 
el's  each  sat  or  met  by  itself,  and  voted  by  itself  in  contributing 
taxes,  one  voting  perhaps  a  tenth,  another  an  eighth,  or  other 
proportion.  Prof.  Freeman's  theory  seems  at  war  with  the  rule 
that  the  more  barbarous  and  military  the  epoch,  the  more  mon- 
archical or  aristocratic  is  usually  the  organization  of  society. 
Local  magistrates  and  county  knights  may  have  occasionally^  sat 
in  the  same  body  as  the  lords,  but  the  evidences  are  ratlier  that 
as  early  as  they  sat  at  all  they  sat  separately  both  from  the  lords 
and  from  each  other,  as  a  petitioning  or  complaining  body,  while 
the  lords  were  a  consulting  body.  In  1265,  fifty  years  after  Magna 

*  See  E.  A.  Freeman  in  International  Review  for  November,  1876. 
+  On  "  Representative  Government." 


RESPONSIBLE  GOVERNMENT.  409 

Cliarta,  borough  representation  was  first  actually  witnessed.  A 
century  later  the  House  of  Commons  was  strong  enough  to  com- 
plain of  the  king's  ministers,  and,  for  the  first  time,  to  exercise 
its  power  of  impeachment.  Hallam  declares  that  at  the  close  of 
the  fourteenth  century  their  consent  was  necessary  to  the  levy  of 
money  taxes,  and  to  the  enactment  of  laws,  and  that  they  had 
frequently  exercised  the  power  of  inspecting  and  controlling  the 
administration  of  government.  From  this  period  to  the  present 
the  king's  ministers  have  been  complained  of  by  the  House  of 
Commons,  at  first  very  meekly  and  humbly,  as  an  oppressed  ten- 
ant might  complain  to  his  lord  of  a  despotic  or  hard  steward,  but 
in  due  time  grown  stronger,  through  impeachments  and  execu- 
tions, until  finally  their  slightest  dissatisfaction  with  a  minister 
has  come  to  be  politely  deferred  to,  through  resignations.  Yet, 
down  to  the  reign  of  Henry  V.  (1413)  the  House  of  Commons,  in 
form,  merely  petitioned.*  The  king  enacted,  with  the  advice  and 
consent  of  his  lords.  An  impeachment  was  in  form  only  the 
humble  petition  of  the  Commons  that  the  king's  evil  advisers 
might  be  arraigned  and  tried  before  the  Lords.  Thus  gradually 
the  ministers  passed,  by  a  transition  which  extended  over  600 
years,  from  being  favorites  and  lackeys  of  an  absolute  monarch, 
whom  they  could  advise  only  because  they  pleased  him,  into 
rulers  selected  by  the  House  of  Commons  to  do  the  actual  work  of 
governing,  while  the  king  merely  reigned. 

The  responsibility,  which  began  as  an  individual  one  on  the  part 
of  each  minister,  began  to  be  a  collective  responsibility  on  the 
part  of  "  the  ministry  "  after  the  revolution  of  1688.  A  century 
earlier  Queen  Mary  had  thought  it  no  infraction  of  the  constitu- 
tion to  dissolve  several  successive  pai'liaments,  with  the  view  of 
getting  one  subservient  to  her  wishes.  Since  the  accession  of 
William  of  Orange,  and  especially  since  the  failure  of  the  last 
"personal"  reign,  that  of  George  III.,  in  the  matter  of  America, 
the  theory  that  the  king  must  have  no  personal  policy,  but  that 
the  House  of  Commons  must  fix  the  policy  of  the  king,  has  slowly 
ripened  into  constitutional  law.  Sir  William  Blackstone,  writing 
exhaustively  upon  all  the  tassels  and  tinsel  of  royalty  in  the  four- 
teenth to  eighteenth  years  of  the  reign  of  George  III.  (1774-8), 
wholly  fails  to  detect  the  doctrine.  Alexander  Hamilton,  in  the 
sixty-ninth  letter  in  The  Federalist,  would  have  stated  the  doc- 
trine with  judicial  fairness  if  he  had  ever  heard  of  it.     But  he 

♦  Guizot  on  Represeutative  Government,  pp.  4G6,  407, 482,  507,  513,  517. 


4 1 0  ECONOMIC  PHIL  OSOPUT. 

says  that  the  king's  veto  was  then  in  disuse  only  because  the 
crown  had  found  it  more  easy  to  control  parliament  by  its  arts 
than  by  its  prerogative.*  Blackstoue  may  have  ignored  the  doc- 
trine through  toryism,  and  Hamilton  may  have  written  sarcas- 
tically ;  but  there  is  hardly  any  evidence  that,  in  their  period, 
this  had  yet  become  even  a  tenet  of  Whig  politics,  still  less  that 
it  was  an  accepted  doctrine  of  the  English  constitution.  History 
must,  therefore,  award  chiefly  to  Queen  Victoria's  reign  the  credit 
of  having  first  displayed  the  conscientious  and  admirable  non- 
partisanship  which  was  necessaiy  to  engraft  this  principle  firmly 
into  the  British  constitution.  The  queen  has  done  this  without 
seeking  to  influence  personally  either  the  popular  elections,  by 
which  the  complexion  of  the  House  should  be  determined,  or 
the  course  of  discussion  by  which  its  majorities  should  be 
controlled. 

The  English  ministry  at  present  consists  of  thirty-one  per- 
sons, of  whom  from  eleven  to  sixteen  form  the  cabinet,  the 
others  being  usually  heads  of  bureaus,  but  not  consulting  olR- 
cei-s  of  the  crown.  The  cabinet  includes  the  first  lord  of  the 
treasury,  chancellor  of  the  exchequer,  lord  chancellor,  president 
of  the  council,  lord  privy  seal,  secretaries  of  state  for  the  home 
department,  for  foreign  affairs,  for  the  colonies,  for  war,  and  for 
India,  first  lord  of  the  admiralty,  first  commissioner  of  works, 
chief  secretary  for  Ireland,  and  generally  also  the  president  of  the 
local  government  board,  vice-president  of  the  education  commit- 
tee of  the  privy  council,  and  the  chancellor  of  the  Duchy  of  Lan- 
caster. The  actual  executive  officers  who  administer  the  govern- 
ment are  known  as  "  ministers  with  a  portfolio,"  i.  e.,  having  the 
responsible  headship  of  a  de])artment,  and  are  cabinet  mem- 
bers. The  selection  of  the  cabinet  from  among  the  ministers  is 
not  always  the  same.  Generally  the  premier  has  been  the  first 
lord  of  the  treasury,  sometimes  the  chancellor  of  the  exchequer, 
sometimes  both  ;  and  sometimes,  as  in  the  case  of  William  Pitt, 
a  secretary  of  state. 

The  crown,  thx'ough  its  ministry,  takes  the  initiative  usually  in 

*  lu  Letter  LXIX.  of  TIu  Federalist,  Alexander  Hamilton  eays : 
"  The  King  of  Great  Britain,  on  his  part,  has  an  absolute  negative  upon  the  acts  of 
the  two  houses  of  parliament.  The  disuse  of  that  power  for  a  considerable  time  past 
does  not  affect  the  reality  of  its  existence,  and  is  to  be  ascribed  wholly  to  the  crown 
having  found  the  means  of  substituting  influence  for  authority,  or  the  art  of  gaining 
a  majority  in  one  or  the  other  of  the  two  houses,  for  the  necessity  of  exerting  a 
prerogative,  which  could  seldom  be  exerted  without  hazarding  some  degree  of 
national  agitation." 


LEGISLA  TION  IN  ENGLAND.  4 1 1 

legislation,  preparing,  proposing,  and  defending  in  parliament 
the  bills  and  measures  on  which  it  stakes  its  success  as  an  admin- 
istration. So  long  as  these  measures  are  concurred  in  by  the  last 
elected  House,  they  are  presumed  to  accord  with  the  will  of  the 
voting  constituency.  For  securing  harmony  toward  the  minis- 
terial measui'es,  certain  members  of  the  ministry  need  to  have 
seats  in  the  House  of  Commons  ;  as  these  do  not  accrue  to  them 
by  virtue  of  their  selection  as  ministers,  they  must  be  elected  by 
some  constituency  to  a  seat  in  the  House. 

A  member  of  the  British  cabinet  is  usually  also  a  member  of 
the  House  of  Lords  or  House  of  Commons,  the  latter  being  in 
modern  times  the  more  effective  position ;  he  is  also  a  member  of 
the  queen's  pi'ivy  council,  a  somewhat  indefinite  body  of  eminent 
persons,  including  many  not  in  the  cabinet  or  ministry.  It  is 
somewhat  as  if  the  President  of  the  United  States  should,  by 
usage,  select  his  cabinet  from  among  the  more  prominent  mem- 
bers of  the  Senate  and  House,  these  members  combining  to  per- 
form their  representative  functions  in  addition  to  their  cabinet 
duties.  The  chief  legislative  duty  of  the  leading  cabinet  officers, 
after  devising  measures  for  the  consideration  of  parliament,  is  to 
defend  these  measures  on  the  floor  of  either  house.  The  chief 
duty  of  the  leaders  of  the  opposition  is  to  carefully  avoid  opposing 
a  government  measure  otherwise  than  by  criticism  of  its  details, 
unless  they  have  something  better  and  more  in  harmony  with  the 
public  will  to  propose.  This  insures  that  habitual  moderation, 
caution,  and  candor  which  distinguish  English  speeches  in  par- 
liament. They  seem  inferior  to  American  speeches  in  statistical 
and  legal  acquirement,  are  less  patriotic,  and  get  down  less  fre- 
quently to  bases  of  fundamental  right  and  equity.  But  they  are 
more  guarded,  discreet,  and,  as  a  rule,  politic,  and  rest  their 
case  on  expediency  and  exigency  more  than  on  ])rinciple. 

When  the  wary  and  prudent  leader  of  the  opposition  sees  his 
antagonist  adopt  a  policy  on  which  he  thinks  he  can  be  over- 
thrown, first  in  the  House  of  Commons,  and  then,  if  necessary, 
before  the  people,  he  attticks  the  offending  measure,  and  the 
struggle  in  debate  is  not  for  the  empty  applause  of  the  galleries, 
but  for  the  control  of  the  government.  Each  party  puts  forward 
its  most  powerful  yet  most  judicious  combatants.  It  is  not  a  set 
speech  or  lecture,  to  be  followed  by  handshakings  of  friends, 
printed  and  sent  to  one's  constituents,  and  that  is  all.  If  success- 
ful it  means  a  cliange  of  office  and  policy,  and  almost  of  necessity 
that  the  critic  will  succeed  in  oilice  the  statesman  he  is  criticis- 


412  ECONOMIC  PHILOSOrUY. 

ing.  Such  a  struggle  sorts  men  and  develops  statesmen,  by  an 
analysis  fai*  finer  than  any  that  can  be  made  by  any  politicians  in 
national  conventions,  or  by  any  voters  at  the  polls.  The  man  it 
brings  forward  is,  however,  a  great  debater  chiefly.  It  is  worthy 
of  note  that  great  debaters  are  seldom  regarded  as  the  best  admin- 
istrators. 

A  government  in  which  all  power  is  conferred,  either  immedi- 
ately or  ultimately,  by  election  or  choice  of  the  people,  or  of  the 
majority  of  military  force  of  the  people,  and  no  part  of  it  by  in- 
heritance, purchase,  or  direct  military  force,  is  a  republic.  If  the 
people  elect  a  legislature,  which  enacts  laws  by  virtue  of  the 
power  thus  delegated,  as  in  the  United  States,  it  is  a  representa- 
tive republic.  The  parliament  of  Great  Britain  is  also  a  repre- 
sentative legislature,  as  respects  its  House  of  Commons.  In  the 
Roman  republic,  however,  the  representative  principle  did  not 
exist.  The  people  voted  directly  for  their  officers,  and  upon  all 
statutes,  or  leges,  submitted  to  them,  accoi'ding  to  one  or  the  other 
of  three  modes  of  mustering  or  grouping,  in  one  of  which  the 
power  was  chiefly  in  the  patricians,*  in  another  of  which  it  was 
chiefly  in  the  wealthy  and  the  army,t  and  in  the  third  of  which 
it  was  in  the  plebeians  or  commonalty.  | 

These  modes  of  voting  distinguished  respectively  the  infancy, 
the  ascendency  and  the  decay  of  the  state.  In  the  earliest  mode, 
known  as  the  Comitia  Curiata,  only  the  patricians  or  aristocracy 
voted,  but  the  vote  of  one  patrician  was  equal  to  that  of  another, 
as  in  the  British  House  of  Lords.  From  that,  Rome  passed  to 
the  more  complex  vote  by  centuries,  known  as  the  Comitia  Cen- 
turiata.  The  people  were  divided  at  the  census  into  six  classes, 
according  to  their  wealth.  As  the  purchasing  power  of  Roman 
money  can  not  be  accurately  expressed  in  modern  money,  it  may 
be  proximately  accurate  to  say  that  all  worth  upwards  of  $1,000,- 
000  were  in  the  first  class,  and  had  thirty-five  parts  in  a  hundred 
of  the  voting  power  of  the  state,  and  furnished  thirty-five  hun- 
dredths of  the  army  and  the  treasury.  Those  worth  less  than 
$1,000,000,  and  more  than  $500,000,  were  in  the  second  class,  and 
furnished  one-quarter  of  the  army  and  of  the  revenue,  and  en- 
joyed one-quarter  of  the  voting  power.  An  absolute  union  of  the 
first  and  second  classes,  therefore,  could  carry  any  measure,  and 
the  vote  of  the  other  classes  needed  not  to  be  taken.  If,  however, 
a  vote  of  the  first  and  second  classes  failed  to  exhibit  a  majority 

*  Comitia  Curiata.  +  Comitia  Centuriata.  t  Comitia  Tributa. 


RESPONSIBLE  GOVERNMENT.  413 

of  the  whole,  then  the  third  class,  worth  say  $100,000,  or  the 
fourth,  worth  $50,000,  or  the  fifth,  worth  $10,000,  or  the  sixth, 
worth  $500,  would  be  consulted.  In  practice,  the  $500  class  was 
seldom  consulted. 

Taxation  and  representation  were  brought  into  their  logical 
coherency  in  a  masterly  way  in  this  Roman  system  of  voting  by 
centuries.  The  i-ight  to  cast  a  certain  voting  power  grew  out 
of  the  possession  of  a  corresponding  amount  of  assessed  capital, 
and  carried  with  it  inseparably  the  obligation  to  contribute  a 
corresponding  I'atio  of  the  army  and  the  revenue.  This  identity 
of  taxation  and  representation  did  much  toward  advancing  Eome 
to  be  the  ruler  of  the  world. 

The  third  system  of  voting,  known  as  voting  by  tribes,  or 
Comitia  Tributa,  admitted  the  plebeians,  freedmen,  aliens,  and 
non  property-holders  to  vote  on  an  equality  with  the  aristocracy, 
whereupon,  of  course,  the  aristocracy  stopped  voting  altogether, 
and  the  Roman  mob  became  the  saddle  on  which  the  Caesars  rode 
into  power.  Universal  suffrage,  divested  of  the  counteracting 
influence  of  capital,  became  the  stepping-stone  to  the  complete 
abolition  of  all  suffrage,  first  in  value  and  then  in  use. 

To  this  subject,  among  American  statesmen,  Mr.  Calhoun  in 
his  celebrated  "  Disquisition  on  Govex*nment,"  and  Mr.  Webster  in 
many  of  his  speeches,  have  alluded.  Whatever  were  Mr.  Cal- 
houn's inducements  to  reflect  upon  the  insecurity  of  capital  under 
a  rule  of  numbers  alone,  he  took  the  ground  that  governments 
are  constitutional  and  enduring  only  when  they  combine  the 
concurring  majorities  of  each  of  the  distinct  forces  which  go  to 
make  up  the  power  of  society.  If  the  priesthood  and  religion 
really  govern  society,  as  they  do  in  Turkey,  Italy,  Spain,  and 
Mexico,  then  they  will  have  power  enough  to  overturn  any  state 
in  which  they  are  not  represented.  If  the  landholders  are  tlie 
chief  social  force,  as  in  Germany.  France,  and  England,  then  a 
government  which  ignores  the  landholders,  and  rests,  for 
instance,  on  the  priests,  must  fall  or  give  place  to  one  in  which 
the  landholders  are  represented.  If  the  army  and  the  aristoc- 
racy are  the  chief  forces  in  the  state,  as  they  wex'e  in  Rome,  then 
their  ascendency  must  be  acknowledged  in  the  constitution,  or 
they  will  overthrow  the  constitution  which  ignores  tliem.  And 
finally,  if  the  church,  and  the  army,  and  the  landholders  and 
capitalists,  all  cease  to  be  a  force  in  the  state,  as  they  do  in  com- 
munities where  capital  is  equally  diffused,  and  there  are  a  hun- 
dred sects,  and  no  standing  army  exists,  there  numbers  become  a 


414  ECONOMIC  PHILOSOPHY. 

ruling  power,  and  any  constitution  which  fails  to  respect  them 
will  fall. 

Mr.  Calhoun  defined  a  despotism  as  being  a  government  which 
attempts  to  rule  society  exclusively  by  one  of  its  forces,  whether 
such  force  were  the  church,  the  army,  the  landholders,  or  mere 
numbers.  He  defined  a  constitutional  government  as  one  which 
provided  for  gathering  up  and  representing  the  views  of  each  of 
the  ruling  forces  of  the  state  in  a  co-ordinate  branch  of  the  leg- 
islature, in  such  a  manner  as  to  give  to  its  united  voice  a  veto  on 
the  action  of  the  other  forces  of  the  state.  If  numbei's,  therefore, 
were  I'epresented  in  the  lower  branch  of  a  state  legislature,  and 
capital  in  the  upper,  he  called  this  a  government  by  concurring 
majorities,  i.  e.,  the  majority  or  voice  of  numbers  concurring 
with  the  majority  or  voice  of  capital ;  whereas,  if  numbers  merely 
elected  both  branches  of  the  legislature,  the  government  not 
having  provided  itself  with  any  machineiy  by  which  it  could 
take  the  views  or  listen  to  the  voice  of  capital,  would  be,  as  to 
capital,  a  hostile  despotism,  tending  toward  frequent  encroach- 
ments and  periodical  culminations  of  force.  Mr.  Calhoun  thought 
the  majority  would  tend  not  only  to  tyrannize  over  the  minority, 
but  to  vest  so  large  a  share  of  power  in  its  individual  chieftain, 
for  the  time  being,  as  would  extend  his  powers  into  absolute- 
ness, while  still  wearing  the  title  of  an  elective  officer.  Sooner  or 
later  he  would  brave  both  the  will  of  the  legislature  and  of  the 
judiciary,  perhaps  also  of  his  constitutional  advisers  and  of  his 
own  party. 

According  to  Mr.  Calhoun's  definition,  our  American  govern- 
ments represent  but  one  of  the  forces  of  society,  there  being  no 
provision  for  affording  an  authoi'itative  expression  to  either  cap- 
ital, culture,  character,  or  experience. 

In  marked  contrast  with  the  quasi-aristocratic  views  of  men 
like  Calhoun,  Webster,  and  Hamilton,  the  socialist  school  in- 
veigh with  great  bitterness  against  the  ascendency  which  capital 
or  individual  capitalists  obtain  in  all  modern  govei*nments,  and 
quite  as  much  in  those  of  the  United  States  as  in  those  which  are 
more  aristocratic  in  form.  They  point  to  the  increasing  ratio  in 
which,  with  each  recurring  election,  the  millionaires  seem  to 
take  the  places  which  were  formerly  filled  by  orators  and  great 
lawyers  in  the  Senate  of  the  United  States.  They  cite  the  vast 
expenses  of  conducting,  not  only  presidential  elections,  but  elec- 
tions of  members  of  Congress.  These  expenses  are  so  great  that 
it  is   alleged  syndicates  of  capitalists,  or  at  least  a  concurrent 


FORMS  OF  REPUBLICS.  415 

action  and  system  of  contribution  among  capitalists,  are  essential 
to  decide  every  election.  In  this  manner,  under  the  forms  of 
equality  and  universal  sufTrage,  a  return  is  made  to  a  government 
by  the  few. 

Between  Mr.  Calhoun,  on  the  ultra-aristocratic  side,  and  Karl 
Marx,  on  the  ultra-democratic,  society  at  present  maintains  a  com- 
placent inertia.  It  is  not  terrified  at  the  degree  in  which  capital 
is  now  represented,  nor  alarmed  lest  it  has  not  representation 
enough.  A  time  may  come,  however,  when  it  will  consider 
whether  a  mere  choice  of  capitalists  sufficiently  answers  the  re- 
quirement of  a  representation  of  capital.  But  that  time  is  not 
yet. 

The  Greek  republics  were  not  representative,  but  questions  were 
submitted  to  the  whole  people  directly,  in  a  manner  resembling 
that  of  the  American  town-meeting. 

167.  Diversity  of  Form  iu  Republics. — A  republic  there- 
fore may  be  aristocratic,  military,  or  democratic,  representative 
or  direct,  and  responsible,  or  having  fixed  terms  of  office  for  its 
legislators.  If  it  consists  of  many  states  confederated  into  one,  it 
becomes  also  a  federal  republic.  The  United  States  of  America 
are  a  democratic,  federal,  representative  republic,  constituted  on 
the  principle  of  fixed  terms  of  office  for  its  legislators,  and  there- 
fore without  the  principle  of  ministerial  responsibility.  Each 
State  in  the  Union  is  a  republic,  of  the  same  quality  as  the  United 
States,  except  that  it  is  single  and  not  federal,  and  sovereign,  as 
regai'ds  other  States  of  the  Union  only,  but  subordinate  as  regards 
the  federal  government,  and  municipal  merely  as  regards  foreign 
nations.  The  judicial  tribunal,  with  which  it  lies  to  decide  in  the 
last  resort,  for  all  judicial  purposes,  what  are  the  relative  powers 
of  the  national  and  state  governments,  is  itself  a  part  of  the 
national  government,  viz.,  the  Supreme  Court  of  the  United  States. 

The  executive  qnd  legislative  branches  of  the  government  of  the 
United  States  did  also,  in  the  war  for  the  suppression  of  the  rebel- 
lion of  the  Southern  States,  in  1861-5,  successfully  decide,  by  mili- 
tary force,  that  it  was  the  province  of  the  general  government  to 
coerce  a  seceding  State.  Hence  it  may  be  assumed  as  settled  that 
while  the  several  States  have  a  qualified  sovereignty  relatively  to 
each  other,  to  the  extent  recognized  by  the  constitution  of  the 
United  States,  and  while  the  United  States  is  a  government  of 
limited  and  delegated  powers,  yet  within  the  scope  of  these  limited 
powers  the  sovereignty  of  the  United  States  is  su))reme,  and  that 
of  the  several  States  is  subordinate.     As  respects  foreign  nations, 


416  ECONOMIC  PHILOSOPHY. 

the  State  of  New  York  is  as  completely  a  subdivision  of  the  Ameri- 
can nation  as  Yorkshire  or  Scotland  is  of  Great  Britain. 

France,  relatively  to  the  United  States,  is  a  highly  centralized 
and  military  republic,  which  exercises  the  power  of  appointing 
mayors  of  cities,  and  controlling  the  police  of  the  country,  in  de- 
tails which,  in  the  United  States,  are  remitted  to  the  several  states. 
Mexico,  on  the  conti-ary,  is,  relatively  to  the  United  States,  an  ex- 
tremely decentralized  republic,  in  the  nature  of  a  league  of  states. 
Each  Mexican  state  levies  import  and  export  duties,  independently 
of  the  central  government,  a  power  the  denial  of  which  to  the 
several  states  under  our  system  imparts  a  more  perfect  unity  to 
the  nation,  than  pertains  to  Mexico, 

Forms  of  government  difPer  chiefly  in  the  mode  of  selecting  the 
officers  who  are  to  constitute  the  mechanism,  and  vary  compara- 
tively little  in  the  nature  of  the  mechanism,  or  in  the  mode  in 
which  it  runs  when  constituted.  The  mechanism  itself  always 
consists  of  a  single  controlling  executive  will,  whether  it  be  that 
of  the  emperor,  czar,  chancellor,  premier,  king,  or  president, 
in  whom,  in  most  cases,  centers  a  power  so  large,  that  the  whole 
power  of  the  national  legislatui'e  becomes,  for  the  time  being,  ad- 
visory, and,  in  a  practical  sense,  secondary,  though  (in  parlia- 
mentary and  republican  governments)  overrulifig,  at  least  in 
theory.  This  central  will  is  influenced  by  four  classes  of  checks  : 
(1)  those  imposed  by  an  immediate  group  of  personal  advisers, 
the  cabinet  ;  (2)  those  imposed  by  the  legislature,  or  national 
council,  through  permanent  laws  ;  (3)  those  imposed  by  the  ju- 
diciary, and  (4)  those  imposed  by  the  constitution.  The  admin- 
istrative force  of  the  United  States,  numbering  in  the  civil  service 
upward  of  100,000  persons,  is  subordinate  to  the  executive  ;  so 
are  the  army,  and  navy,  and  diplomatic  force.  These  consti- 
tute, together,  the  entire  administrative  force,  and  this  does  not 
difl'er  greatly,  in  personnel  or  duties,  from  what  are  called  the 
bureaux  in  bureaucratic  governments.  All  the  machinery  of 
the  most  absolute  government  exists,  therefoi'e,  in  a  republic, 
and  does  the  practical  work  of  governing  in  the  same  manner  as 
it  is  done  under  bureaucratic  governments,  so  far  as  the  absolute 
authority  of  the  central  head,  for  the  time  being,  is  concerned, 
except  so  far  as  it  is  held  in  check  by  the  constitution,  the  judi- 
ciary, and  the  legislature. 

Of  the  three  departments,  the  executive,  legislative,  and  judi- 
cial, the  judicial  is  that  which,  at  most  times,  seems  to  reach 
the  citizen  with  most  coercive  force,  since  it  is  that  alone  which 


SELECTING  A  PRESIDENT.  417 

is  in  the  habit  constantly  of  commanding  his  presence  by  its 
writs,  of  compelling  his  obedience  by  its  punishments,  and  of 
arbitrarily  overruling  his  judgments  by  its  own.  The  legisla- 
tive department,  of  a  republic  like  that  of  the  United  States, 
affects  him  chiefly  through  its  power  to  regulate  tariffs  on  im- 
ports and  money,  to  encourage  navigation  and  maritime  com- 
merce, to  provide  for  transporting  the  mails,  and  to  influence 
war  and  peace,  and  the  terms  on  which  he  shall  render  military 
service.  The  declaration  in  the  American  Constitution,  that 
only  Congi'ess  can  declare  war,  is  virtually  futile,  since  declara- 
tions of  war,  as  a  usage  of  nations,  have  nearly  ceased  to  exist, 
and  in  fact  the  steps  which  lead  to  war  are,  almost  of  necessity, 
acts  of  policy  determinable  only  by  the  executive.  It  was  so  in 
the  war  with  England  in  1813,  with  Mexico  in  1848,  and  with 
the  Confederate  States  in  1861. 

The  powers  of  a  republican  president  are  thus  practically  as 
absolute,  for  the  time  being,  as  those  of  a  British  premier.  So 
long  as  he  avoids  a  vote  overruling  his  veto,  by  two-thirds  of 
both  houses  of  Congress,  he  is  not  inferior  to  a  Russian  czar  in 
actual  potency.  He  has  the  same  bureaus  at  command  for  en- 
forcing his  will,  and  the  same  control  of  the  army  and  navy. 
Naturally,  therefore,  the  machinery  for  selecting  the  president  is 
of  prime  importance  in  a  republic.  Law  governs  only  the  formal 
act  of  voting.  But  anterior  to  the  vote  there  is  a  campaign. 
This  campaign  knows  no  law.  In  monarchies  the  king  reigns  ! 
This  is  fixed  by  law.     But  who  governs  ?    This  is 

"  Variable  as  the  shade 
By  the  light-quivering  aspen  made." 

Perhaps  the  courtiers,  or  the  premier,  or  the  chancellor.  Philip 
of  Macedon  declared  that  Alexander,  while  a  child,  ruled  Mace- 
don.  How  ?  "  His  mother  rules  me,  and  he  rules  his  mother  !  " 
So,  in  republics,  the  people  reign — i.e.,  they  may  change  their 
rulers.  But  to  change  one's  rulers  is  not  to  rule.  Those  rule  who 
manage  the  machinery  for  selecting  rulers. 

For  thirty-five  years,  from  1790  to  1825,  the  men  already  se- 
lected for  office  managed  the  machinery  of  election.  This  was 
when  a  caucus  of  Senators  and  Representatives  of  each  party 
selected  the  candidates  for  President  and  Vice-President,  to  be 
voted  for  either  by  the  people  or  by  one  party.  Tlie  men  who 
took  part  in  it  were  necessarily  familiar  with  practical  legislation, 
with  economics,  with  the  presidential  candidates,  and  with  the 
duties  of  the  presidential  office. 


4 1 8  ECONOMIC  PHIL  0 SOPHY. 

A  clause  of  the  Federal  Constitution  provides  that  the  electors 
of  President  and  Vice-President  should  meet  at  the  several  state 
capitals,  and  there  vote  by  ballot,  and  therefore  in  secret,  as  to 
the  names  of  their  candidates.  Mr.  Hamilton,  in  TJie  Federalist, 
shows  that  it  was  expected  to  be  a  marked  excellence  of  this  sys- 
tem that  no  one  would  know  beforehand,  and  that  no  one  would 
need  to  know,  or  would  have  the  right  to  know  afterward,  for 
whom  any  presidential  elector  should  cast  his  vote.  The  framers 
of  the  Constitution  had  no  experience  to  draw  upon,  of  the  effects 
which  would  be  wrought  upon  the  machinery  for  the  selection  of 
candidates,  by  so  expanding  the  right  of  suffrage  as  to  include  all 
the  male  adult  citizens,  of  widely  separated  states,  in  the  one  act 
of  selection,  and  at  the  same  time  so  extending  the  offices  to  which 
voting  would  apply,  as  to  subject  the  chief  executive  office  of  a 
nation  of  50,000,000  of  people  directly,  or  indirectly,  to  the  popu- 
lar choice.  The  only  elections,  with  Avhose  machinery  they  could 
have  been  familiar,  were  the  Greek,  Roman,  English,  German, 
Polish,  Papal,  and  Colonial.  The  first  wez'e  simple  town  meet- 
ings, and  did  not  involve  the  element  of  voting  for  the  same 
officer  simultaneously  by  different  constituencies,  at  widely  sepa- 
rated polling  places,  and  therefore  did  not  call  for  an  anterior 
series  of  party  conventions  to  nommate  candidates,  in  order  that 
all  who  are  in  one  party  might  vote  for  one  man,  and  so  secure 
the  greatest  strength  possible  for  its  real  or  supposed  principles. 
At  the  English  elections  of  members  of  Parliament  the  sheriff 
summoned  all  the  voters  of  the  county  to  the  county-seat,  one  or 
two  nominations  wei'e  made  viva  voce,  and  a  show  of  hands,  or  a 
gathering  of  the  voters  on  opposite  sides  of  a  fence,  enabled  the 
sheriff  to  make  the  count,  and  he  returned  accordingly.  Tlie 
Roman  system  was  more  extended  and  complete.  None  afforded 
any  precedent  for  the  United  States,  except  the  Papal.  The  ap- 
plicability of  the  latter,  as  a  precedent,  was  observed,  but  not 
entirely  followed,  by  those  who  framed  the  Federal  Constitution. 
The  College  of  Cardinals  which  elects  the  Pope  is  usually  made 
up  chiefly  of  Italians.  It  contains,  however,  many  representa- 
tives of  the  Church  in  other  nations.  It  therefore  represents, 
though  in  very  unequal  ratio  to  their  numbers,  widely  separated 
constituencies  and  about  three  times  as  many  persons,  as,  even 
now,  make  up  the  American  population. 

This  college  meets  aiid  votes  in  virtual  secresy.  Each  cardinal 
has  his  individual  independence  of  choice,  in  the  full  degree  that 
the  framers  of  the  American  Constitution  intended  the  membei"S 


AMENDMENT  BY  TISTIRPATION.  419 

of  the  American  Electoral  College  to  have.  No  anterior  nomina- 
tion of  a  candidate  for  the  Papacy  could  avail  if  made,  and  there 
is  no  temptation  to  make  one.  The  entire  college,  or  body  of 
electors,  meet  in  one  place.  All  the  nominating,  intriguing,  and, 
if  there  be  any,  all  the  bargaining,  must  be  done  in  this  body,  to 
be  effective. 

The  framers  of  the  American  Constitution  sought  to  remove 
the  temptation  to  bargaining  and  corruption.  They  would  pre- 
serve the  independence  of  the  presidential  electors  whom  the 
people  of  the  several  States  should  choose,  to  make  the  choice  for 
them,  by  having  them  vote  at  widely  distant  places.  Then  they 
could  not  bargain.  Hence,  they  provided  that  the  pi'esidential 
electors  should  meet  at  the  state  capitals  of  their  respective 
States,  then  13,  now  39,  in  number. 

The  effect  was  the  wholly  unforeseen  one,  that  a  bargain  had 
first  to  be  made,  whom  these  electors  should  vote  for.  Precisely 
what  the  Constitution  forbade,  the  people  wanted,  viz.,  a  bargain. 
They  did  not  want  independent  electors,  but  subservient  electors, 
who  would  obey  the  popular  will.  They  caused  candidates  for 
each  party  to  be  nominated  in  advance  of  the  popular  vote,  not 
merely  for  electors  as  the  Constitution  designed,  but  for  the 
chief  officers  themselves,  with  the  implied  result,  that  the. elec- 
tor would  be  bound  by  a  political  honor,  stronger  than  law  or 
covenant,  to  vote  only  for  the  one  man  for  each  office,  who  had 
been  nominated  by  this  anterior  machinery  of  nomination. 
Until  1828,  it  was  a  caucus  of  members  of  Congress  of  each  party. 
Since  that  date,  it  has  been  a  national  nominating  convention  of 
the  members  of  each  political  party,  selected  by  voluntary  assem- 
blies. All  this  lies  wholly  outside  the  constitution  and  the 
statutes.  Probably,  from  its  very  nature,  it  can  not  be  made 
law.  Thus  the  electoral  colleges  become  as  many  dummy  bodies 
as  there  are  States.  The  actual  choice  passes  from  the  electoral 
college,  in  two  fractions:  one  half  of  its  intended  powers  is 
usurped  by  the  nominating  convention;  the  other  half  of  it  is 
usurped  by  voters  at  the  polls.  The  privilege  of  choosing  from 
among  the  whole  people  two  or  more  candidates  for  President 
and  Vice-President,  so  that  each  political  party  can,  in  pretending 
to  vote  for  electors,  in  reality  vote  for  its  candidate,  is  \isur])ed 
by  the  national  conventions.  The  privilege  of  voting  between 
these  two  or  three  candidates  is  usurped  by  the  voters  at  the  polls. 
The  presidential  electors  abdicate  their  powers  in  favor,  in  part, 
of  the  voters  directly,  and,  in  part,  of  the  nominating  assemblies. 


420  ECONOMIC  PHILOSOPHY. 

While  they  take  an  oath  to  support  the  Constitution  of  the 
United  States,  they  forego  the  proper  exercise,  in  tlieir  own  per- 
sons, of  tliat  supreme  judgment  and  choice,  which  the  Constitution 
intends  them  to  manifest,  without  outside  dictation  or  suggestion. 

In  order  to  render  such  a  dictation  as  that  to  which  they  sub- 
mit, an  impertinence,  they  are  required  to  vote  by  ballot.  They 
vote  by  ballot,  but  they  accept  the  supposed  impertinence  as 
being  strictly  pertinent  and  proper.  The  departure,  from  the 
constitutional  intent,  is  popular,  because  of  the  supposed  necessity 
of  making  political  parties  represent  principles.  To  this  end  they 
must  unite  in  the  assertion  of  these  principles,  in  advance  of  an 
election,  which  they  do  by  their  platform.  It  is  felt  that  the 
power  of  the  people  is  thus  increased ;  since,  instead  of  voting 
merely  for  electors,  they  vote  virtually  for  President.  It  is 
assumed,  also,  that  the  diffusion  of  intelligence  through  the 
press,  among  the  j^eople,  is  so  general,  that  the  voters  in  their 
primitive  capacity  are  as  good  judges  as  the  electoral  colleges 
would  be,  both  of  the  qualifications  and  qualities  required  in  the 
presidential  office,  and  of  the  possession  of  these  requisites  by  the 
candidates.  This  democratic  correction  of  the  Constitution,  with- 
out amendment,  is  no  longer  questioned.  The  document  is  popu- 
larly regarded  as  having  shown  an  unnecessary  and  aristocratic 
distrust  of  the  wisdom  of  the  common  people.  Under  a  reign  of 
the  peo])le  this  is  the  most  unpopular  of  crimes. 

The  effect  is  that  the  people  vote  for  candidates,  whom  not  more 
than  one  in  100,000  of  them  knows  personally,  or  has  met  in 
conjunction  with  any  act  of  official  duty.  The  pretended 
"information  "  communicated  to  them  through  the  press,  as  the 
day  of  election  draws  near,  degenerates  into  slanders  for  one 
candidate  and  fulsome  overestimate  of  the  good  qualities  of  the 
other.  The  great  mass  of  voters  have  no  means  of  sifting  the 
truth  from  the  falsehood.  They  believe  nothing,  and  "go  it 
blind."  To  cause  the  constitutional  system  to  be  adhered  to  in 
its  spirit,  would  require  that,  by  amendment,  the  presidential 
electors  should  meet  in  one  body,  instead  of  in  forty.  This 
would  abolish  the  function  of  the  national  conventions,  and 
revive  the  electoral  college,  as  a  constitutional  machinery  of 
selection.  The  voters  of  each  congressional  district  would  then, 
in  voting  for  one  or  more  electors  fi'om  their  district,  vote  for 
a  man  whom  most  of  them  would  know  personally,  and  at  the 
same  time  the  electors  of  President  and  Vice-President  would, 
when  convened,  consist  of  men  of  the  rank  of  Senators  and  Con- 


MAJORITIES  BTTLE  BY  OI^E. 


421 


gressmen,  and  who  would  know  personally  much  of  the  practical 
workings  of  the  presidential  office,  and  all  the  persons  suggested 
bj^  either  party  as  candidates. 

In  any  system  of  voting  by  majorities  or  pluralities,  the  two 
parties  neutralize  each  other's  votes  up  to  the  point  where  their 
equal  voting  ends.  The  majority  only  counts.  Moreover,  of  all 
the  votes  in  that  majority,  none  but  the  first  one  has  any  legal 
efficiency  in  deciding  the  question.  Hence,  in  a  strict  mathe- 
matical sense,  all  popular  voting  is  decided  by  one  vote. 

Thus,  in  the  vote  between  Blaine  and  Cleveland  for  the  Presi- 
dency, the  votes  for  Cleveland  were  4,911,017.  Those  for  Blaine 
were  4,848,334.  The  plurality  was  62,683.  The  4,848,334  votes 
cast  for  Blaine  were  neutralized  wholly  by  the  equivalent  num- 
ber cast  for  Cleveland.  Of  all  the  62, 683  votes  which  are  supposed 
to  form  the  effective  plurality,  only  one  vote  has  any  legal  effi- 
ciency. A  conceded  plurality  of  one  would  have  been  as  effective, 
as  one  of  62,683.  Hence  all  majority  rule  becomes,  in  the  last 
analysis,  the  rule  of  one. 

In  the  vote  between  candidates  Hayes  and  Tilden  in  1876,  the 
vote  as  counted  in  the  electoral  college  was  one  of  185  to 
184,  a  decision  by  one  vote.  The  question,  however,  whether 
it  should  be  so  counted  was  decided  by  a  vote  of  8  to  7  in 
an  electoral  commission,  which  had  to  be  so  constructed  as  to 
render  such  a  decision  possible,  in  order  to  render  any  decision 
whatever  certain.  The  passage  of  the  law,  creating  the  electoral 
commission,  was  effected  in  each  house,  by  votes  of  which  none 
had  any  efficiency,  except  the  one  vote  that  effected  a  majority. 

When  passed  its  existence  as  law  depended  again  upon  the 
single  vote  of  the  President.  The  question  to  be  decided  in  the 
election,  turned  upon  the  votes  of  a  single  State,  Louisiana,  and 
depended  upon  a  popular  vote,  which  was  divisible  into  three 


parts,  as  follows: 

USEI.KSS. 


EPFIOIENT. 


USELESS. 


Surplus  voU^s  above 
tlic  1  \iitv  rt'nuirt'd  to 
iiiuke  u  iiuijoiity. 


422  ECONOMIC  PHILOSOPHY. 

The  ultimate  crisis,  wherein  the  one  or  the  few  govern,  may 
arise  at  one  election  in  one  place,  and  at  another  in  quite  a  different 
place.  When  readied,  there  is  always  an  equation  between  bal- 
ancing quantities,  which  virtually  eliminates  them  from  the  con- 
test. Then  there  is  a  useless  surplus,  always  thrown  away. 
Cutting  off  all  these,  one  vote  decides. 

This  is  felt  in  national  conventions.  Local  primaries  of  every 
ward  and  town  send  delegates  to  the  congressional  or  state  con- 
vention. This  in  turn  elects  delegates  to  the  national  conven- 
tion. In  the  first,  so  little  interest  is  felt  that  it  is  difficult  to  get 
one-fifteenth  of  the  persons  entitled  to  vote  at  them,  to  take  part 
in  them.  They  know  their  votes  there  are  mere  counters,  to  be 
set  off  against  opposing  votes.  The  actual  motive,  for  attending, 
is  usually  one  of  employment.  Those  who  want  political  favor  do 
this  work  to  secure  that  favor.  In  the  state  conventions  the  in- 
terest is  still  listless,  as  respects  their  action  in  selecting  delegates 
to  the  national  convention,  unless  it  is  perceived  in  advance  that 
THE  UNIT  VOTE  wliich  is  to  decide  the  national  result  is  in  that 
state  convention.  Then  all  is  vim  and  fire.  In  the  national 
convention,  as  each  ballot  is  taken,  tliere  is  merely  anxious  in- 
quiry, until  the  vote  nears  the  point  where  mathematicians  on 
both  sides  have  set  off  all  the  fixed  and  unchangeable  votes 
against  each  other.  This  brings  two  candidates  where  the  change 
of  one  vote  will  elect  one  or  the  other,  at  least  to  the  candidacy. 
This,  if  parties  are  equal,  brings  him  one  chance,  in  two,  of  the 
election.  In  the  Chicago  conventions,  of  each  party,  in  1884,  the 
excitement  was  of  an  intensity  that  indicated  that  it  was  actually 
and  in  fact  here,  in  this  wholly  extra-constitutional  body,  that  a 
Pi'esident  was  being  made.  The  prospect,  that  one  vote  would 
speedily  determine  the  question,  could  be  figured  out  by  all. 
Through  36  ballotings,  in  the  Republican  convention  of  1880, 
the  call  had  been  for  Blaine  284  or  thereabouts,  for  Grant  304  to 
309,  settling  finally  at  306,  and  the  deadlock  had  worn  every  body 
out. 

When  it  becomes  known  that  neither  of  the  two  preferred  can- 
didates can  be  elected,  some  other  must  be  taken.  As  it  is  little 
matter,  to  many  of  the  delegates,  who  the  other  may  be,  it  goes  by 
panic.  One  vote  from  either  side,  and  another  and  another,  to- 
ward the  new  candidate,  converts  the  action  into  a  stampede. 
The  effect  of  these  straggling  votes  is  foreseen  by  the  immense 
assemblage.  Each  vote  at  this  crisis  is  drowned  in  cheers  and 
yells,  because  it  is  seen  to  be  the  one  vote  that  tells.    The  rising 


THE  FEW  THAT  CHOOSE.  423 

of  the  vast  assemblage,  aud  the  waving  of  hats  aud  nandker- 
chiefs,  laughing  and  weeping,  crying,  cheering,  and  embracing, 
all  indicate  the  emotional  crisis.  Here,  and  not  in  the  electoral 
college  or  at  the  polls,  the  true  efficient  choice  is  made,  at  least  it 
is  either  in  that  convention  or  in  its  rival.  When  it  is  seen  how 
the  tide  can  be  made  to  go  by  their  votes,  chairmen  of  the  dele- 
gations of  twenty  States  at  once  will  rise  to  announce  the  change 
in  the  vote  of  their  State.  At  the  convention  referred  to,  Garfield 
received  no  votes  until  the  thirty-first  ballot,  and  then  only  one  ; 
one  on  the  thirty-second,  and  one  on  the  thirty -third.  On  the 
thirty-fourth  he  rose  to  seventeen,  on  the  thirty-fifth  to  fifty. 
This  revealed  him  as  the  "dark  horse  "  in  the  race,  and-  on  the 
thirty-sixth  ballot  he  received  399,  the  number  essential  to  a 
choice  being  378.  The  persons  who  thus  reduced  the  choice 
of  the  American  people  at  the  polls,  to  a  choice  between  General 
Garfield  and  General  W.  S.  Hancock,  whose  selection  by  the 
Democratic  convention  was  arrived  at  in  the  same  manner, 
were  as  few  in  number  as  those  who  would  have  decided  it  in  the 
electoral  college,  had  the  spirit  of  the  constitutional  provision  been 
found  or  made  practicable,  but  they  were  not  the  same  few. 

So  in  the  subsequent  contest  between  Messrs.  Cleveland  and 
Blaine,  the  "  few"  whose  casting  votes  determined  the  selection, 
in  convention,  of  Cleveland  on  one  side  and  Blaine  on  the  other, 
were  politicians  of  New  York,  to  the  number  of  a  dozen  in  each 
party.  Finally  the  contest  was  decided  for  the  nation  by  a  plu- 
rality, Mr.  Blaine  has  said,  of  less  than  one-eleventh  of  one  per 
cent,  of  the  voters  of  New  York  at  the  polls.  But,  in  theory,  and 
in  legal  efficiency,  every  voter  even  of  this  small  fraction  existed 
as  a  useless  surplus,  after  the  one  vote  necessary  to  avoid  a  tie. 
None  will  be  so  obtuse  as  to  suppose  we  overlook  the  value  of  a 
larger  majority  as  a  means  to  avoid  a  strife  over  the  question 
whether  this  plurality  of  one  exists.  But  the  legal  and  constitu- 
tional efficiency  all  centers  in  the  one  vote.  As  all  government 
by  majorities  is  thus  reducible  in  final  analysis  to  a  selection  by 
a  few,  and  a  decision  by  one,  it  is  a  delusion  to  suppose  that  dem- 
ocratic institutions  can  iinpart  governing  efficiency  to  each  indi- 
vidual of  the  whole  numerical  mass.  The  number  of  persons,  in 
whose  breasts  it  lies  to  exercise  a  final  efficient  choice,  on  eco- 
nomic or  administi'ative  questions,  is  somewhat  larger  in  republics, 
than  in  monarchies,  but  it  is  by  no  means  so  nmcli  larger  as  many 
suppose.  In  America  the  governing  class,  as  represented  by  the 
officers  finally  chosen  to  perform  the  work  of  the  federal  and 


424  ECONOMIC  PIIILOSOPIIY. 

state  governments,  is  very  large,  and  may  be  larger  than  in  most 
countries.  In  some  phases  it  shows  greater  cost.  Tims  the  six 
hundred  members  who  sit  in  the  House  of  Commons  of  England, 
the  members  of  the  House  of  Lords,  and  we  believe  the  governing 
councils  of  most  or  all  of  the  cities,  still  do,  or  until  very  recently 
did,  serve  without  pay.  In  America  the  national  Congress, 
thirty-nine  state  and  several  territorial  legislatures,  and  the  com- 
mon councils  of  most  of  tlie  cities,  comprising  probably  5,000 
persons,  draw  regular  salaries.  In  England  thirty-five  judges 
of  the  courts  of  record  seem  to  have  performed  the  general 
and  appellate  judicial  work  for  28,000,000  people.  We  have 
no  similar  number  of  people,  among  whom -the  performance  of 
judicial  work  does  not  call  for  the  services  of  a  number  of 
judges,  at  least  ten  times  as  lai-ge.  Republics  are  generous  in 
expenditure.  No  throne-room  in  Europe,  it  is  believed,  costs 
more  than  the  chamber  of  the  New  York  councilmen.  No 
palace  or  public  building,  for  representing  the  dignity  of  an  equal 
number  of  people,  equals  in  expense  the  state  capitol  at  Albany, 
or  that  at  Springfield,  111.  The  most  virtuous  and  meritorious 
quality,  in  the  practical  working  of  a  republican  government 
founded  on  manhood  suffrage,  when  brought  into  comparison 
with  governments  professing  to  represent  wealth,  land,  religion, 
the  army,  or  other  special  but  powerful  interest,  is  the  largeness 
numerically  of  the  class  to  which  it  tries  to  do  the  greatest  possi- 
ble good.  It  may  still  continue  exclusive  toward  any  non- voting 
class,  or  despotic  toward  any  class  which  is  sure  not  to  come  into 
potency  as  a  constituency.  It  is  nearly  certain  to  do  far  more 
for  education,  for  the  dependent,  defective,  and  delinquent 
classes,  for  the  general  promotion  of  industry,  and  probably  to 
make  more  public  improvements,  than  a  government  which 
arises  out  of  a  condition  of  industry  wherein  the  voting  constitu- 
ency is  more  narrow  in  relative  numbers.  It  will  tax  capital  if 
it  can,  and  so  far  as  it  can,  rather  than  labor.  There  is  great 
breadth  of  purpose,  and  in  general  a  shrewd  perception  of  the 
drift  of  the  popular  weal,  as  well  as  wishes,  in  American  politics. 
In  the  politics  of  republics  which  have  a  less  ample  treasury  of 
national  earnings  to  draw  upon,  the  economic  results  must  be  less 
brilliant.  The  anticipations  of  the  founders  of  the  American  re- 
public have  not  been  fully  met  in  several  respects.  They  did  not 
suppose  that  success  in  obtaining  oflRce  would  depend  so  much 
more  on  skill  in  manipulating  the  machinery  of  selecting  candi- 
dates for  office,  than  on  skill  in  performing  the  duties  of  office, 


CONVENTION-MADE  KINGS.  425 

They  did  not  desire  so  frequent  a  displacement,  of  one  inexperi- 
enced officer,  by  anotlier  equally  inexperienced,  as  often  occurs. 

They  did  not  foresee  the  costly  political  convulsions  of  the  first 
magnitude,  and  consequent  incurment  of  expense  for  armies  and 
navies,  which,  when  spread  over  the  intervening  years,  would 
render  the  military  expenses  of  an  unarmed  republic  fully  equal 
to  those  of  any  armed  empire. 

Questions  which  it  was  hoped  to  submit  to  the  arbitrament  of 
the  whole  people,  or,  if  of  a  few,  at  least  of  a  well-selected  and 
highly  intelligent  few,  seem  often  to  turn  on  political  accidents, 
in  far  out-of-the-way  constituencies  of  small  intelligence.  The 
question  whether  Hayes  was  elected  turns  for  the  moment  on  the 
point  whether  a  negress  named  Eliza  Pinkston,  in  an  obscure 
parish  in  Louisiana,  speaks  the  truth.  Accidental  segments, 
insignificant  fractions,  and  small  self -constituted  and  self-seeking 
coteries  of  party  conventions  of  manipulators,  remind  us  by  their 
vehemence  and  power,  that  temporarily  the  pyramid  of  state  rests 
on  its  apex.  The  few  who  control  are  too  accidental,  too  un- 
informed, too  untrustworthy  and  too  extra-hazardous,  to  deserve 
to  have  such  a  load  of  responsibility  thrust  on  them.*  An  aristoc- 
racy that  becomes  such  by  commanding  armies  or  by  acquiring 
lands,  is  not,  in  the  long  run,  inferior  to  one  that  becomes  such  by 
skillful  management  of  primary  conventions.  In  adjusting  the 
slavery  question  by  popular  convulsion,  instead  of,  as  in  Russia, 
by  executive  discretion, t  the  American  Republic  has  shown  that 
where  a  very  large  number  of  the  people  are  interested  in  an  evil, 
a  government  wherein  the  initiative  may  be  said  to  .spring  from 
the  common  people,  and  go  upward,  may  be  less  awake  to  the  de- 
mands of  economic,  ethical,  and  moral  progress  than  one  in 
which  a  single  enlightened  ruler  may  enjoy  an  absolute  confi- 
dence and  unchangeable  tenure  of  power. 

*  Upon  this,  Mr.  deTocqueville,  in  his  "  Democracj^'in  America,"  remarked  :  "In  the 
immense  crowd  which  throngs  the  avenues  to  power  in  the  United  States,  1  found  very 
few  men  who  displayed  that  manly  candor  and  masculine  independence  of  opinion 
which  frequently  distinguished  the  Americans  in  former  times,  and  which  constitutes 
the  leading  feature  in  distinguished  characters  wheresoever  they  may  be  found.  It 
seems  at  first  sight  as  if  all  the  minds  of  the  Americans  were  formed  upon  one  model, 
80  accurately  do  they  follow  the  same  route.  A  stranger  does  indeed  sometimes  meet 
with  Americans  who  dissent  from  the  rigor  of  these  formularies,  with  men  who  deplore 
the  effects  of  the  laws,  the  mutability  and  the  ignorance  of  democracy— who  even  go  ho 
far  as  to  observe  the  evil  tenduncieB  which  impair  the  national  character,  and  to  point 
out  such  remedies  as  it  miirht  be  possible  to  apply,  .  .  .  but  .  .  .  they  hold  a 
different  language  in  public." 

+  Vide  "  Russia,"  ;»«/,  §  594,  Ch.  XIII. 


426  ECONOMIG  PHILOSOPHY. 

The  feature  which  is  most  original  and  admirable  is  equal 
representation  of  population  according  to  numbers  in  the  House 
of  Representatives,  and  of  large  and  small  States  as  equals 
with  each  other  in  the  Senate.  This  has  introduced  into  the 
United  States  Senate  a  spirit  whose  aim  is  to  temper  power  with 
equity.  It  has  been,  at  most  times,  the  ablest  because  the  most 
equitable  deliberative  body  in  the  world.  Tlie  British  House  of 
Lords  might  be  restored  to  vitality  by  such  a  federation  of  the 
empire  as  would  embody  in  it  something  of  the  dignity  of  the 
American  Senate.  Capital  might  be  represented  in  it  more  per- 
fectly than;now,  and  in  addition  the  various  states  and  dominions, 
now  governed  by  Parliament. 

108.  Diversity  of  Fimctious  and  Objects. — Governments 
are  further  classified  as  either  military  or  civil,  provisional  or 
permanent,  constitutional  or  absolute,  of  mutual  checks  and  bal- 
ances or  sovereign  in  some  one  department,  tributary  or  supreme, 
tempoi'al  or  spiritual,  religious  or  secular,  general  or  local,  cen- 
tralized or  distributed  (decentralized). 

An  absolute  government  has  some  one  department,  or  body, 
which  possesses  at  least  legislative  omnipotence,  and  which,  in  the 
last  resort,  can  effectively  conti'ol  all  other  departments.  In  this 
sense,  Great  Britain  is  an  absolute  government,  and  its  parliament 
possesses  legislative  omnipotence,  in  itself,  and  final  absolute  power 
over  all  other  departments.  It  can  declare  the  thi'one  vacant,  as 
it  did  on  the  occasion  of  the  forced  abdication  of  James  II.  It  can 
change  the  succession,  as  it  has  done  on  several  occasions,  elect- 
ing a  new  family  to  reign,  and  prescribing  a  new  order  of  inher- 
itance for  the  crown.  Doubtless,  on  what  it  deemed  a  sufficient 
provocation,  or  reason,  it  could  terminate  the  heritable  quality  in 
the  crown,  and  make  it  elective.  This  would  be  styled,  in  English 
parlance,  a  revolution,  and  a  change  in  the  fundamental  law.  The 
English  parliament,  however,  has  the  power  to  change  the  fund- 
amental law  by  which  it  is  boimd,  and  this  makes  it  absolute,  or 
a  law  unto  itself.  It  has  power  to  impeach,  and  execute,  all  judges 
who  should  oppose  its  will,  as  well  as  all  ministei's  of  the  crown 
who  should  nullify  its  laws  or  disobey  its  commands.  The  pro- 
ceedings of  the  Long  Pai'liament,  and  of  the  Protectorate  under 
Cromwell,  including  the  execution  of  Charles  I.,  are,  out  of  def- 
erence to  the  kingly  principle,  usually  assumed,  in  English  dis- 
cussion, to  be  unconstitutional  and  revolutionary.  They  were, 
however,  assertions  of  the  practical  omnipoteiiue  of  parliament, 
which  underlie  and  cause  the  present  supremacy  of  the  House  of 


UNITED  STATES  GOVERNMENT.  42 Y 

Commons.  Without  these,  and  the  subsequent  parliamentary 
revolutions,  it  would  not  to-day  be  the  theory  of  the  English  gov- 
ernment that  parliament  is  supreme  over  the  crown,  and  that  in 
parliament  the  House  of  Commons  is  supreme  over  the  House  of 
Lords.  Still,  the  particular  machinery  thi'ough  which  the  Com- 
mons assert  their  supremacj^  over  other  branches  of  the  govern- 
ment, is  that,  by  means  of  the  principle  of  responsible  government, 
the  House  of  Commons  controls  the  ministers  of  the  crown,  and) 
as  these  have  the  power  at  all  times  to  appoint  new  peers,  they 
can  at  all  times,  through  the  appointment  of  new  peers,  control 
the  House  of  Lords. 

The  United  States,  on  the  other  hand,  is  a  government  of  mu- 
tual checks  and  balances,  or  wherein  absolute  sovereignty  is  not 
lodged  in  any  one  department,  but  each  may  check  the  other. 

The  departments  for  this  purpose  are(l)  the  executive,  of  which 
the  President  is  chief,  and  which  includes  the  cabinet  and  all 
subordinate  officers  (about  120,000  in  all)  of  the  civil  service,  the 
diplomatic  officei'S  and  consuls,  the  army  and  navy  ; 

(2)  The  legislative  department,  consisting  of  both  houses  of 
Congress  ; 

(3)  The  judiciary,  comprising  all  the  federal  courts,  viz.,  the 
Supreme  Court  of  the  United  States,  circuit  courts,  district  courts, 
territorial  courts,  court  of  claims,  and  courts  of  the  District  of 
Columbia. 

The  executive,  legislative,  and  judicial  departments  act  as 
checks  upon  and  balance  each  other  in  certain  ways.  If  the  ex- 
ecutive and  Congress  are  dis.satisfied  with  the  workings  of  the 
Supreme  Court  they  have  the  power  by  law  to  reconstitute  the 
court,  expand  or  reduce  the  number  of  judges,  and,  in  case  it  is 
expanded,  the  President  has  power  by  the  selection  of  the  added 
judges  to  determine  the  political  complexion  of  the  court,  and  in 
some  degree  the  quality  of  its  judicial  decisions  upon  the  class 
of  legal  questions  he  has  in  mind  at  the  time  he  makes  the  aj)- 
pointment.  Action  of  this  kind  is  held  in  disfavor,  however,  as 
large  numbers  of  the  i)eople  regard  the  Supreme  Court  as  a  body 
that  should  not  be  subordinated  to  the  views  of  the  President  and 
Congress  in  its  judicial  decisions,  even  where  they  bear  in  their 
effect  upon  the  political  departments  of  the  government. 

The  two  houses  of  Congress  have  also  the  power  to  impeach  and 
remove  either  the  President, or  the  judges  of  the  Supreme  Court, 
for  high  ci'imes  and  misdemeanors. 

The  Supreme  Court  has,  by  judicial  construction, in  consequence 


428  ECONOMIC  PIULOSOPHT. 

of  the  existence  of  our  written  Constitution,  a  power  to  declare 
an  act  of  Congress,  regularly  passed,  null  and  void,  if  it  holds  the 
act  to  be  in  conflict  with  the  written  Constitution.  This  is  a 
power  not  possessed  by  the  courts  under  any  other  form  of  gov- 
ernment, unless  it  may  have  been  copied,  from  ours,  into  the  con- 
stitutions of  some  of  the  Spanish-American  states. 

The  President,  through  the  veto  power,  can  check  any  action  of 
Congress  not  capable  of  being  passed  by  a  two-thirds  vote  over 
Jiis  veto.  In  practice,  each  of  the  departments  of  our  government 
has,  at  times,  exerted  a  powerful  check  on  the  action  of  the 
others. 

The  distinction  between  temporal  and  spiritual  government  is 
essential  to  a  clear  view  of  the  science  of  compai-ative  govern- 
ment. 

A  government  is  temporal  if  it  has  charge  of  the  bodies,  prop- 
erties, and  legal  rights  of  its  subjects,  with  power  to  inflict  cor- 
poral and  pecuniary  punishments,  and  to  regulate  the  transfer 
and  descent  of  property.  Such  are  the  governments  of  England, 
France,  Italy,  and  Spain. 

It  is  spiritual,  if  it  have  charge  of  the  consciences  of  any 
class  of  subject  persons,  with  a  purporting  power  to  dictate  to 
them  what  is  right  and  what  is  wrong,  or  what  will  make  for 
their  supposed  welfare  in  a  present  or  a  future  world.  Such  is 
the  government  of  the  Pope  of  Rome,  of  the  Patriai'ch  of  Con- 
stantinople as  the  head  of  the  Greek  Church,  and  of  the  Czar  of 
Russia  as  the  competing  or  antagonistic  head  of  the  same  Greek 
Clmrch.  Such  also,  under  the  Mohammedan  faith,  are  the  Sultan 
of  the  Ottomans,  and  the  Sheik  ul  Islam  of  Mecca. 

In  England  spiritual  and  temporal  powers  combine  in  the 
queen.  In  Germany,  they  unite  in  the  emperor.  In  Spain,  Aus- 
tria, and  Brazil,  the  Spanish- American  republics,  and  all  the  har- 
moniously Catholic  countries,  the  temporal  power  is  in  the  state, 
but  it  acknowledges  the  spiritual  supremacy  of  the  Pope  of 
Rome. 

In  France  the  republic  is  a  secular  republic,  entangled  with 
the  embarrassments  growing  out  of  a  former  union  between  the 
monarchical  state,  to  which  it  succeeds,  and  the  church. 

In  the  United  States  the  distinction  between  temporal  and  spir- 
itual powers  does  not  exist,  but  the  federal  and  state  governments 
are  secular,  exercising  no  influence  whatever  over  religious 
affairs,  and  no  such  tiling  as  a  spiritual  government  is  I'ecognized 
by  law.     Secular  and  religious  government  are  distinguished  in 


GENERAL  AND  LOCAL.  429 

the  United  States  as  follows  :  A  state  is  secular,  when  it  identi- 
fies itself  with  no  religious  faith  of  any  kind  as  a  state,  but  leaves 
its  citizens  and  its  officials,  when  acting  in  their  moral  capacity 
as  individual  persons,  free  to  perform  or  neglect,  to  obsei've  or 
to  avoid,  any  and  every  religious  duty  or  principle  as  each  per- 
son shall  for  himself  elect.  In  the  United  States,  therefore,  all 
religious  organizations  are  simply  private  corporations  which  are 
permitted  to  exercise  a  merely  persuasive  and  not  in  any  degree 
a  coercive  power.  Nor  could  a  coercive  power  be  conferred  upon 
them,  by  the  consent  of  their  members,  which  would  not  be  re- 
buked and  set  aside,  or  punished,  by  the  civil  courts. 

General  and  local  government  are  distinguished  as  follows: 
General  government  consists  of  such  of  the  functions  of  govern- 
ment as  are  exercised  by  the  same  authority,  according  to  the 
same  rules,  and  by  pei'sons  selected  in  the  same  general  manner, 
for  extended  areas  of  country  and  large  and  widely  separated 
and  numerous  populations.  Local  government  consists  of  such 
of  the  functions  of  government  as  are  permitted  to  be  broken  up, 
subdivided,  or  "  morselized, "  so  as  to  be  exercised  by  diverse  au- 
thorities, by  officers  selected  according  to  different  rules,  and  act- 
ing in  diverse  ways  in  different  parts  of  the  country. 

169.  Local  Government. — All  the  subdivisions  of  gov- 
ernment, according  to  their  foinn,  which  have  been  heretofore 
named,  whether  as  monarchies,  aristocracies,  democracies,  or  re- 
publics, whether  as  bureaucratic,  hereditary,  or  impei'ial,  wheth- 
er as  responsible  or  of  fixed  terms,  whether  as  parliamentary  and 
absolute,  or  of  checks  and  balances,  whether  as  despotic  or  free, 
whether  as  temporal  or  spiritual,  religious  or  secular,  have  had 
reference  to  the  general  government.  The  general  compares 
with  the  local  government  as  the  spires,  domes,  towers,  and  loft- 
ier ai'chitectural  features  of  an  edifice,  as  seen  from  without,  com- 
pare with  its  inner  apartments,  its  imrlors,  kitchens,  sitting- 
rooms,  and  conveniences  for  home  life.  The  comfort  of  a  people 
dwelling  within  an  edifice  may  depend  more  on  the  mode  of  get- 
ting the  kettle  over  the  fire,  or  ventilating  the  sleei)ing-rooms,  or 
expelling  flies  from  the  larder,  than  upon  the  question  whether  a 
tower  is  true  Gothic,  or  a  pillar  is  absolute  Corinthian.  So  the 
amount  of  real  liberty  and  prosperity  enjoyed  by  a  people  may 
depend  chiefly  upon  the  administration  and  form  of  the  local 
government,  which  lays  out  roads,  builds  bridges,  schools,  and 
sewers,  docks,  markets,  and  baths,  provides  gas,  water,  and  paved 
gtreets,  licenses  street  railways,  cabs,  and  carts,,  and  also  trades 


430  ECONOMIC  PHILOSOPHY. 

and  amusements,  lays  out  parks,  opens  public  librai'ies,  regulates 
health,  buries  the  dead,  and  feeds  the  homeless  poor,  and  which, 
in  some  countries,  lays  out  farms  as  well,  and  divides  their  pro- 
duce among-  the  workers,  or  collects  their  wages,  or  shuts  out  or 
licenses  alcoholic  drinks. 

Local  government  gets  nearer  to  the  people  in  many  things 
than  general  government,  and  may  be  of  a  very  unlike  character 
to  that  of  the  general  government.  In  Russia,  for  instance,  each 
rtiir  or  village  commune  is  a  little  communistic  democracy,  in 
which  no  peasant  can  lose  his  title  to  bis  home,  while  in  Ireland 
each  landed  estate  is  a  little  absolute  despotism,  in  which  nothing 
but  a  revolution  could  insure  to  the  peasant  his  home  against  his 
landlord.  Thus  the  freer  character  of  the  general  government,  in 
England,  is  a  less  valuable  boon  to  the  Irish  peasant,  than  the 
freer  character  of  the  local  government  of  Russia  is  to  the  Russian 
peasant.  Hence,  in  estimating  the  relative  freedom,  and  effects 
upon  industries,  of  vai'ious  governments,  it  is  more  important  to 
look  at  the  substance  than  the  form  of  all  governments,  and  to 
look  at  the  mode  in  which  the  local  rather  than  the  general 
functions  are  administei-ed. 

In  the  United  States  general  government  is  not  confined  to 
national  government,  nor  are  local  functions  strictly  identical 
with  state,  city,  and  county  functions. 

So  far  as  the  national  govei'nment  runs  a  post-office,  light- 
house, harbor,  court,  revenue,  or  customs  office,  in  a  town,  that 
becomes  local  government  within  that  town.  All  governments, 
therefore,  have  some  local  functions.  In  the  United  States,  how- 
ever, most  of  the  functions  of  local  government  devolve  on 
States,  counties,  and  cities.  Their  economic  infl.uence  is  felt 
chiefly  by  the  action  they  take,  or  omit  taking,  concerning  : 

1.  The  opening  up  and  surveys  of  new  lands,  and  the  denuda- 
tion and  restoration  of  forests,  destruction  of  animals,  etc. 

2.  The  construction  of  highways,  roads  of  all  kinds,  including 
railways  and  canals,  the  building  of  aqueducts  for  cities,  the 
improvement  of  rivers  as  highways,  protection  from  rivers,  and 
irrigation. 

3.  The  construction  of  residences  and  their  insurance,  including 
'in   cities   the  regulation   of   their  materials,  height,    kind,  and 

quality. 

4.  Creating,  registering,  and  vindicating  titles  to  land,  including 
the  regulation  of  transfers  and  descent  of  lands, 

5.  Their  protection  to  personal  liberty  and  to  the  security  of  the 


INDUSTRIAL  RELATIONS.  431 

family  relation,  to  freedom  of  contract  and  association,  and  their 
provisions  as  to  corporations  and  trades. 

6.  Their  provisions  for  education,  and  the  quality  of  the  educa- 
tion they  impart. 

7.  Their  pi'ovision  for  the  relief  of  the  poor,  the  maintenance 
of  the  incompetent,  defective,  and  delinquent  classes,  and  detec- 
tion and  punishment  of  the  criminal  classes,  including-  prisons, 
and  colonization. 

8.  Tneir  action  as  i-espects  vice  and  intemperance,  food,  drinks, 
popular  amusements  and  public  morals,  including  in  cities  public 
parks,  libraries,  fountains,  and  baths. 

9.  Their  methods  of  taxation  and  theory  of  the  purposes  to 
which  it  is  adequate. 

10.  Their  provisions  for  rewarding  discoveries  in  science,  inven- 
tions in  the  useful  arts  or  masterpieces  in  fine  art,  and  for  granting 
by  letters  patent  to  inventors  and  by  copyright  to  authors  the 
monopoly  of  the  profits  accruing  upon  their  works  for  a  period 
of  time. 

11.  Their  provisions  as  to  coast  and  naval  defences,  armies, 
police,  and  such  coercive  means  as  may  be  essential  to  the  per- 
manence and  good  order  of  the  State. 

170.  The  State  as  Related  to  Industry. — In  estimating 
the  relation  of  governments  to  industry,  especially  with  the  view 
of  determining  whether  the  aggregate  experience  of  mankind 
goes  to  .show  that  the  functions  of  government  are  alike  in  all 
states  or  different  in  each,  and  whether  they  have  been  injuriously 
or  beneficially  exercised,  it  is  important  first  to  grasp  in  their 
entirety  all  the  functions  of  all  parts  of  the  government,  of  the 
local  as  well  as  the  general,  the  colonial  as  well  as  the  home 
government,  and  of  the  array  as  well  as  of  the  tariffs. 

No  assumption  is  more  frequent,  in  economic  discussion,  than 
that  England  not  only  practices,  but  stunningly  illustrates,  free 
foreign  trade.  No  fact  has  entered  so  prominently  into  modern 
history  as  that  England  has  constantly  made  use  of  her  armies  in 
India,  Ireland,  Turkey,  Egypt,  Africa,  New  Zealand,  Borneo, 
China,  Japan,  and  among  all  barbarous  peoples,  to  coerce  foreign 
trade,  or,  as  she  expresses  it,  to  "  open  barbarian  ports  to  civiliza- 
tion." If  one  nation  practices  military  protection  on  behalf  of  her 
foreign  trade,  the  result  may  be  as  efficient,  in  its  way,  as  another 
nation,  differently  situated,  may  achieve,  by  practicing  tariff"  pro- 
tection in  favor  of  its  home  trade. 

As  the  Roman  empire  was  circumstanced,  the  building  of  great 


432  ECONOMIC  PHILOSOPHY. 

roads,  all  centei-ing  in  Rome,  may  have  been  the  most  efficient 
form  of  protection  to  a  state  whose  chief  industry  was  military 
conquest. 

In  the  modern  British  Empire,  on  whose  dominions  the  sun 
never  sets,  lines  of  steamei-s  and  coaling  stations  may  take  the 
exact  place,  and  perform  the  precise  function,  of  Rome's  great 
roads.  In  the  Middle  Ages,  when  money  was  scarce  and  produc- 
tion reduced  to  a  low  stage,  the  owner  of  land,  seeking  security 
against  the  marauder,  would  beg  to  become  the  vassal  of  a  ruthless 
baron  in  oi'der  that  he  might  exchange  weakness  for  protection, 
and  would  pay  rent  in  military  service,  of  course  neither  for 
capital  expended,  nor  for  fertility,  nor  for  location,  but  for 
security.  But  he  would  consult  his  own  best  interests  at  the 
time,  as  certainly  as  he  did  later  on,  when  money  became  plenty, 
in  commuting  his  military  rent  into  a  money  I'ent. 

The  exterior  or  visible  government  of  society,  known  as  the 
state,  must,  however,  always  be  recognized  by  the  student  of 
economics,  as  a  sort  of  apparel  thrown  over  that  real  and  involun- 
tary organization  of  society,  under  industry,  which  may  be  called 
the  industrial  state. 

Tlie  industrial  state  has  a  different  set  of  chiefs,  or  heads,  from 
the  civil  state,  whose  ascendency  is  indicated  only  by  the  rate  of 
remuneration  they  can  command,  the  quantity  of  capital  and  la- 
bor they  can  control,  and  the  quantity  of  business  they  can  trans- 
act at  a  profit.  Voting  is  performed  in  the  industrial  state  every 
time  a  contract  is  made,  merchandise  is  transferred,  or  a  commod- 
ity is  created.  Aia  employer  says  :  "I  will  give  you  $20  per  week ; 
will  you  work  for  me  ? "  The  employee  says :  "  I  will."  Thence- 
forth both  are  integral  units  organized  into  one  larger  body — so- 
ciety. One  commands,  the  other  obeys.  One  steers,  the  other 
rows.  One  sells  his  time  for  wages,  the  other  sells  what  this  time 
has  aided  to  produce — the  product,  for  profit — if  he  can.  If  he  can 
not  sell  it,  having  produced  something  not  wanted,  his  steering 
capacity  is  cut  down,  and  lessened,  by  the  fact  that  he  has  lost  a 
pai't  of  that  capital  in  right  of  which,  alone,  he  does  the  steering. 
Every  time,  therefore,  a  retailer  says  to  his  customer,  ' '  Will  you 
buy,"  and  the  customer  says,  "  I  will,"  the  retailer  is  promoted 
or  approved  in  his  office,  as,  by  his  customer's  vote,  that  he  has 
usefully  supplied  a  demand.  Thus  the  organization  of  the  indus- 
trial state  is,  at  once  voluntarily  and  involuntarily,  extended  every 
time  a  purchase  is  made  or  a  business  act  performed.  The  custom- 
er's act  elects  the  retailer.     The  retailer's  act  elects  the  whole- 


THE  INDUSTRIAL  STATE.  433 

saler.  The  wholesalers  elect  the  manufacturer,  and  the  manu- 
facturer must  foresee  the  demand  correctly,  or  part  with  his 
capital.  The  employer's  choice  elects  the  workers,  and  the  workers 
ai*e  relieved  of  the  necessity  of  watching  the  markets  of  the  prod- 
ucts of  their  labor,  and  need  only  watch  the  markets  of  labor  it- 
self. As  votes  in  the  political  state  give  the  title  to  office,  so  capi- 
tal in  the  industrial  state,  which  can  only  be  preserved  by  success, 
gives  title  to  command.  Every  capitalist  can  command  all  the 
labor  he  chooses  to  pay  for.  By  simplifying  their  task,  to  the 
single  one  of  selling  their  labor-time  and  labor-force  to  whoever 
will  pay  the  highest  price  for  it,  laborers  ax*e  enabled  to  give  far 
more  time  and  fox-ce  to  the  work  actually  to  be  done.  By  simplify- 
ing the  retailer's  task  to  the  single  one  of  buying  at  five  what  he 
can  sell  for  seven,  the  retailer  saves  all  his  time  and  force  for  efforts 
which  have  profit  in  them.  And  by  the  conjoint  action  of  every 
member  of  society,  in  the  line  in  which  he  can  be  paid,  and  in  no 
other,  he  most  closely  serves  demand,  which  is  the  most  comprehen- 
sive name  for  human  need,  or  for  the  relief  of  want.  Thus,  in  the 
industrial  state,  the  higher  and  more  intense  is  the  egoism  or  desire 
of  profit,  as  the  motive  of  human  action,  the  prompter  and  more 
efficient  is  the  satisfaction  of  demand,  the  relief  of  want,  or  the 
attainment  of  pi'actical  altroism  as  the  effect. 

The  political  state  is  the  garment,  or  apparel,  of  the  industrial 
state.  Governments  are  but  the  expression,  for  coercive  or  at- 
tractive purpo.ses,  of  the  interest  and  will  of  society,  as  it  is  fornm- 
lated  by  their  material  condition  and  occupations.  Where  the 
masses  of  the  people  have  the  means  of  comfortable  living,  by 
nearly  continual  labor  (and  without  the  continual  labor  of  nearly 
all  it  is  impossible,  in  the  nature  of  things,  that  any  should  live 
comfortably),  there,  persons  will  be  free  ;  governments  will  i-est 
lightly  on  the  shoulders  of  the  people.  But  little  coercion,  either 
by  governments  or  by  employers,  will  be  required,  and  both  gov- 
ernment and  industry  will  become  attractive  rather  than  coer- 
cive. 

171.  Coercion  and  Attraction  in  the  State.— The  attrac- 
tive functions  of  government,  as  distinguished  from  its  coercive, 
consist  in  the  education  of  youth,  the  establishment  of  light- 
houses and  life-saving  stations,  the  distribution  of  seeds  to  secure 
the  introduction  of  new  brandies  of  agriculture,  the  creation  of 
artificial  corporations,  having  perpetual  life,  as  a  means  of  at- 
tracting the  capital  of  investors  into  investments  of  a  perpetual 
character,  the  building  of  levees  to  restrain  Hoods,  and  of  canals, 


434  ECOKOMIC  PHILOSOPHY. 

works  of  irrigation,  and  aqueducts,  and  building  or  aiding  rail- 
ways, common  highways,  sewers,  drains  and  bridges,  the  author- 
ization of  banks  for  the  issue  and  loan  of  ci'edit-money,  and  of 
savings  banks  for  making  the  hoarding  propensity  in  the  poor 
productive  ere  yet  the  accumulation  is  large  enough  to  be  used  as 
a  working  capital  ;  enacting  laws  of  descent,  whereby  human 
afTection  and  love,  in  one  generation  of  workers,  may  be  attracted 
onward  in  their  toil,  by  the  hope  of  being  able  to  make  provision 
for  those  they  shall  leave  behind  ;  authorizing  the  creation  of 
insurance  companies  and  trust  funds,  for  tiding  over  the  calami- 
ties of  fire  and  death  by  the  interested  co-operative  aid  of  those 
who  do  this  good  to  others,  on  a  bargain  that  others  shall  pay 
them  for  the  service  ;  the  regulation  and  check  of  international 
competition  in  industries  by  tariffs  ;  the  diversification  of  indus- 
tries by  securing  certain  valuable  markets  to  producers,  the  estab- 
lishment of  colleges,  the  propagation  of  fish  in  rivers,  the  tunnel- 
ing of  mines  on  occasions  when  individual  enterprise  might  neg- 
lect a  much-needed  work,  the  attractively  encouraged  emigration 
of  the  poor  to  new  and  better  homes,  the  collection  and  universal 
diffusion  of  an  accurate  bulletin  of  the  weather  one  day  in 
advance,  the  assortment  of  letters  for  transmission  by  routes 
selected  and  paid  for  by  the  government,  the  granting  of  patents 
to  inventors,  and  a  hundx'ed  others. 

This  enumeration  might  be  extended,  but  it  suffices  to  show 
how  vastly,  in  modern  government,  the  attractive,  or  educing,  or 
educating,  functions  of  government  have  risen  above  and  come 
to  outrank  the  coercive.  In  most  of  the  Northern  States  of  the 
Union  from  two-thirds  to  three-fourths  of  the  revenue  of  the 
State  is  expended  on  the  single  purely  attractive  function  of 
educating  youth,  a  function  which,  until  barely  a  century  ago, 
it  was  not  supposed  that  government  had  anything  whatever  to 
do  with. 

With  the  advance  of  government  to  functions  more  and  more 
attractive,  there  has  been  a  recession,  in  all  newer  and  freer 
countries,  from  the  despotic,  military,  and  coercive  functions,  to 
which  government  was  formei'ly  confined.  Where,  a  century  ago, 
134  crimes  were  punished  with  death,  now  only  from  one  to  four 
are  so  punished.  In  America,  and  the  British  colonies,  standing 
armies  and  coast  defences  ai*e  of  the  past.  Titles,  the  survival  of 
military  rank  and  soldierly  life,  are  fading  out  and  less  esteemed. 
Finally  there  is  a  growing  feeling  that  woman,  debarred  bj'  her 
sex  from  founding  the  coercive  or  military  state,  except  she  otter 


COERCIVE  GOVERNMENT.  435 

hei'self  for  military  service,  is  not  by  the  same  logic  barred  from 
taking  part  in  those  functions  of  government  which  are  intellec- 
tual, moral,  and  attractive.  The  earliest,  and  perhaps,  next  to 
education,  the  most  important  instance  in  which  government  has 
passed  from  coercive  to  attractive  functions  has  been  in  practicing 
protection  to  national  industries  against  foreign  competition. 

172.  Government  by  Force.  Voting  by  Males.— The 
coercive  functions  of  government  bear  toward  the  attractive 
much  the  same  relation  as  coin  bears  toward  credit  money.  Had 
there  never  been  government  by  coercion,  a  government  by 
attraction  could  not  have  arisen.  The  tramp  of  contending  armies 
precedes  respectful  obedience  to  the  law  and  the  courts.  The 
memory  of  hostile  encounters  ovei'shadows  the  courteous  language 
of  diplomacy,  and  gives  efficacy  to  arbitrations.  It  is  a  funda- 
mental maxim  that  "  tlie  law  always  implies  force."  All  gov- 
ernment implies  an  army,  navy,  and  police  capable  of  enforc- 
ing its  will.  In  fact  all  governments  have  been  established,  as 
against  those  who  opposed  their  establishment,  by  armed  force. 
The  summary  manner  in  which  the  Tories,  who  opposed  in  New 
York,  New  Jersey,  and  elsewhere,  the  formation  of  the  American 
Government,  were  driven  out  of  the  United  States,  as  fugitives, 
places  the  United  States  in  the  same  category  as  all  other  govex'n- 
ments  m  this  respect.  The  "  Continental  Congress  "  met,  not  to 
deliberate  with  Tories  as  to  whether  it  should  itself  exist,  but  to 
deliberate  among  Whigs,  and  as  a  pui-ely  Whig  government,  how 
all  opposition  to  itself  could  best  be  forcibly  overcome.  As  armies 
are  the  immediate  authors  and  sponsors  of  all  government, 
whether  republican  or  monarchical,  it  is  natural  that,  when  voting 
comes  to  supersede  fighting  as  a  means  of  selecting  the  officials 
who  are  to  govern,  the  voting  should  devolve  exclusively  on  the 
sex  which  had  done  the  fighting.  This  alone,  and  not  any  diff'er- 
ence  of  intelligence  between  the  two  sexes,  has  caused  the  male 
sex  to  monopolize  the  right  of  suffrage. 

In  Sparta,  and  one  or  two  other  of  the  States  of  Greece,  accord- 
ing to  Aristotle,  women  bore  arms  in  war,  owned  most  of  the 
property,  and  voted.  In  whatever  state  they  should  be  admitted 
to  vote  it  would  logically  and  naturally  follow,  if  not  at  first,  yet 
in  the  long  run,  that  they  would  bear  arms  also,  if  only  fi-om  a 
sentiment  of  honor.  For  as  women  are  far  more  exacting  than 
men  in  their  standard  of  requirement  as  to  tlie  number  of  sup- 
posed good  objects  the  government  should  be  called  on  to  effect, 
they  would  constitute  the  class  of  voters  most  given  to  enacting 


436  ECONOMIC  PHILOSOPHY. 

high-keyed,  reformatory,  and  exacting  laws,  which  woukl  raise  the 
number  voting  against  them  to  close  proximity  with  the  number 
voting  for  them.  Such  laws,  which  are  barely  passed  by  a  small 
plurality  of  votes,  and  which  imply  a  large  interference  with  the 
personal  liberty  of  many  citizens,  of  perhaps  the  poorer  class, 
excite  a  degree  of  opposition  to  their  enforcement  which  the  ordi- 
nary laws  against  crime  do  not  arouse.  The  difficulty  of  their 
enforceraent  renders  much  personal  collision  necessary,  and  in 
such  case  somebody  must  give  and  take  the  blows,  or  theenfoi'ce- 
ment  of  the  law  would  be  abandoned. 

In  a  state  in  which  women  should  vote  on  equal  terms  with 
men,  the  laws  would  soon  come  to  be  divided  into  those  which 
bore  the  general  sanction  of  both  women  and  men,  and  those 
which  sought  to  press  the  magistrate's  club  into  the  work  of  en- 
forcing as  law  the  finer  sentiments  of  chastity,  temperance, 
purity,  and  religion,  which  men  are  content  to  remit  to  the  domain 
of  morals  and  persuasion. 

In  this  manner  there  would  be  two  kinds  of  laws,  the  men's 
laws  and  the  women's  laws.  The  former  would  be  enforced;  the 
latter  would  not,  unless  women  should  take  it  upon  themselves  to 
do  so.  To  remit  these  laws  to  mere  persuasion  would  leave  them 
just  whei'e  the  sentiments  they  embody  are  now.  The  attempt  of 
women  to  enforce  them  would  convert  them,  as  a  logical  corol- 
lai*y,  into  an  arms-bearing  sex.  That  the  female  sex  would  accept 
the  right  of  suffrage,  if  accompanied  by  the  condition  that  they  bear 
arms  and  perform  police  duty,  is  hardly  contended.  It  is  doubt- 
less the  opinion  of  the  great  mass  of  women,  that  no  exigency 
of  their  situation  calls  for  action  so  revolutionary,  and,  to  nearly 
all  of  them,  so  distasteful.  The  exclusion  of  women  from  the 
right  to  vote  can  only  be  logically  ascribed  to  the  fact  that  gov- 
ernments are  an  affair  of  armed  force,  in  which  it  is  contrary  to 
the  course  of  nature  and  civilization  that  woman  should  partici- 
pate. 

This  monopoly  of  the  fighting  function  by  the  male  is,  in  its 
turn,  an  evident  consequence  of  the  physiological  necessity  that 
motherhood  shall  be  made  secure,  and  motherly  attention  adequate 
in  delicacy,  to  the  needs  of  infancy.  The  germs  of  this  division 
of  functions  between  the  sexes  appear  in  nearly  all  of  the  higher 
forms  of  quadrupeds  and  birds,  and  are  wholly  absent  only  among 
reptiles  and  fishes.  A  division  of  functions  between  the  sexes 
which  is  so  much  bi"oader,  even,  than  the  human  race,  and  so 
much  older  than  history,  is  not  likely  to  become  capable  of  over- 


ORGANIZED  ARMIES.  437 

tlirow  in  fact,  however  interesting  may  be  the  grounds  on  which 
its  obliteration  is  pressed. 

1 73.  Annies,  and  Their  Cost. — In  ancient  times,  war  was 
a  struggle  between  all  the  members  of  two  hostile  populations. 
In  modern  times,  the  principle  of  division  of  labor  is  applied  to  it. 
It  is  a  physical  fight  only  between  the  two  organized  armies  in  the 
field  ;  the  populations  on  both  sides  take  part  in  it  only  as  tax- 
payers, or  as  their  transit  and  trade  may  be  interrupted,  or  as 
they  are  recruited,  drafted,  or  enlisted  into  the  army.  Armies 
ai'e  now  recruited  by  two  modes — voluntary  enlistment,  and  the 
draft.  Great  Britain  adheres  to  the  former  system,  which  in  prac- 
tice usually  degenerates  into  an  abuse  known  as  the  press-gang — 
a  dozen  armed  men  setting  upon  one,  and  compelling  him  to 
"voluntarily  enlist,"  either  through  the  blandishments  of  intoxi- 
cation or  the  force  of  a  sound  drubbing.  Blackstone,  a  century 
ago,  denounced  the  ]jress-gang  as  unworthy  of  a  free  country. 
Either  it,  or  very  high  bounties,  ai'e  necessary  under  the  system 
of  voluntary  enlistments. 

It  was  by  the  conscription,  or  drawing  among  all  citizens  by 
lot,  that  Napoleon  was  able  to  sustain  the  arms  of  France  against 
the  Allied  Powers  from  1793  to  1815.  It  has  since  been  adopted 
or  revived  in  all  the  European  states,  and  was  resorted  to  by  the 
United  States  in  its  war  of  1861  to  1865. 

The  relative  economy  of  the  policy  of  maintaining  a  large  army, 
or  a  small  one,  is  not  so  simple  a  problem,  since  the  war  last 
named,  as  it  had  previously  been  assumed  to  be,  by  many  advo- 
cates of  the  doctrine  that  "  that  government  is  best  which  gov- 
erns least."  In  1790,  Congress  fixed  the  rank  and  file  of  the 
American  army  at  1,216  men.  In  1814,  a  small  English  force  of 
only  3,500  men  was  able  to  seize  and  burn  the  Capitol  and  the 
city  of  Washington,  though  the  country'  had  then  a  population 
of  8,000,000  persons,  or  about  as  many  as  Egypt  contained  when, 
under  her  first  great  military  leader,  Sesostris,  she  extended 
her  empire  over  Ethiopia  and  Southern  Asia,  eastward  to  the 
Ganges,  and  northward  to  the  Caspian. 

During  the  war  of  1861-5,  the  government  of  the  United  States 
called  under  arms  2,759,049  men,  of  whom  2,656,053  men  were 
actually  embodied  in  the  armies.  Adding  to  these  the  1,100,000 
men  embodied  by  the  Soutliern  States  into  their  armies,  the  total 
force  called  into  the  field,  in  a  country  whose  hobby  it  was  to 
have  no  armies,  amounted  to  the  enormous  number  of  3,756,053 
men,    whereas    the  entire    standing  armies    of  Gx'eat   Britain, 


438  ECONOMIC  PHILOSOPHY. 

France,  Germany,  Russia,  Austro-Hungary,  and  Italy  combined, 
when  on  a  peace  footing,  amount  to  only  3,265,000  men,  their 
active  army  during  war  to  only  5,101,000  men,  and  their  entire 
nominal  forces,  including  their  active  army,  depot  troops,  garri- 
sons, and  reserves  for  244,000,000  of  people,  sum  up  to  only  6,470,- 
000  men,  or  but  fifty  per  cent,  more  than  the  United  States  actu- 
ally mustered  into  the  field  in  five  years.  The  entire  annual 
expenditure  of  these  six  leading  nations,  on  their  armies,  is  £96,- 
000,000,*  or  $480,000,000,  an  expenditure  about  half  as  great  per 
day  as  that  to  which  the  United  States  alone  was  subjected  dur- 
ing the  greater  part  of  the  war,  and  the  total  of  which, for  twenty 
years,  would  be  required  to  pay  the  cost  of  the  American  war 
($9,000,000,000)  t  for  five  years.  The  military  expenditure  of 
Great  Britain  is  $3  per  head  per  year,  for  the  population  of  Great 
Britain  and  Ireland,  or  one  cent  per  working  day,  being  about  one- 
sixth  the  cost  of  intoxicating  liquors.  The  military  expenditure 
of  France  is  10s.  sterling  (about  f2.50)  per  head  per  annum,  or 
about  two-thirds  of  a  cent  per  working  day.  That  of  Germany  is 
fifteen  and  a  half  millions  of  pounds  sterling  ($78,000,000)  for 
41,000,000  of  people,  or  say  one-half  cent  a  day  for  each  person. 
That  of  Russia  is  $1.25  jDer  capita  per  year,  or  one-third  of  a  cent 
a  day.  And  those  of  Austro-Hungary  and  Italy  are  about  the 
same.  Since  the  war  of  1861-5,  the  American  expenditure,  per 
capita,  for  interest  on  the  war  debt  and  pensions,  about  equals 
the  European  rate  of  expenditure  per  capita  for  standing  armies 
and  interest. 

It  cannot  be  assumed,  therefore,  that  the  American  experiment, 
of  dispensing  wholly  with  a  standing  army,  has  proved  economi- 
cal to  American  tax-payers,  unless  it  be  also  assumed  that  the 
maintenance  of  a  standing  army  would  not  have  prevented  the 
war  for  secession  in  1861-5.  It  is  diificult  to  imagine,  however, 
a  government  having  100,000  armed  men  at  its  command  calm- 
ly waiting  until  eleven  States  had,  one  after  another,  met  in 
their  legislative  sessions,  and  resolved  to  withdraw  from  the 
Union,  when  a  single  regiment  of  obedient  troops  would  have 
proved  competent  to  disjjerse,  or  place  under  arrest,  either  of  these 
bodies.  Since  1860,  the  United  States,  as  an  integral  state,  indis- 
soluble at  the  will  of  any  one  or  eleven  States,  owes  its  existence 
to  the  army  it  was  able  to  create.  The  collision  between  Ger- 
many and  Austria,  ending  at  Sadowa,  and  between  Germany  and 

♦  Encyclopaedia  Britannica.  +  Estimate  of  David  A.  Wells. 


ARMIES  CREATE  THE  STATE.  439 

France,  terminating  at  Sedan,  have  converted  Prussia  into  a 
German  empire  founded  chiefly  by  an  army.  The  kingdom  of 
Italy  under  Victor  Emmanuel,  is  an  army-made  kingdom  in  effect 
— the  irregular  bodies  of  carbonari  and  lazzaroni,  under  Garibaldi, 
counting  for  an  army  because  of  the  absence  of  any  effective  op- 
position. England's  rule  over  Ireland  and  India  rests  on  military 
force,  more  or  less  nascent,  and  hence,  in  her  reign  over  200  out 
of  225  millions  of  her  subjects,  England  is  an  army-made  state. 
Russia,  Austro-Hungary,  and  the  Ottoman  Empire  do  not  aspire 
to  be  other  than  army-made  states.  Hence,  in  the  industrial 
sense,  armies  may  be  defined  as  the  factories  which  take  in  races, 
quarrels,  and  superstitions  as  their  raw  material,  employ  sol- 
diers as  their  working  operatives,  make  use  of  money,  credit, 
taxes,  loans,  guns,  powder,  ships,  and  shells,  as  their  circulating 
capital,  and  turn  out  states,  empires,  and  i-epublics,  and  indirect- 
ly popular  elections,  settled  constitutions,  legislatures,  laws, 
courts,  and  political  and  civil  order,  as  their  finished  products. 
They  stand  in  the  same  relation  to  the  states  which  they  estab- 
lish, as  strikes  and  lock-outs  do  to  the  subsequent  rates  of  wages. 
Army  expenditures,  therefore,  stand  on  the  same  footing,  econom- 
ically, as  expenditures  for  education,  for  elections,  for  courts  of 
justice,  and  the  punishment  of  crime.  They  have  been  classed, 
by  many  economists,  as  wholly  unproductive,  or  as  simply  de- 
structive. 

When  viewed  in  perspective,  over  long  distances  of  time,  they 
often  seem  more  productive  than  periods  of  peace.  The  treasures 
of  gold  and  silver,  obtained  by  Alexander  from  the  hordes  of  East- 
ern princes,  introduced  money  in  Western  Europe.  The  con- 
quests of  Rome  were  missionary  in  their  effect.  Many  modern 
wars  have  directly  produced  the  most  wide-spread  industrial 
benefits.  No  feature  in  economic  history  is  so  difficult  of  accu- 
rate adjustment  as  that  of  the  relative  cost  of  wars  and  of  armies,* 

*Col.  Volley,  professor  of  military  adminietration  at  Sandhurst.writing  in  Encyclope- 
dia Britannica  on"Army,"  says  of  military  expenditure:  "Perhaps  it  might  more  fairly  be 
called  indirectly  productive,  as  necessary  to  the  maintenance  and  extension  of  civiliza- 
tion, and  the  production  and  development  of  trade.  Further,  the  value  of  property  in- 
creases with  increased  security,  ar.d  military  expenditure  within  certain  limits  thug 
tends  to  repay  itself.  Broadly,  however,  it  may  be  treated  as  a  tax  for  insurance,  and 
as  so  much  withdrawn  from  the  productive  power  of  the  nation.  The  object  of  all  mili- 
tary institutions  is  to  develop  the  highest  fighting  power— that  is,  to  attain  the  greatest 
security  with  least  strain  on  the  industry  of  the  country — the  latter  being  measured  not 
by  the  cost  of  the  army,  as  shown  by  the  budget,  but  by  the  amount  of  productive  labor 
withdrawn  and  disturbance  produced.  All  questions,  therefore,  have  to  be  considered 
under  two  aspects,  miliiary  and  economical— that  of  efficiency  and  that  of  cost." 


440  ECONOMIC  PHILOSOPHY. 

of  na\des,  and  fortifications,  as  compared  with  the  often  more 
costly  experiment  of  attempting  to  dispense  with  them,  or  of 
faihng  to  maintain  them  with  adequate  vigor. 

Peru,  for  many  centuries  a  cultivated,  aristocratic,  populous, 
and  wealthy  country,  inheritor  of  the  pride  of  the  Castilian  and  of 
the  sources  of  the  wealth  of  the  Incas,  accustomed  to  despise  the 
base-born  and  grovelling  Chilians  as  a  coarse,  brutal,  and  half- 
savage  nest  of  mountain  starvelings,  has  within  three  decades  past 
been  reduced  to  a  bankrupt  and  subject  province,  the  prey  of  the 
cruel  savages  it  had  despised. 

History  is  full  of  melancholy  proofs  that  agriculture  and  com- 
merce, banking  and  exchange,  manufactures  and  finance,  all  de- 
rive their  liberty  to  exist  in  peace  and  security,  either  recently, 
presently,  or  prospectively,  from  the  soldier.  After  all  is  said, 
that  can  be,  in  favor  of  holding  the  military  power  at  all  times 
subordinate  to  the  civil  power,  the  histoi'ic  fact  remains  that  the 
civil  power  owes  its  existence  to  the  military,  and,  if  adequately 
resisted,  falls  back  for  defense  upon  the  author  of  its  being — the 
army.  In  this  last  resort  the  productive  power  of  the  state,  in  its 
totality,  becomes  bound  up  in,  and  is  dependent,  upon  its  military 
power. 

174.  Crime  aud  Its  Puuishnients. — Crime  is  little  else  than 
a  continuance,  by  sporadic  individuals,  of  that  warfare  against 
order,  which,  if  carried  on  by  organized  bodies  of  men  in  military 
array,  is  called  war.  It  consists  in  gratifying  our  desires  by  the 
commission  of  acts  which  the  state  condemns  and  punishes.  In 
the  United  States  about  30,000  convicts,  in  the  penitentiaries,  attest 
the  fact  that,  in  the  most  favored  industrially  of  nations,  about 
one  in  2,000  of  the  population  is  a  criminal.  Owing  to  the  very 
large  number  of  criminals  that  escape  punishment,  the  propor- 
tion of  those  who  at  times  and  in  sudden  heat,  as  well  as  profes- 
sionally and  as  a  settled  business,  make  war  on  society,  is  some- 
what larger.     There  are  also  11,000  lesser  culprits. 

The  state  does  not  punish,  primarily  or  chiefly,  to  reform  the 
criminal,  but  to  protect  itself,  and  preserve  that  order,  without 
which  there  could  be  no  productive  industry,  or  settled  liberty. 
No  ethical  perfection  can  be  claimed  for  its  statutes  or  decrees, 
whether  executive,  legislative,  or  judicial. 

Its  right  to  govern  does  not  depend  on  its  governing  always 
rightly,  since  that  would  be  to  require  infallibility  from  the 
fallible,  and  since  no  other  criterion  more  wise  than  the  state  it- 
self can  be  found  to  determine  whether  it.  is  right. 


THE  PROBLEM  OF  CRIME.  441 

"  No  thief  e'er  felt  the  halter  draw. 
With  good  opinion  of  the  law." 

Except  as  the  minority,  which  has  to  be  overruled  in  all  gov- 
ernment, m^y  agitate  with  the  view  of  converting  itself  into  the 
majority,  and  so  becoming  in  fact  the  state,  the  opinions  of  such 
minority  are  practically  immaterial.  The  state  is  therefore  as 
wise,  as  just,  and  as  humane  as  the  aggregate  opinion  which  goes 
to  make  up  its  decisions,  and  no  more  so.  It  expresses  a  grand 
average.  In  the  view  of  later  or  distant  peoples,  a  state  may 
itself  commit  great  blunders,  crimes,  and  inhumanities,  and  in 
no  sphere  is  it  more  possible  to  do  so  than  in  its  punishments  of 
crime.  In  its  own  view  it  can  not  err,  because  there  is  no  cri- 
terion by  which  to  adjudge  its  action  to  be  error,  unless  it  may 
be  the  very  flimsy  criterion  of  popular  clamor.  But  a  clamor 
may  be  raised  as  easily  when  the  state  is  right,  in  the  judgment 
of  its  best  minds,  as  when  it  is  wrong.  For  popular  clamor  also 
has  its  errors  and  its  crimes. 

Crime  is  at  bottom  a  problem  in  economic  science  (as  well  as  in 
moral)  for  four  reasons,  viz. : 

1.  Men,  in  most  cases,  become  criminals  only  as  they  fail  in 
productive  industry. 

2.  In  a  like  vast  majority  of  cases  their  reform  can  be  best 
efFected,  if  at  all,  by  improving  their  facilities  for  making  a  living 
honestly. 

3.  The  modes  of  punishment  usually  adopted  eliminate  the 
criminal,  temporarily  or  permanently,  from  among  industrial  pro- 
ducers, and  render  him  a  burden  on  them. 

4.  Crime  itself  is,  in  most  cases,  an  attempt  at  a  redistribution  of 
wealth,  power,  or  privilege,  in  a  manner  which  assumes  that  the 
criminal  will  not  abide  by  the  mode  of  economic  distribution 
brought  about  by  natural  and  social  law.  He  is  not  content  with 
his  own . 

M.  Quetelet*  took  a  less  economic  view  of  crime,  but  while  he 
compared  crime  with  age,  sex,  occupation,  education,  geographical 
districts, etc.,  he  neglected  to  compare  it,  systematically, with  mere 
poverty.  Of  course  he  could  not  find  a  correspondence  for  which 
he  did  not  look.  After  noting  that  instruction  has  less  influence 
than  is  generally  supposed,  and  that  instruction  which  consists 
only  of  reading  and  writing,  to  the  neglect  of  morals,  may  become 
a  new  instrument  of  crime,  he  says :   ' '  The  same  is  true  of  poverty. 

*  "  RecliercUes  sar  le  Penchant  au  Crime."    A.  Quetelet,  1833. 


442  ECONOMIC  PHILOSOPHY. 

Most  of  the  departments  of  France,  reputed  the  poorest,  are  at  the 
same  time  the  most  moral.  Man  does  not  generally  resort  to 
crime  hecause  he  has  but  little,  but  rather  when  he  is  suddenly 
reduced  from  a  condition  of  ease  to  one  of  distress,  and  of  insuf- 
ficient means  to  gratify  his  accustomed  wants."  M.  Quetelet's 
specification  does  not  completely  justify  his  position.  The  poorer 
districts  of  France  might  be  more  moi-al  thau  the  richer,  and  yet 
if  the  immoral  class,  in  these  districts,  were  all  the  poorest  class,  it 
would  still  establish  that  their  immorality,  and  their  poverty,  were 
either  due  to  each  other,  or  to  like  causes.  The  comparison  must 
not  be  made  between  districts,  but  between  the  richer  and  the 
poorer  population  of  any  one  district.  The  comparison  (cited 
ante,  ch.  1,  §15,  of  this  work)  in  the  case  of  Austria  would  be 
duplicated  in  any  other  country  in  which  the  statistics  should  be 
collected.  It  would  be  found  that  the  trial  and  punishment  of 
well-to-do  people,  for  crime,  is  so  rare  as  to  prove  that  crime  stands 
chiefly  related  to  povei'ty. 

M.  Quetelet  says,  as  to  the  sexes,  in  France,  "that  only  one 
woman,  to  four  men,  comes  before  the  ti-ibunals."  This  pro- 
portion of  females  is  larger  than  in  America  ;  but,  even  in 
America  only  one  woman,  to  four  and  a  half,  makes  the  struggle 
for  subsistence  in  person, by  engaging  in  an  industrial  occupation. 
In  a  visit  to  the  penitentiary  at  Joliet,  111.,  the  writer  observed 
that  there  were  but  thirty  women  to  1,500  men.*  But  it  may  be 
doubted  if  in  Illinois  the  number  of  women  who  make  the  strug- 
gle for  subsistence,  wholly  unaided  by  any  male  protector,  exceeds 
one  in  fifty. 

M.  Quetelet  found  that  both  in  warm  weather  and  in  w^arm 
climates,  as  compared  with  cold,  crimes  of  violence  and  against 
persons  prevail,  but  that  in  cold  weather,  and  in  cold  climates, 
crimes  against  property  multiply.  He  found  that  the  country  in 
which  there  are  most  frequent  changes,  and  the  greatest  admix- 
ture, of  population,  in  which  industry  and  commerce  bring  people 
into  most  active  collision,  and  persons  and  property  circulate  most 
actively,  and  in  which  there  were  greatest  inequalities  of  fortune, 
there  was  the  highest  ratio  of  crime  to  population.  The  higher 
the  rank  of  society,  and  grade  of  instruction,  the  less  the  culpabil- 
ity of  women  relatively  to  men,  and  the  lower  the  rank  the  less 
the  moral  differentiation  between  the  two  sexes.  The  liberal  pro- 
fessions tend  toward  crimes  against  persons  more  than  to  those 

♦  Census  of  1880  makes  it  1487  males,  23  females. 


CONDITIONS  OF  CRIME. 


443 


against  property ;  the  ouvrier  (wage- workers)  and  servile  class  tend 
most  to  crimes  against  property.  So  far  as  women  are  in  a  con- 
dition of  dependence,  lead  sedentary  lives,  or  are  physically  weak, 
their  proportion  of  crime  is  diminished.  The  impulse  toward 
crime  was  strongest  in  the  period  of  the  culmination  of  physical 
strength  and  animal  passion,  declining  after  the  age  of  twenty- 
five  in  the  ratio  shown  in  the  diagram. 


10 


15 


■m       25      30       35      40       -is       50       55      co       c5       to       75 
Relative  Tendency  to  Crime  at  Different  Ages. 


80 


85 


90        S?5 


In  America  the  period  of  epidemic  absence  of  crime  was  simul- 
taneous with  the  like  absence  of  bankruptcy,  viz.,  during  the  war 
of  1861  to  1865.  In  many  counties  in  every  State  tlie  jails  were 
continuously  empty  for  long  periods,  so  that  it  attracted  the 
comments  of  the  courts.  The  war  seemed  to  exhaust  the  crime 
propensity  by  its  intense  demands  for  slaughter,  and  all  minor 
strifes  lacked  the  passion  to  fan  them  into  crime. 

M.  Quetelet  concludes  his  researches  by  expressing  his  "  aston- 
ishment at  the  constancy  which  we  observe  in  the  i-esults  wliich 
each  year  appear  in  the  records  of  the  administration  of  justice. 
Nothing,  at  first  blush,  ought  to  be  less  regular  than  the  march  of 
crime.  Nothing,  above  all,  ought  more  completely  to  defy  human 
foresight,  than  the  number  of  murders  whicli  would  arise  witliout 
provocation,  and  in  encountei's  altogether  accidental.  Neverthe- 
less experience  proves  that  not  only  murders  are  annually  nearly 
the  same  in  number,  but  that  the  instruments  which  serve  in  tlieir 
commi.ssion  are  employed  in  the  same  proportions.  Thus  is  pre- 
sented to  us  the  same  sad  perspective  of  the  reappearance  of  tlie 
same  crimes  in  the  same  order,  and  assuming  in  minute  detail  the 
same  form.     Sad  condition  of  the  liuman  race— the  portion  due 


444  ECONOMIC  rillLOSOPUY. 

to  the  prison,  chains,  and  the  scaffold,  seems  as  fixed  as  the  reve- 
nues of  the  state."  * 

In  the  very  earliest  condition  of  society,  crime,  as  distinguished 
from  the  disobedience,  by  the  slave,  of  his  master's  commands, 
could  hardly  be  said  to  exist.  Crime  is  the  offspring  of  liberty, 
as  is  also  virtue.  The  tendency  of  earlier  society  was  to  punish 
crime  by  expulsion  or  extermination — vindictively.  Exile  to  an 
island  is  mentioned  in  Job,  and  appears  in  the  earliest  Roman 
law.  Labor  in  mines,  and  slavery,  took  the  place,  until  a  recent 
date,  wdiich  is  now  held  by  penitentiaries  and  jails.  Forfeiture  of 
goods,  and,  in  a  few  cases,  of  land,  branding  and  slitting  the  ear, 
maiming  and  torture,  crop  out  in  history  as  expressive  of  the 
sense  of  social  justice  toward  crime.  Throwing  from  the  Tarpeian 
Rock,  casting  among  lions,  the  drinking  of  poison,  beheading, 
crucifixion,  and  burning  are  prominently  brought  to  view  in 
ancient  and  medieval  history,  while  hanging  is  recent. 

In  administering  the  death  penalty,  no  account  is  usually  made 
of  the  value  a  man  may  still  be  capable  of  conferring  on  society, 
notwithstanding  the  commission  by  him  of  a  very  great  crime. 
Common  rumor  repoi-ts  Shakspeare  as  having  incurred  the  death 
penalty,  for  poaching,  before  he  had  written  any  one  of  his  plays 
or  poems.  Had  the  law  been  executed,  in  his  case,  the  human 
race  w^ould  have  suffered  an  immeasurable  loss.  Jeremy  Bentham 
assails  vigorously  f  what  he  calls  the  ' '  lavish  and  unnecessary 
use  that  is  made  of  the  invariable,  unequable,  incommensurable, 
uncharacteristic,  unfrugal,  unpopular,  uncompensatory,  ii'remis- 
sible  punishment  of  death."  Since  his, day  the  number  of  crimes 
so  punished  has  been  reduced  from  134  to  4,  of  which  the  latter  all 
involve  the  taking,  or  endangering,  of  human  life. 

The  most  successful  treatment  of  crime  in  modern  history,  and 

*  Note  (in  French)  from  Quetelet; 

1826.       1827.       1838.      1829. 

Meurtres  en  general 241 

Fusil  

Platelet 

Sabre,  epee,  et  autres  arniee  permises 

Stylet,  poignard,  et  autres  armes  prohlbites 

Couteau  

Baton,  canne,  etc  23 

Pierres 

Hache,  fourclie,  et  autres  instrumens  tranchants  on 

piquans 

Marteau  et  corps  coutoud<)ns  non  autrement  designees 

Strangulations  

En  precipitant  ou  noyant 

Le  feu ... 

Inconnus  

t  "  Bentham's  Works,"  by  Bowring,  vol.  1,  p.  18G. 


241 

2?4 

227 

2.31 

47 

52 

54 

54 

n 

12 

6 

7 

8 

2 

6 

6 

7 

5 

2 

1 

X) 

40 

34 

46 

23 

28 

31 

24 

20 

20 

21 

21 

13 

20 

16 

14 

22 

20 

26 

31 

2 

5 

2 

o 

6 

16 

6 

1 

1 

1 

17 

1 

2 

FROM  KILLING  TO  CURING.  445 

the  only  treatment  that  could  be  called  ecoTiomic  or  reformatory, 
is  the  colonization  of  the  criminal,  as  practiced  by  England,  in- 
directly in  America,  and  directly  in  Australia,  the  Cape,  New 
Zealand,  and  Tasmania.  Notwithstanding  all  the  efforts  which 
philanthropists  have  made  to  bring  reform  out  of  the  penitentiary 
system,  the  admission  of  practical  prison  workers  is  that  the  sys- 
tem almost  never  produces  penitence.  It  fails  to  recognize  that 
most  men  become  criminals,  not  because  inci^eased  restraint  and  a 
close  fitting  "jacket  of  the  law  "  is  what  they  need,  but  because 
the  degree  of  restraint  and  jural  limitations  they  are  under  in 
civilized  life,  and  in  a  state  of  liberty,  is  greater  than  their  na- 
tures are  adapted  to.  A  society  more  relaxed,  with  fewer  re- 
straints and  greater  self-dependence,  is  furnished  them  by  colo- 
nization, and,  in  many  thousands  of  instances,  the  transported 
convict  in  a  few  years  becomes  the  firm  friend  of  law  in  his 
new  home. 

Tlie  substitution  of  the  penitentiary  so  largely  for  the  gallows 
has  been  due  to  the  increased  value  of  man  which  arises  with  the 
growth  of  capital,  the  facility  of  subsisting  and  employing  the 
prisoner,  which  attends  the  introduction  of  machinery  and  the 
subdivision  of  labor,*  the  sensitiveness  of  the  public  conscience 
in  view  of  occasional  instances  of  convicting  the  innocent,  and 
the  general  growth  of  humanity  and  regard  for  human  life. 

175.  Social  Crimes  and  Insanities. — Quetelet  found  that 
both  the  weather,  and  the  seasons,  had  the  same  influence  on 
crimes,  and  on  insanities.  The  ancients  recognized,  or  imagined, 
so  close  an  influence,  or  sympathy,  as  existing  between  the  moon 
and  mental  aberration,  as  to  call  the  latter  after  the  former, 
lunacy,  or  moonstroke.  Absurd  as  tliis  has  been  held,  modern 
medical  science  drifts  around  to  the  same  point,  by  attributing 
much  mental  derangement  to  malaria  or  diseased  air,  and  then 
making  the  symptoms  on  the  7th,  14th,  21st,  and  28th  days  the 
test  as  to  whether  the  disease  is  malarious,  since  these  are  merely 
moon  periods.  Both  views  may  be  mistaken,  and  the  latter 
merely  a  survival,  in  a  scientific  form,  of  the  earlier  superstition. 
On  the  other  hand,  it  is  possible  that  a  force  which  can  lift  the 
ocean  ninety  feet,  in  the  Bay  of  Fundy,  may  excite  tides  in  the 
atmosphere  which  have  their  effects  on  the  mind  and  will. 
Whether  any  of  these  hypotheses  be  true  or  not,  there  is  a  strong 
analogy  between  the  epidemics  of  unreason,  cyclones  of  cruelty, 

*  In  the  penitentiaries  of  Illinois,  17  mechanical  trades  were  tauglit  in  1810. 


446  ECONOMIC  PHILOSOPHY, 

aud  outbreaks  of  social  war,  which  occur  in  tlie  world  of  collective 
humanity,  and  the  storms  and  tempests  of  the  physical  world. 
These  epidemics  of  unreason  enlist  great  masses  of  men,  even  mil- 
lions at  a  time,  in  their  phantasies.  As  these  millions  could  only 
cohere  through  the  leadership  of  their  noblest  and  purest  minds, 
their  most  zealous,  self-sacrificing,  and  just  men,  it  is  found  that 
in  these  great  social  upheavals  it  is  the  very  best  men  that  lead 
in  the  work  of  mischief,  if  mischief  it  is  to  be  called.  The  perse- 
cutions of  the  Christians  by  the  Roman  Emperors,  the  tendency 
of  dying  persons  to  bequeath  their  lands  and  goods  to  the  church, 
and  to  overestimate  the  virtue  of  charity  as  compared  with  indus- 
try, led  into  the  middle  or  dark  ages.  The  exaggerated  value 
which  men,  during  several  centuries,  attached  to  the  work  of 
bringing  the  whole  world  under  one  religious  government — a 
fanaticism  which  had  its  outcome  in  a  sacrifice  of  industry  to 
nionasticism  and  in  a  waste  of  European  life  and  energy  upon 
the  crusades — in  religious  persecutions,  and  in  the  prosecution 
and  buiniing  of  witches,  and  the  religious  wars,  all  threatened 
to  quench  civilization  in  Europe  wholly.  Tliere  is  little  doubt 
that  these  veritable  cyclones  of  human  hate,  black  with  all  the  de- 
structive possibilities  of  reviving  barbarism,  were  led  on  by  the 
very  best,  purest,  and  noblest  minds,  the  most  spiritual  and  self- 
sacrificing,  as  they  were  judged  at  the  time,  in  the  world's  best  cir- 
cles. There  is  equally  little  doubt  that  it  was  the  substitution  of 
the  spirit  of  gain,  of  industry,  and  of  business,  caused  by  the  re- 
vival of  trade  in  Europe  under  the  stimulus  of  the  discovery  of 
the  Indies  and  of  America,  which  rescued  the  world  from  the 
darkness  into  which  it  was  ever  more  deeply  plunging,  by 
bringing  back  the  thoughts  of  mankind  to  their  secular  and  ma- 
terial interests. 

Looking  at  these  social  tendencies,  it  becomes  evident  that  they 
go  far  toward  equalizing  the  ultimate  influence  of  the  more  suc- 
cessful and  the  less  successful,  or  of  what  are  usually  called  the 
good  aud  bad  classes  of  society.  The  latter  drift  into  the  petty 
stage  of  individual  crime,  and  are  eliminated  by  society  through 
some  mode  of  punishment.  The  former  take  the  lead  in  great 
holocausts  of  suffering  and  slaughter,  which  equal,  in  the  evil  and 
misery  they  inflict  on  tlie  world  in  a  single  year,  or  generation, 
all  that  its  combined  criminal  and  vicious  classes  would  inflict  in 
a  century.  At  the  rate  of  240  murders  per  annum,  in  France, 
the  individual  wickedness  of  that  country  would  in  seventy  yeai\s 
take  as  many  lives  as  its  social  and  collective  fanaticism,  acting 


AMBITIOK  AND  CRIME. 


44: 


in  the  name  of  justice  and  public  spirit,  took  in  one  year  of  the 
French  Revolution,*  and  it  would  require  four  French  Revolu- 
tions to  make  one  St.  Bartholomew's  night,  t 

Roughly  estimating,  as  many  lives  were  destroyed  in  the  cru- 
sades X  as  have  been  ended  in  Europe  by  j)rivate  murder  in  3,240 
yeai-s,  or  since  King  Sesostris  led  the  armies  of  Egypt  against 
Asia.  Yet  it  would  be  doing  injustice  to  the  leaders  in  the  cru- 
sades to  suppose  that  their  motives  seemed  to.  them  less  sacred 
than  the  absolute  righteousness  itself.  It  becomes  those  who 
have  charge  of  the  state,  therefore,  in  its  executive,  legislative, 
and  judicial  functions,  to  observe  with  a  wary  and  watchful  eye 
the  movements  of  those  who  have  influence,  popularity,  and 
power,  rather  than  those  of  the  burglars,  hall-thieves,  and  mid- 
night assassins.  The  latter  will  be  reached  by  the  police  and  the 
courts,  and  opinion  is  united  as  to  their  qualit3^  But  the  great 
uijheavals  and  oppressions,  holocausts  and  sacrifices,  civil  wars 
aud  revolutions,  will  originate  with  the  public-spirited,  patriotic, 
pure,  and  virtuous.  The  people  who  give  the  statesmen  most 
trouble,  and  the  generals  and  armies  most  business,  are   those 


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Rate  op  Growth  of  the  Woiu.d's  National,  Dei-.ts  sinck  1714,  on  a  Scale  or 
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.ooo.ax). 


448  ECONOMIO  PHILOSOPHY. 

who  are  intent  on  making  the  world  better,  or  on  obtaining  for 
some  of  its  people  enlarged  rights  and  greater  purity,  and  for  them- 
selves a  higher  niche  in  the  temple  of  fame. 

176.  The  Recent  Growth  of  Debt.— The  growth  of  the 
aggregated  debts  of  the  nations  which  borrow  in  the  money 
market  of  Europe  forms  the  unsettled  problem  in  modern  politi- 
cal finance.  Since  1714  the  world's  national  debts  have  nmlti- 
plied  fifteen-fold,,  viz.,  from  1,500  millions  of  dollars  to  2(3,970 
millions.*  Measured  by  half  decades,  the  rate  of  increase  appeal's 
in  diagram  on  page  447. 

Mr.  Adams  t  says  of  a  loan  to  government:  "Its  full  effect  is  to 
check  further  industrial  expansion,  and  this  it  does  by  turning 
the  energy  of  the  country  into  other  channels."  Yet  Mr.  Adams 
says  that  "employed  capital  will  not  be  placed  at  the  disposal  of 
the  state,  and  that  a  public  loan  at  normal  rates  of  interest  can 
not  exert  any  decided  influence  upon  established  industries,  since 
there  is  no  motive  pi-esented  to  one  whose  capital  is  well  invested 
to  withdi'aw  any  part  of  it  from  its  accustomed  employment,  and 
place  it  at  the  disposal  of  the  state." 

Mr.  Adams  infers  that  it  will  take  the  fund  that  would  have 
gone  to  new  enterprises,  because  no  man  having  a  fund  well  in- 


*  The  Iron  Age,  referring  to  an  address  to  the  National  Board  of  Trade  by  Mr. 
Price,  quotes  Lord  Derby  as  having  predicted  that  European  nations  must  repudiate. 
The  aunualburden  of  $800.000,000 of  interest  is  a  load  they  can  not  carry.  It  continues: 
"  Spain,  Portugal,  Austria  and  Greece  are  bankrupt ;  Russia  and  Italy  are  without 
credit;  and  the  great  States  of  Great  Britain,  Prance,  and  Holland  are  exhausting  every 
measure  of  taxation  to  maiiitain  solvency  and  credit. 

"  To  the  constantly  growing  sum  of  obligations  which  constitute  our  credit  system 

must  be  added  an  enormous  total  of  public  indebtedness  contracted  by  minor  divisions 

of  the  state,  corporations,  tirms,  and  individuals.    For  our  own  country  the  showing  is 

assumed  to  be  about  as  follows  : 

Present  national  debt,  December  1, 1887 $1,675,816,660 

State 2d6,597,.594 

County  and  municipal 821,486,447 

Railway.     4,163,640,144 

Banking  4,581,706,203 

Private  banking    ' 1,500,000,000 

Record 6,()00.0(X).000 

Mercantile  3,000,000  000 

Individual,  otherwise  than  above 6,000,000,000 

Aggregate  $27,969,247,048 

"  This  total  is  more  than  one-half  the  entire  census  valuation  of  1880.  If  our  popula- 
tion is  60,000,000,  it  means  a  per  capita  indebtedness  of  $465,  or  more  than  the  average 
income  of  the  family  in  Massachusetts." 

Singularly  enough,  while  some  are  distressed  by  these  predictions.  Prof .  MacLeod, 
of  Cambridge,  counts  all  this  volume  of  debt  as  "  currency,"  and  therefore  "  means 
of  payment,"  as  well  as  principal  to  be  paid. 

t  "Public  Debts,"  p.  62. 


EFFECTS  OF  DEBT.  449 

vested  in  established  eiiterpz'ises  would  see  sufficient  profit  in  it. 
But,  as  we  have  repeatedly  seen,  the  fund  that  goes  into  new  enter- 
prises demands  as  a  rule  a  far  higher  rate  of  interest  than  is 
earned  in  established  enterprises.  Capital  migrates  only  under 
the  inducement  of  higher  rates  of  profit.  If  it  will  not  abandon 
its  established  enterprise,  in  which  pi'ofits  are  fast  descending  to 
ordinary  rates  of  interest  and  rent,  and  wherein  perhaps  they  are 
fifteen  per  cent,  per  annum,  why  should  it  be  withdrawn  from 
the  prospective  venture  in  which  50,  100,  or  500  per  cent,  are 
looked  for  ? 

Mr.  Adams  says :  "  If  filled  at  all,  it  will  be  filled  from  that  fund 
of  fi'ee  capital  which  would  otherwise  have  been  invested  in  new 
industries."'  On  the  contrary,  the  class  of  persons  who  buy  gov- 
ernment bonds  are  at  the  very  opposite  pole  of  the  industrial 
world  from  the  class  which  invests  capital  in  new  industries.  The 
latter  are  the  class  full  of  ideas,  but  without  a  surplus,  generally 
borrowers  of  the  means  they  invest^  The  lenders  to  government 
are  a  class  seeking  safety  by  avoiding  the  risks  of  industrial  in- 
vestment, either  because  their  capitals  are  too  large  to  admit  of 
their  superintending  industrial  enterpi'ises,  or,  as  in  the  case  of 
Avomen  and  salaried  employees,  they  feel  too  distrustful  of  their 
own  judgment  to  venture. 

Prof.  Adams'  suggestion  of  the  effect  of  loaning  to  govern- 
ments overlooks  the  fact,  also,  that  no  person  could  be  deterred 
from  investing  in  any  new  enterprise  by  the  fact  that  he  had  al- 
ready invested  in  bonds,  since  the  bonds  are  as  convertible  as 
money.  The  ready  answer  of  those  who  solicit  him  to  invest, 
if  he  should  object  that  he  had  already  invested  his  money  in 
government  bonds,  would  be,  "That  is  an  aid  rather  than  an 
obstacle,  as  we  will  take  your  bonds  as  even  better  than  cash,  for 
they  will  draw  interest  until  we  wish  to  use  them,  and  whenever 
we  wish  to  use  them  they  are  as  good  means  of  payment  as 
money." 

The  confusing  element,  in  tracing  the  economic  effects  of  loans 
to  government,  is  that  the  bond  which  is  purchased  is  in  the 
economic  sense  "  money,"  or  "inflation, "  as  truly  as  if  it  were 
an  additional  issue  of  paper  money.  Hence,  by  its  effect  on  prices 
generally,  it  has  the  same  effect  to  stimulate  new  enterprises  in- 
stead of  discouraging  them,  which  all  additions  to  tlie  volume  of 
the  currency  have. 

Mr.  Adams  *  fully  explains  this  use  of  government  bonds  as  in- 

*  "Public  Debts,"  pp.  55-7. 


450  ECONOMIC,  PHILOSOPHY. 

ternational  means  of  payment.  He  shows  tliat  when  Fx'ance,  as 
a  means  of  paying  the  German  indemnity,  called  for  a  loan  of 
2,000,000,000  francs,  more  than  four  times  that  sum  were  offered. 
About  two-thirds  of  the  sum  offered  were  offered  from  outside  of 
France,  one-tenth  of  it  from  Germany  itself  ;  that  in  fact  it  was 
only  a  readjustment  of  credits  which  did  not  involve  any  drain 
of  capital  from  the  industi-ies  of  France,  but  only  an  addition  of 
new  "international  values  "  to  the  security  market. 

Mr.  W.  L.  Fawcett  *  regards  it  as  inconceivable  that  such  an 
increase  in  the  volume  of  national  debts  should  have  any  other 
outcome  than  early  general  bankruptcy  among  all  the  weaker 
nations. 

Mr.  Adams  cites  the  attempt  of  the  foreign  bondholders  to  con- 
quer Mexico  and  enthrone  Maximilian,  which  failed,  and  the 
later  successes  of  English  bondholders  in  Egypt,  of  French  bond- 
holders in  Tunis,  and  the  abject  subservience  of  Peruvian  politics 
to  foreign  bondholders. 

He  also  holds  f  that  it  is  the  fact  that  the  possessing  or 
property-owning  class,  the  moneyed  interest,  has  captured  the 
machinery  of  government  that  "  affords  such  guai'antee  as  exists, 
that  moneys  borrowed  by  government  will  be  repaid." 

Here  again  Prof.  Adams  clings  to  the  "debt  "  idea  and  forgets 
the  "  international  value"  function,  or  currency  office,  which  he 
explains  so  fully  in  the  case  of  the  French  debt.  The  national 
creditor  not  only  does  not  cling  to  the  notion  that  his  debt  will 
be  paid,  but  in  the  case  of  the  debts  of  most  of  the  governments 
of  Europe  the  notion  does  not  exist.  All  the  European  debts  are 
interminable.  They  never  fall  due.  They  are  merely  permanent 
savnigs  banks  in  which  the  people  may  make  their  deposits  at 
interest  when  not  needed,  and  when  needed  may,  by  sale  of  the 
bond,  draw  out  their  deposits.  Of  all  financial  investments  they 
are  that  in  which  the  people  may  most  nearly  "  eat  their  cake 
and  have  it  left."  If  the  government,  by  paying  off  its  debt, 
deprives  the  people  of  the  privilege  of  lending  to  it,  they  take 
their  money  to  the  savings  banks,  or  deposit  it  in  the  national 
banks,  to  be  loaned  out  by  them  to  merchants  and  manufacturers. 
In  this  case  it  is,  usually,  the  substitution  of  a  social  loan  of  a 
narrow  sort  for  a  social  loan  of  the  broadest  sort.  For,  all  sui'plus 
uninvested  funds  have  to  be  loaned  in  some  way.  Wherein  lies 
the  danger  of  lending  them  to  the  collective  people  through  a 

*  "  Gold  and  Debt."  +  "Public  Debts,"  p.  9. 


THE  DEBT  PROBLEM.  451 

national  debt,  as  conipavecl  -with  lending  tliem  to  tlie  banking 
class  ?  We  do  not  present  these  snggestions  as  solutions.  The 
debt  question  is  tiie  nearly  unexplored  problem  in  existing 
political  economy.  The  facility  "with  which  governments  borrow 
money  is  pushing  them  ouward  toward  a  more  and  more 
socialistic  order  of  society.  Tlie  tendency  is  toward  a  rapid 
increase  of  tlie  enterprises,  sncli  as  schools,  telegi-aphing,  internal 
improvements,  of  which  the  state  "will  take  charge  in  the  interest 
of  production  of  commodities.  The  socialists  demand  that  it 
shall  take  charge  also  of  the  distribution  of  wealth,  of  interest, 
rent,  and  profits.  Meanwhile,  the  novel  fact  in  finance  is  that  in 
the  manufacture  of  debts  governments  are  at  the  same  time  sup- 
plying means  of  payment,  if  not  in  the  full  degree  asserted  by 
Prof.  McLeod,  at  least  in  the  full  degree  in  which  the  debt  so 
issued  is  readily  negotiable.  The  debt  is  money.  The  paradox 
is  orthodox. 

Socialism  rails  against  interest,  yet  seeks  nationalization  of 
land,  railway's,  mines,  manufactures,  schemes  whose  carrj'ing 
out  involves  increase  of  debt,  and  hence  of  interest.  It  jiroposes 
to  confiscate  rents,  yet  thrives  upon  that  i-apid  increase  of  town 
population,  relatively  to  rural,  which  chiefly  swells  rents. 

The  modern  state  is  a  new  factor  in  finance.  Once  the  state 
conquered  and  plundered — now  it  borrows  and  pays.  Then  it 
was  the  General.  Now  it  is  the  Banker.  Poets  loved  the  former, 
for  ver.se  can  deal  with  slaughter,  but  not  w^ith  profits,  rent  or 
interest.  When  the  people  prosper  the  poets  are  in  pain,  but 
the  economists  smile.  Tennyson  complains  about  the  fleet, 
and  Lowell  declares  that  France  and  America  are  inirsing  little 
men.  Aristophanes  anticipated  both  "  Gresham's  Law"  and 
Tennyson's  and  Lowell's  complaint,  by  twenty  centuries,  in  these 
lines : 

"  Oftentimes  we  have  reflected  on  a  eimilar  abuse 
In  the  choice  of  men  for  office,  and  of  coins  for  common  use  ; 
For  your  old  and  standard  pieces,  valued  and  api)roved  and  tried, 
Here  among  the  Grecian  nations,  and  in  all  the  world  beside, 
Recofjnized  in  every  realm  for  trusty  slanij)  and  pure  assay, 
Are  rejected  and  abandoned  for  the  trash  of  yesterday  ; 
For  a  vile,  adulterate  issue,  drossy,  counterfeit  and  base, 
"Which  the  traffic  of  the  city  passes  current  in  their  place  !  " 

—[Aristophanes,  "  Frogs,"  891-898  ;  Frere's  Translation. 


CHAPTER  XII. 

TAXATION. 

177.  Origin  of  Taxes. — Inscriptions,  on  some  of  the  oldest 
monuments  of  Egypt,  indicate  that  tribute  was  levied  on  con- 
quered tribes  ;  enforced  contributions  were  obtained  from  prov- 
inces, to  sustain  the  cost  of  the  funeral  honors  due  to  the  sacred 
ox  ;  spoil  in  gold  and  silver,  and  in  various  products  of  the  land, 
was  wrung  from  subject  tribes,  in  a  manner  that  brought  the 
methods  of  taxation  into  close  resemblance  to  the  plunder  prac- 
ticed in  war.  So,  American  merchants,  after  a  short  residence  in 
China,  have  returned  from  that  country,  with  the  fixed  impression 
that  thieves  were  licensed  by  the  government.  So  little  resem- 
blance exists  between  the  collection  of  taxes  there,  and  in 
America,  that  they  had  not  recognized  the  tax-collector  in  the 
Chinese  depredator,  but  supposed  him  to  be  literally  a  ' '  licensed 
thief."  This  would  be  the  natural  effect  of  that  system  of 
"farming  the  revenues,"  as  it  is  called,  which,  from  the  very 
dawn  of  time,  has  been  the  prevailing  system  of  levying  taxes  in 
most  parts  of  Asia  and  Africa.  The  revenues  are  "farmed  "  when 
the  governments  rent  a  province,  or  district,  to  the  chief  satrap  or 
governing  officer  thereof,  for  a  stipulated  annual  sum,  leaving 
him  to  collect  as  much  more  as  he  may,  or  as  the  district  will 
bear  without  rebellion,  by  such  methods  as  he  finds  most  con- 
venient. Usually  the  satrap  or  governor  sub-lets  to  smaller 
farmers,  and  these  to  others,  and  all  collect  partly  upon  the 
standard  of  ancient  customs,  and  partly  accoi'ding  to  "what  the 
district  will  bear,"  i.e.,  what  the  people  will  pay  without  mur- 
muring or  rebellion. 

From  the  system  of  "farming  the  revenues,"  which  is  but  one 
remove  from  licensed  robbery,  the  first  advance  toward  equity, 
among  commercial  and  trading  nations,  is  to  a  fractional  rate  one- 
half,  fifth,  eighth,  or  tenth  of  certain  specified  products  of  the  soil. 
This  is  the  system  described  in  the  Old  Testament  as  operative 
among  the  Hebrews,  and,  combined  with  certain  elements  of  the 
system  of  farming  the  revenues,  it  still  prevails  in  Turkey. 

In  India,  by  the  institutes  of  Manou,  a  tax  of  one-sixth,  one- 


ECONOMIC  PinLOSOPHT.  453 

eighth,  or  one-twelfth  was  levied  on  grain,  one-sixth  on  sales  of 
goods,  one-twentieth  on  sales  of  lands,  and  one-fifteenth  on  the 
net  annual  revenue  of  cattle,  gold,  and  silver.*  Traces  of  a  poll- 
tax  (an  equal  sum  on  each  person)  also  are  found. t  Heavier 
duties,  even  at  this  early  date,  were  levied  on  the  importation  of 
silk  fabrics  than  on  the  raw  material,!  in  order  that  the  wages  and 
profits  of  weaving  and  dyeing  silks  might  be  secured  to  t^e  Hin- 
doo artisan.  On  emergency,  in  India,  a  right  between  our  right 
of  military  seizui-e  and  of  eminent  domain  existed,  to  take  one- 
fourth  the  property  of  the  subject  as  a  tax. 

In  Egypt,  according  to  Brugsch,  certain  inscriptions,  in  the 
reign  of  Usurtasin,  indicate  that  taxation  was  levied  on  prov- 
inces in  proportion  to  income,  but  whether  pi'oportionate  to 
the  income  of  the  province,  or  of  the  people,  is  not  clear. 

Among  early  nations  the  government  is  often  itself  a  trader,  as 
in  Tyre,  Sidon,  Phenicia,  and  Carthage.  In  such  countries,  as  well 
as  in  those  wherein  the  government  is  the  sole  land-owner,  as  in 
modern  India,  and  in  those  wherein  the  ruling  families  are  the 
chief  landlords,  as  in  England  in  the  feudal  period,  taxation  as- 
sumes the  form  of  rent  of  land.  In  England,  in  the  feudal  period, 
this  rent  was  paid  mostly  in  military  or  personal  services,  and 
taxes  in  money  were  little  known. 

Hence  Blackstone  treats  the  old  feudal  forms  of  revenues  as 
the  ''  ordinary  revenues  "  of  the  crown,  while  excise  and  customs 
duties,  and  all  the  ordinary  modern  forms  of  taxes,  are  classed  as 
"extraordinary  revenues,"  which  do  not  belong  to  the  crown  of 
strict  right,  but  require  to  be  granted  to  it  by  a  special  act  of  par- 
liament. This  is  the  origin  of  the  theory  that  "taxes,"  in  the 
modern  sense  of  the  word,  are  only  gran  table  by  the  representa- 
tives of  the  people.  These  are  in  England  the  House  of  Com- 
mons, to  whose  powers,  in  the  main,  the  lower  House  of  Congress, 
and  of  our  several  State  legislatures,  succeed.  Hence  arises  tlie 
practice  in  England  of  making  up  an  annual  budget,  or  account 
of  revenues  and  expenses,  on  the  presentation  of  which  an  op- 
portunity is  afforded  to  criticise  government  policies,  and  to  vote 
upon  or  reject  them  by  making  a  modification  or  change  in  them 
a  condition  of  granting  the  budget.  This  budget  is  supposed  to 
be  presented  by  the  prem-er,  or  actual  head  of  the  government, 
whose  function  it  is  to  govern,  while  that  of  the  queen  or  king  is 
merely  to  reign.     By  this  machinery  a  division  is  effected  between 

*  Marigny.        t  De  Parien.       %  "  Qovcriimcnt  Revenues,"  by  Roberts,  p.  31. 


454  ECONOMIC  PHILOSOPHY. 

the  dignity  of  the  government,  which  rests  in  the  crowned  head, 
and  the  wisdom  or  poHcy  of  the  particular  persons  conducting  it, 
whicli  centers  in  the  premier,  who  may  hokl  either  or  several  of 
the  chief  cabinet  portfolios,  viz.,  he  may  be  first  lord  of  the 
treasury,  chancellor  of  the  exchequer,  secretary  of  state  for 
foreign  aflFairs,  etc. 

Out^f  these  customs  have  evolved  our  own  constitutional  prin- 
ciples, that  measures  relating  to  the  revenue  must  originate  in  the 
House  of  Eepresentatives  and  not  in  the  Senate,  and  that  the 
President  and  several  heads  of  departments  shall  make  up  a 
budget,  or  annual  report  to  Congress,  of  the  condition  of  the  finan- 
ces and  business  of  their  several  departments,  at  the  o^jening  of 
each  session  of  Congress. 

In  Rome  there  were  three  systems  of  voting,  one  of  which,  that 
by  centuries,  divided  the  people  into  six  different  grades,  accord- 
ing to  wealth  and  the  number  of  their  retainers  and  dependents. 
It  then  gave  them  a  power  in  determining  public  questions,  es- 
pecially of  peace  or  war,  proportionate  to  their  wealth  and  mili- 
tary resources,  and  compelled  them  to  contribute  to  the  burdens 
of  war  in  like  proportion.  Gibbon  says:  "History  has  never 
perhaps  suffered  a  more  irreparable  injury  than  in  the  loss  of  the 
cui'ious  register  bequeathed  by  Augustus  to  the  Senate  in  which 
that  experienced  prince  so  accurately  balanced  the  revenues  and 
expenses  of  the  Roman  Empire."*  Guizot  and  Wenck  estimate 
the  annual  tributes,  derived  by  the  Roman  Empire  from  subject 
nations  in  the  time  of  Augustus,  at  not  less  than  $200,000,000. 
Asia  paid  $21,000,000  a  year,  Egypt  $11,000,000,  and  Carthage  a 
war  mdemuity  of  $20,000,000  spread  over  fifty  years. 

Julius  Caesar  laid  duties  of  from  an  eighth  to  a  fortieth  on  im- 
ports, and  Augustus  introduced  the  excise  or  internal  tax  on 
sales,  legacies,  successions,  and  inheritances,  and  the  license  tax 
on  occupations,  even  down  to  petty  retailers  and  panderers  to  vice. 
The  system  of  farming  the  revenue  prevailed,  and  in  the  New 
Testament  we  get  a  graphic  view  of  tbe  contempt  and  hati*ed  felt 
for  the  tax  gathei^er.  In  Gaul,  the  taxes  amounted,  according  to 
Gibbon,  to  $45  a  head,  and  were  in  part  a  land  and  in  part  a  poll- 
tax.  This  Gibbon  calculates  at  four  times  the  average  rate  of 
French  taxes  in  his  day.  Throughout  the  empire  mines  and 
quarries,  salt,  fisheries,  and  forests  were  subject  to  special  charges, 
and  tolls  were  collected  on  post-roads  and  bridges. 

♦Gibbon's  "Decline and  Fall,"  vol.  i.p.  187. 


EQUALITY  IN  TAXATION.  455 

Constantine  in  the  Eastern  Empire  practised  the  system,  which 
continues  in  Turkey  to  the  present  day,  of  taking  a  share  of  the 
produce  of  the  land.  A  sum  was  apportioned  to  a  province,  and 
tliis  was  divided  among  the  population,  until  it  became  a  definite 
sum  per  head  to  each. 

China  has,  from  the  dawn  of  time,  taxed  the  laud  from  one-fifth 
to  one-third  its  gross  product.  Transit  duties,  next  to  the  land-tax, 
reap  the  largest  return.  Tlien  follow  taxes  on  stores,  markets, 
corpoi'ations,  salt,  on  the  manufacture  of  porcelain,  silk,  and  var- 
nish, on  the  sale  of  offices  and  degrees,  on  rank,  and  finally  duties 
on  imports  and  exports.  In  India,  a  land-tax  or  rent  is  collected 
by  the  government  as  the  national  landlord,  amounting  to  a  half 
or  third  of  the  annual  produce,  while  a  very  heavy  tax,  2s.  6d.  per 
pound,  is  levied  on  salt.  This  salt-tax  has  occasioned  the  habit,  in 
the  people  of  certain  districts,  of  eating  the  dirt  which  contains 
the  salt,  as  it  is  dug  from  the  earth,  in  order  to  escape  the  revenue 
tax  collected  on  it,  under  very  harsh  penalties  if  it  is  refined. 
This  dirt-eating  system  in  its  turn  has  produced  peculiar  diseases 
of  the  digestive  organs  of  the  ryots  who  partici^jate  in  the  habit.* 

178.  Standards  of  Equal  Taxation. — Taking  society  as  it 
has  existed  in  all  ages,  the  chief,  and  almost  the  sole,  object  of 
taxation  has  been  to  provide  an  income  and  means  of  expendi- 
ture for  those  engaged  in  administering  the  government,  and  for 
the  maintenance  of  their  armies  and  police.  The  chief  motive  of 
those  engaged  m  administering  the  government,  in  earlier  peri- 
ods, was  to  maintain  their  own  power,  and,  as  the  securest  mode 
of  doing  this,  they  gradually  gave  more  and  more  attention  to 
administering  justice  between  citizens,  promoting  the  arts,  intro- 
ducing learning,  giving  an  intelligent  direction  to  superstition, 
and  ameliorathig  tlie  tendencies  of  their  savage  populations 
toward  violence  and  fraud.  At  last,  in  modern  times,  education, 
internal  improvements,  the  promotion  of  industries,  the  care  of 
the  poor,  defective,  and  delinquent  classes,  the  interpretation  and 
adjudication  upon  contracts,  perfecting  means  of  transportation, 
including  highways,  canals,  steamship  linos,  and  stinmlating  dis- 
coveries and  inventions,  have  become  leading  objects  of  govern- 
ment. Even  the  coercive  administration  of  justice  has  become 
secondary  in  importance,  and  cost,  to  the  means  taken  to  further 
industry  and  general  enliglitenment. 

Theories  of   taxation   have  varied  with  these  changes   in   il.s 

♦  Seymour  Ktay's  "  Sjjoliatiou  of  India," 


456  ECONOMIC  PlIILOSOrilY. 

objects.  So  long  as  taxes  were  laid  as  a  means  to  keep  the  gov- 
erning classes  in  power  by  military  force,  the  chief  motive  held 
in  view  would  be  to  levy  them  where  the  most  I'evenue  could  be 
collected,  with  most  ease,  at  least  cost.  When  the  state  became 
itself  engaged  in  the  work  of  production,  as  France  is  to  day  in 
the  manufacture  of  tobacco,  and  as  the  Phoenician  kings  were 
engaged  in  foreign  commerce,  taxes  or  prohibitions  would  be 
imposed  on  all  rivals  in  the  same  trade.  The  English  govern- 
ei'nment  maintains,  in  this  spirit,  a  monopoly  to  itself  of  the 
opium  production  in  India. 

When  theories  of  equality  began  to  be  broached  by  the  French 
and  English  philosophers  of  the  eighteenth  century,  they  natu- 
rally concentrated  their  efforts  on  some  plan  of  ideal  equality  in 
taxation.  Here,  however,  arose  endless  themes  for  dispute,  ow- 
ing to  differences  of  judgment  as  to  whether  possessions,  per- 
sons, incomes,  consumptions,  occupations,  processes,  descents  and 
inheritances,  contracts,  profits,  acres,  or  i^roductive  or  idle  capi- 
tal should  be  equally  taxed.  Each  of  these  forms  an  independ- 
ent standard  of  "  equality  in  taxation  "  wholly  irreconcilable,  in  its 
practical  workings,  with  all  the  others.  One  will  say  it  is  equal 
taxation  to  tax  each  man  in  proportion  to  the  value  of  the  prop- 
erty he  owns.  This  is  the  basis  or  standard,  at  which  all  the 
state,  county,  and  local  taxation  aims,  in  most  of  the  states  of  the 
United  States,  but  not  in  the  General  Government.  The  objec- 
tion to  this  is  that  capital  that  is  earning  nothing,  and  that  per- 
haps is  in  the  way  to  be  swallowed  up  by  losses,  is  so  taxed  as  to 
hasten  the  ruin  of  its  owner,  while  men  who  are  making  large 
incomes,  but  expending  them  as  fast  as  they  make  them,  are  not 
taxed,  though  they  are  enjoying  far  more  of  the  world's  wealth 
than  those  whose  possessions  are  considerable,  but  whose  incomes 
ai*e  small.  Hence,  the  demand  for  the  equal  taxation  of  posses- 
sions is  met  by  the  counter-demand  for  the  equal  taxation  of  in- 
comes, or  of  expenditure,  or  of  consumption.  Another  will  say, 
tax  manufacturing  processes  equally,  according  to  the  product 
turned  out.  Another  will  conscientiously  think  it  equal,  to  tax 
occupations  equally,  according  to  their  earnings. 

Still  another  will  deny  that  taxation  should  be  equal,  and  will 
allege  that  taxation  should  rest  more  heavily  on  superfluities, 
luxuries,  and  vices,  e.  g.,  on  tobacco,  spirituous  liquors,  licenses 
to  sell  liquor  in  drinking  saloons,  on  shows,  brokei*s,  money  lend- 
ers, peddlers,  usurers,  on  people  who  keep  dogs,  silks,  diamonds, 
carriages,   many  servants,   large  retinues,  etc.     One  holds  that 


IDEAL  OF  TAXATION.  457 

unoccupied  land  should  be  specially  taxed  to  punish  the  wi-ong 
to  society  of  keeping  it  out  of  the  market.  Ricardo  holds  that  to 
tax  any  form  of  capital  is  a  discouragement  to  labor,  since,  in  his 
view,  capital  is  the  wage-fund  from  which  labor  must  be  paid, 
axid,  intrinsically,  all  capital  is  unproductive  except  as  it  is  made 
a  means  of  employing  labor. 

In  this  conflict  of  theories,  first,  as  to  whether  taxation  should 
be  equal  at  all,  and,  secondly,  what  element  or  aspect  of  man 
should  be  selected  in  estimating  equality,  there  could  be  no 
other  feasible  course,  open  to  governments,  than  to  combine 
taxation  on  nearly  all  these  conflicting  bases  in  the  degree  that 
a  national  legislature,  or  bureau  of  taxation,  would  be  able  to 
agree  upon.  This  is  what  is  meant  by  saying  that  taxation  is  a 
practical  question,  or,  largely,  a  compromise  between  conflicting 
theories.  Obviously,  nothing  would  be  more  despotic  than  to 
seize  upon  one  only  of  these  standards  of  equality  as  being  the 
true  and  absolute  standard,  as,  for  instance,  "  incomes,"  wheji  as 
many  persons  favor  an  equal  tax  on  every  person,  or  equality  ac- 
cording to  the  value  of  one's  possessions,  or  taxation  according  to 
consumption,  or  the  taxation  of  vices,  luxuries,  monopolies,  etc. 

179.  An  Ideal  Theory  of  Taxation. — Adam  Smith  has 
laid  down  four  rules  which  are  supposed,  by  some,  to  embody  a 
system  of  taxation  which  ought  to  be  satisfactory  to  every  mind. 
They  are  good  rules,  relatively  to  certain  others  which  Avould  be 
worse,  and  very  poor  rules  relatively  to  the  actual  practice  of 
many  governments,  which  is  better  than  these  rules.  We  shall 
examine  them  consecutively  : 

"  1.  The  subjects  of  every  Btate  ought  to  contribute  to  the  support  of  the  government, 
as  nearly  as  possible  in  proportion  to  their  respective  abilities  ;  that  is,  in  proportion  to 
the  revenue  which  they  respectively  enjoy  under  the  protection  of  the  state.  In  the 
observation  or  neglect  of  this  maxim  consists  what  is  called  the  equality  or  inequality 
of  taxation." 

The  opening  words  begin  by  the  assumption,  so  common  among 
free  traders,  that  only  "  the  subjects  of  a  state  "  ought  to  contrib- 
ute to  the  support  of  its  government.  This  is  to  ignore,  at  the 
outset,  a  cardinal  point  in  the  protectionist  experience,  that  not 
only  the  subjects  of  a  state,  but  aliens  who  seek  to  do  business  or 
sell  their  wares  within  its  borders,  or  in  any  way  to  get  the  bene- 
fits of  its  markets  and  scale  of  values,  ought  to,  and  under  ])ro- 
tectionist  duties  do,  in  many  cases,  contribute  to  the  support  of  its 
government.  The  protectionists  claim  to  be  able  to  tax  an  inter- 
national constituency  of  producers  and  consumers  on  all  interna- 


458  ECONOMIC  PIIIL080PUT. 

tioiial  trade,  i.  e^  trade  between  citizens  of  different  nations. 
Whether  they  do  so  or  not  will  be  fully  discussed  in  our  next 
chapter.  Meanwhile,  the  opening  passage  of  the  above  rule  is 
defective  in  ignoring  this  important  fact,  which  limits  the  accept- 
ance of  the  rule  to  a  class  of  closet  theorists  who  have  never  yet 
given  a  fiscal  policy  to  any  nation  in  the  world,  and  doubtless 
never  will.  The  two  recommendations  that  follow  are  that  sub- 
jects contribute  in  proportion  to  their  respective  abilities,  and  in 
propoi'tion  to  what  they  enjoy.  Their  abilities  to  enjoy  will  be 
measured,  by  one  man,  by  their  possessions,  and  by  another,  by 
their  income.  A  tax  on  the  first  is  a  tax  on  capital,  while  a  tax 
on  the  second  is  a  tax  ou  income.  Thus  the  single  word  "abil- 
ities "  covers  two  very  unliice  modes  of  taxation.  But  both  are 
distinct  from  "what  they  enjoy,"  for  this  last  again  is  measured 
by  expenditure,  and  by  intellectual  capacity  to  obtain  enjoyment. 
To  tax  expenditure  is  to  tax  consuinption,  ostentation,  and  lux- 
ury. So  far  as  we  tax  consumption,  it  becomes  very  nearly  in 
effect  a  tax  on  persons,  for  the  poor  man  with  a  large  family  will 
consume  as  much,  directly,  as  the  rich  man  with  a  small  family. 
Taxing  ostentation  and  luxury  is  taxing  that  very  dispersion  of 
wealth,  and  breaking  up  of  hoards  and  estates,  in  which  the  pro- 
fessed champions  of  the  poor  are  so  deeply  interested.  For,  nothing 
tends  so  directly  to  the  disjiersion  of  wealth,  by  the  richer  among 
the  poorer,  as  most  forms  of  luxurious  and  ostentatious  living. 
Thus  Dr.  Smith's  first  prescription  divides  itself  into  seven,  viz., 
into  taxes  on  capital,  on  incomes,  on  expenditure,  on  capacity, 
on  consumption,  on  ostentation,  and  on  luxury.  Tax-gatherers 
can  not  travel  far  together,  on  a  road  that  forks  so  often.  Dr. 
Sinith's  next  precept  is  : 

"2.  The  tax  which  each  individual  is  bound  to  pay  ought  to  be  certain,  and  not  arbi- 
trary. The  time  of  payment,  the  manner  of  payment,  the  quantity  to  be  paid,  ought 
all  to  be  clear  and  plain  to  the  contributor,  and  to  every  other  person.  The  certainty 
of  what  each  individual  ought  to  pay  is,  in  taxation,  a  matter  of  so  great  importance 
that  a  very  considerable  degree  of  inequality,  it  appears,  I  believe,  from  the  experi- 
ence of  all  nations,  is  not  near  bo  great  an  evil  as  a  very  small  degree  of  uncertainty." 

This  might  seem  self-evident  to  a  man  in  a  closet,  but  it  does 
not  agree  with  any  experience  we  have  of  society,  and  it  is  not  of 
the  least  practical  importance  to  either  the  statesman  or  the  tax- 
payer. 

The  tax  to  which  each  individual  is  subjected,  in  every  relation 
of  life  other  than  citizenship,  is  both  uncertain  and  arbitrary.  The 
degree  in  which  he  is  taxed  in  his  strength  and  vital  force,  first, 
to  support  himself,  then  to  make  for  himself  a  good  name  and 


,  WHO  PAYS  THE  TAX.  ■^od 

estate  among  his  fellow-meu,  then  to  maintain,  provide  for,  and 
conduct  his  family,  are  all  uncertain,  unequal,  and  often  very 
arbitrary,  and  of  a  kind  to  involve  absolute  heroism  to  endure. 

Out  of  these  social  taxes,  however,  come  all  social  heroisms  and 
nobility.  Where  then  in  nature  do  we  get  the  basis  for  assuming 
that  a  social  state,  which  is  full  of  social  inequalities,  and  of  un- 
equal burdens  on  every  hand,  and  wherein  the  prime  duty  of  the 
virtuous  is  to  help  carry  the  derelict  and  delinquent,  wherein  also 
the  wise  must  help  bear  the  foolish  up  above  and  out  of  their 
folly,  and  wherein  the  strong  must  be  taxed  often  to  theu*  full 
ability  to  secure  the  survival  of  the  weak,  the  healthy  of  the 
diseased,  and  the  competent  of  the  incompetent— how  is  it  that 
when  this  unequally-yoked -together  mass  of  citizens  are  conglom- 
erate into  a  state,  there  must  perforce  suddenly  spring  out  of  this 
compost  heap  of  inequalities  a  fair,  white,  ideal  flower,  which 
shall  embody  in  its  purity  a  principle  on  which  no  two  minds  can 
agree  ?  To  the  man  that  desires  nicotine  this  flower  shall  contain 
nicotine  and  no  other  essence,  to  the  man  who  desires  cocaine  it 
shall  contain  cocaine,  and  to  the  man  that  wants  lavender  or  rose 
it  shall  be  lavender  or  rose. 

But  neither  the  statesman  nor  the  citizen,  in  fact,  cares  or  needs 
to  know  who  pays  the  tax,  any  more  than  the  citizen  needs  to 
know  what  particular  Siug-leng-foo  in  China  cultivated  the  tea 
which  he  sips,  or  what  negro  in  Georgia  hoed  the  cotton  which 
he  wears,  or  what  were  the  features  of  the  sheep  whose  wool 
adorns  his  back.  The  question,  who  pays  the  tax  ?  is  often  a 
wholly  insoluble  conundrum  to  the  economist,  the  tax  being 
passed  on,  in  its  incidence,  from  one  hand  to  another,  until  its 
exact  incidence  is  lost  in  the  tangled  network  of  social  causes  and 
effects.  But  so  are  all  other  costs  of  living  lost,  if  we  attempt  to 
follow  them,  in  the  same  tangled  network.  An  English  parlia- 
mentary committee  on  local  taxation,  presided  over  by  one  of 
the  foremost  of  England's  practical  and  theoretical  economists, 
George  J.  Goschen,  reported  in  1872  that  they  could  not  tell,  and 
no  man  could  po.ssibly  (ind  out,  whether  the  tax  on  the  occupier 
of  houses  was  paid  by  the  tenant  or  the  owner  of  the  land.*  But 
shall  no  houses  be  rented  until  we  find  out  w^hether  the  landlord  or 
tenant  pays  the  occupier's  tax  ?     Mr.  Mill  is  in  an  absolute  mud- 

♦  The  report  says  ("  Goschen  on  Local  Taxation,"  p.  178)  :  "That  your  committee 
have  examined  many  witnesses,  and  received  at  their  hands  very  conflicting  opinions 
as  regards  the  proportion  in  which  tlic  Ijuidcu  of  rates  at  present  falls  relatively  on 
owners  and  occupiers," 


460  EGONOMW  PHILOSOPHY. 

die,  as  to  whether  taxes  on  exports  are  paid  by  the  foreign  con- 
sumers or  by  the  domestic  producers  of  the  exported  product,  but 
incHnes  to  the  opinion  that  they  are  paid  by  the  foreign  consum- 
ers, and  that  a  nation  may  often  greatly  benefit  its  own  trade  by 
taxing  its  exports.* 

Tlie  very  able  economists,  who  fi*amed  the  constitution  of  the 
United  States,  must  have  differed  toto  coelo  from  Mr.  Mill  on  this 
point,  or  they  would  not,  with  such  unanimity,  have  prohibited 
duties  on  exjjorts.  Indeed,  if  any  considerable  portion  of  the 
people  of  the  United  States  should  think  as  Mr.  Mill  does  on  this 
point,  it  would  be  but  a  very  little  while  before  the  Constitution 
of  the  United  States  would  be  amended,  and  a  duty  on  raw  cotton 
imposed.  We  do  not  mean  to  express  a  difference  from  Mr.  Mill 
as  to  duties  on  exports,  but  only  to  point  out  that  where,  in  rela- 
tion to  so  many  taxes,  it  is  impossible  for  statesmen  to  agree  as  to 
where  the  incidence  of  the  tax  actually  rests,  yet  the  tax  produces 
the  revenue,  and  the  citizen  prospers,  the  question  where  it  rests 
becomes  a  mere  philosophical  and  metaphysical  subtlety,  of  no 
more  practical  importance  than  the  question  where  the  ultimate 
responsibility  for  human  conduct  rests,  or  where  the  human  will 
begins,  or  where  in  economics  the  cost  of  production  begins — 
whether  with  the  final  process,  or  with  the  production  of  the  im- 
plements, and  if  so  whether  production  shall  be  deemed  to  include 
invention  of  the  implements,  in  which  case  the  effort  to  compute 
the  cost  of  producing  a  bushel  of  corn  would  carry  us  back  to  the 
beginning  of  the  world.  Such  subtleties  may  be,  and  largely 
through  Mr.  Mill's  influence  are,  mistaken  for  economic  science, 
but  they  have  nothing  to  do  with  it,  but  belong  to  the  widely  dif- 
ferent domain  of  metaphysical  gymnastics. 

Students  must  gradually  learn  the  distinction,  between  the  men- 
tal daze  that  comes  from  reading  propositions  like  those  of  Mr. 
Mill,  which  begin  with  a  "  let  us  suppose, "  then  carry  you  through 
the  meshes  of  a  tangled  but  non-existing  hypothesis,  and  finally 
dump  you  with  a  triumphant  "  therefore  "  in  a  quagmire  of  con- 
clusions, which  agree  only  in  being  at  war  with  the  existing  sys- 
tem of  things,  whatever  it  may  be — and  political  economy,  at 
least  as  taught  by  the  historical  school.  Dr.  Smith's  third  rule  is  : 

*  Book  V.  ch.  3  (p.  574,  Loughlin'sed.)  he  says  :  "By  taxing  exports  we  may,  in 
certain  circumstances,  produce  a  division  of  the  advantage  of  the  trade  more  favorable 
to  ourselves.  In  some  cases  we  may  draw  into  our  coffers,  at  the  expense  of  foreign- 
ers, not  only  the  whole  tax,  but  more  than  the  tax  ;  in  other  cases  we  should  gain  ex- 
actly the  tax  ;  in  others,  less  than  the  tax.  In  this  last  case  a  part  of  the  tax  is  borne  by 
ourselves  ;  possibly  the  whole,  possibly  even,  as  we  shall  show,  more  than  the  whole." 


SUPPBESSmG  A  PRODUCTION.  461 

"3.  Every  tax  ought  to  be  levied  at  the  time,  or  in  the  manner,  in  which  it  is  meet 
likely  to  be  convenient  for  the  contributor  to  pay  it.  Taxes  upon  each  consumable 
goods  as  are  articles  of  luxury  are  all  finally  paid  by  the  consumer,  and  generally  in  a 
manner  that  is  very  convenient  to  him.  He  pays  them  little  by  little,  as  he  has  occa- 
sion to  buy  the  eoods.  As  he  is  at  liberty,  too,  either  to  buy  or  not  to  buy,  as  he  pleases, 
it  must  be  his  own  fault  if  he  ever  Buffers  any  considerable  inconvenience  from  such 
taxes." 

This  rule  emphatically  and  throughout  contradicts  the  last.  For 
the  most  convenient  time  and  manner  in  which  to  pay  a  tax  is 
■when  we  pay  it  without  knowitig  it,  whether  we  are  the  producers 
of  goods,  working  for  a  profit,  and  paying  the  tax  in  order  to  get 
them  into  a  particular  market,  or  whether  we  are  consumers  and 
buying  the  product.  It  is  not  true  that  taxes  upon  such  consum- 
able goods  as  are  articles  of  luxury  are  all  finally  paid  by  the 
consumer,  or  that  a  diflPerent  rule  prevails  for  articles  of  luxury 
from  those  that  govern  other  products.  Indeed,  there  can  be  no 
distinction  in  economics  between  luxuries  and  necessaries,  as  may 
be  illustrated  by  the  very  simple  fact  that  in  civilization  clothing 
is  necessary,  in  Central  Africa  it  is  a  luxury.  In  Uganda,  more- 
over, bamboo  is  necessary,  and  most  kinds  of  money  have  little 
or  no  value.  In  civilization  bamboo  is  nearly  worthless,  and 
money  is  constantly  necessary.     Dr.  Smith's  fourth  rule  is  : 

"4.  Every  tax  ought  to  be  so  contrived  as  both  to  take  out  and  keep  out  of  the 
pockets  of  the  people  as  little  as  possible  over  and  above  what  it  brings  into  the  public 
treasury  of  the  state." 

This  rule  in  practice  contradicts  the  second  rule.  For  the  sec- 
ond rule  assumes  there  are  many  taxes,  concerning  which  it  is 
true  that  the  quantity  each  person  pays,  and  even  the  question 
which  of  several  persons  pays,  is  uncertain,  in  the  sense  of  un- 
known, i.  e.,  is  not  capable  of  being  known.  Now,  where  we  can 
not  know  who  pays  the  tax,  it  is  obviously  fruitless  to  try  to 
measure  the  proportion  of  the  amount  paid  which  does  not  go 
into  the  ti-easury,  against  the  amount  that  does,  so  as  to  make  the 
ratio  of  two  unknown  quantities  to  each  other  the  gauge  by 
which  to  determine  the  justice  of  a  tax. 

Again,  there  may  be  great  difference  of  judgment  among  men, 
as  to  which  of  two  modes  of  tax  does  take  out,  or  keep  out,  of  the 
pockets  of  the  people,  most  money  relatively  to  what  it  brings  into 
the  public  treasury  of  the  state. 

Great  Britain  taxes  the  importation  of  leaf  tobacco  3s.  6d.  ster- 
ling, or  87  cents  per  pound.  To  prevent  this  import  duty  from 
causing  Irish  and  Scotch  farmers  to  cultivate  tobacco,  as  they 
could  do  at  an  enormous  profit,  by  reason  of  the  duty  thus  ini- 


462  ECONOMIC  PHILOSOPHY. 

posed  on  the  foreign  article,  the  government  prohibits  absolutely 
the  domestic  production,  making  it  criminal  to  cultivate  the  leaf 
anywhere  in  Great  Britain.  This  suppression  of  the  domestic 
production  is  supposed  to  have  the  effect  to  cause  the  entire  sum, 
by  which  the  price  of  tobacco  to  the  consumer  is  increased,  to  go 
into  the  treasury,  i.  e.,  no  part  of  it  goes  to  any  domestic  producer. 
But  lo!  to  accomplish  this  result,  there  is  kept  out  of  the  pockets 
of  the  people,  not  merely  the  amount  of  the  tax  paid,  but  the  en- 
tire profits  of  the  possible  domestic  production  of  the  leaf.  No 
one  can  tell  how  peculiarly  the  climate  of  Ireland  might  have 
proved  to  be  adapted  to  the  culture  of  tobacco,  if  it  liad  been  al- 
lowed. It  might  have  proved  to  be  as  much  superior  to  any  other 
point  in  the  world,  for  the  culture  of  the  leaf,  as  the  Southern 
States  are  for  the  culture  of  cotton.  In  that  case  Ireland  could 
have  produced  the  tobacco  crop  of  the  world,  and,  instead  of 
famine  and  decline,  might  have  maintained  a  population  of  nine 
to  twelve  millions  of  people. 

Yet  we  are  told  that  the  signal  merit  of  this  tobacco  tax  is,  that 
it  takes  not  a  penny  from  the  pockets  of  the  people,  that  does  not 
go  into  the  treasury.  In  fact,  by  suppressing  a  domestic  produc- 
tion, it  keeps  out  of  the  pockets  of  the  people  the  profits  of  a  pos- 
sible national  industry,  the  value  of  which  no  man  can  compute. 
180.  The  Search  for  the  Iiicideuee  of  Taxation  and  of 
Specific  Taxes.— By  the  incidence  of  a  tax  is  meant  the  fall, 
"  blow,"  or  deduction  from  wealth,  which  it  effects  on  a  particular 
person,  and  this  involves  the  defining  of  the  final  person  upon 
whom  the  tax  rests,  and  beyond  whom  its  burden  does  not  go,  and 
has  no  effect.  It  has  never  occurred  to  the  writers  on  this  subject, 
that  if  tlie  ultimate  incidence,  or  final  deleterious  effect,  of  a  tax 
or  burden  can  be  defined,  much  more  by  parity  of  reason  ought  we 
to  be  able  to  define  where  the  benefits  of  production,  or  of  a  new 
aid  to  production,  stop.  We  ought  to  be  able  to  point  out  the  ex- 
treme outward  person  upon  whom  the  beneficent  effects  of  tlie 
invention  of  printing,  the  discovery  of  America,  or  of  gold  in 
California  rests.  A  tax,  considered  as  a  diminution  of  production, 
can  hardly  be  measured  until  we  can  assign  limits  to  the  effects 
of  aids  to  production.  For,  peradventure,  the  tax  itself  may  be 
an  aid  to  production,  and  in  that  case  it  has  no  incidence,  properly 
speaking,  since  its  supposed  "blow"  is  converted  into  a  caress. 
In  discussing  Adam  Smith's  ideal  theory  of  taxation,  we  else- 
where point  out  that  standards  of  equality  may  be  as  numerous 
as  the  persons  who  propose  them- 


WIIEX  A  RE  TAXE:s  ' '  EQ  CA  L  "  f  4G;] 

A  would  thiuk  it  equal  that  B  pay  the  same  as  C.  This  calls 
for  a  poll  tax.  In  inferior  or  barbarous  i-aces,  where  no  capital 
exists,  a  poll  tax  would  be  as  equal  as  any  other.  B  thinks  it 
equal,  that  A  and  C  pay  according  to  what  they  possess.  This 
calls  for  a  tax  on  capital,  or  savings,  or  principal.  This  is  equal 
in  as  far  as  capitals  and  incomes  are  equal.  C  thinks  it  equal  that 
A  and  B  pay  according  to  what  they  earn  or  receive.  This  calls 
for  an  income  tax.  Income  taxes  are  equal  wherever  incomes 
are  equal.  D  thinks  it  equal  that  A  and  B  pay  according  to  what 
they  enjoy  or  expend.  This  calls  for  a  tax  on  consumption  or 
rate  of  living,  which  is  an  equal  tax  as  to  all  who  live  at  an  equal 
rate  of  expense.  E  thinks  it  equal,  that  A  and  B  should  pay  taxes, 
at  the  point  where  it  will,  incidentally,  cause  industries  not  pre- 
viously possible  to  become  equally  possible  to  both  A  and  B, 
whereby  they  can  be  supplied  with  the  means  to  pay  the  tax  and 
make  a  profit  besides,  so  that  by  paying  a  tax  of  say  five  they  are 
benefited  to  the  extent  of  fifteen.  This  calls  for  taxes  for  im- 
pi'ovements,  schools,  lights,  sewers,  and  protection  to  domestic 
industry.  These  are  equal  except  as  to  such  persons  as  do  not 
intend  to  live  by  industry,  and  who  have  therefore  no  interest  in 
its  protection  or  defense.  F  thinks  it  equal  that  A  and  B  should 
be  taxed  according  to  their  respective  utility  to  the  community. 
If  A  is  rendering  valuable  service,  say  in  teaching  school  or  in- 
venting machinery  at  small  pay,  or  in  introducing  capital  into 
new  avocations  which  will  be  presently  unprofitable,  but  ulti- 
mately of  great  public  benefit,  and  B  is  getting  high  profits  out 
of  a  business  deleterious  to  the  general  welfare,  as  gambling,  sell- 
ing spirituous  liquors,  or  prize-fighting,  lotteries,  bull-baiting,  or 
vice,  then  B  should  be  taxed  a  sufficient  sum  to  at  least  make  A\s 
means  of  living  as  secure  as  his  own,  and  this  sum  should  be  paid 
over  to  A  for  teaching  school,  or  inventing  machinery,  or  invest- 
ing capital,  or  otherwise  working  for  the  common  good. 

Mr.  Mill  holds  that  true  equality  of  taxation  consists  inequality 
of  sacrifice,  or  sufi'ering,  in  paying  the  tax.  But  this  is  chimerical, 
as  those  who  have  abundant  means  can  not  be  niade  to  sulfer  by 
any  payment  whatever.  Dr.  Smith  holds  that  taxation  should  be 
equal  according  to  the  ability  of  each  to  pay.  But  who  shall 
define  ability  to  pay  ? 

Mr.  Mill  was  strongly  of  the  opinion  that  the  increase  of  value 
in  land,  growing  out  of  increased  public  appreciation,  should  be 
taxed.  But  if  so,  should  the  state  compensate  for  the  decrease  of 
value  ?  and  why  should  the  rise  in  land,  more  than   the  rise  in 


464  ECONOMIC  PHILOSOPHY. 

stocks,  iu  good  will,  or  in  personal  popularity  and  reputation,  be 
taxed  ?  Labor  has  as  little  to  do  with  causing  a  man  to  grow  in 
public  favor  as  with  causing  a  lot  of  land  to  grow  in  price. 
Horace  Greeley  was  wont  to  say :  ' '  Popularity  is  a  happy  acci- 
dent of  life,  and  political  preferment  is  an  affair  of  luck."  Why 
should  they  not  be  taxed  as  well  as  the  unearned  increment  of 
land? 

If  a  particular  kind  of  business  be  taxed,  on  the  ground  that  it 
is  inimical  to  public  interest,  a  half  or  third  of  the  persons  that 
would  else  engage  in  it  go  out  of  it,  thus  enlarging  the  ratio  of 
customers  to  those  that  remain,  and  hence  removing  from  them 
the  tax.  Many  sellers  of  liquors  prefer  a  high  tax  on  liquor,  as 
it  dignifies  their  calling  and  makes  them  collectors  of  revenue, 
and  therefore  agents  of  the  state.  When  the  increase  in  their 
monopoly  of  the  custom  reimburses  to  them  the  effect  of  the  tax, 
upon  whom  does  the  tax  rest  ?  The  customer  will  declare  that 
he  is  not  taxed,  as  he  gets  his  goods  of  as  good  quality  and  at  as 
low  a  i^rice  as  before,  but  from  fewer  merchants.  The  persons 
who  go  out  of  the  business  can  not  be  said  to  pay  the  tax,  since 
they  go  into  other  kinds  of  business  and  are  not  in  the  line  from 
whence  the  tax  comes.  The  liquor  seller  who  remains  certainly 
does  not  pay  it,  as  the  increase  of  custom  resulting  fi'om  driving 
his  competitors  out  of  the  business  has  reimbursed  him.  Thus, 
though  the  state  treasury  has  certainly  received  an  increase  of 
revenue,  no  person  can  be  proven  to  have  sustained  the  actual 
burden  of  this  increase. 

So  suppose  a  tax  be  laid  upon  land,  with  the  effect  to  lessen  the 
profits  of  investing  capital  in  it.  The  number  of  competitors  for 
its  ownership  diminishes,  the  same  capital  acquires  more  of  it, 
and  virtually  the  monopoly  of  those  who  choose  to  invest  in  it 
increases,  with  a  corresponding  increase  in  their  profits,  in  the 
same  manner  as  we  have  indicated  in  the  case  of  tax  on  an  occupa- 
tion.    But  with  this  result, — on  whom  has  the  tax  fallen  ? 

Mr.  Mill  holds  that,  in  taxing  incomes,  all  that  portion  of  the 
income  which  is  laid  by  as  .savings  should  be  exempted,  since  to 
tax  savings  is,  he  says,  to  condemn  prudence.  But,  in  such  a 
case,  the  tax  would  rest  on  that  which  a  person  can  not  afford  to 
save,  but  needs  to  consume.  This  is  in  conflict  with  his  other 
principle  that  the  tax  should  be  so  distributed  as  to  equalize  the 
sacrifice.  It  certainly  involves  a  far  greater  sacrifice,  to  tax  a 
man  out  of  what  he  needs  to  expend  for  his  support,  than  to  tax 
Jiim  on  the  surplus  he  is  able  to  save. 


INGIDENOE  OF  TAXES:  465 

Annual  taxes,  being  a  portion  of  the  year's  production — the 
money  proceeds  of  its  crops  and  earnings — might  be  supposed  to 
be  in  the  first  instance  a  deduction  fi'om  the  retui'us  of  the  pro- 
ducei-s,  at  least  until  they  return  into  the  channels  of  production, 
as  seed,  or  cause,  in  part,  of  the  next  year's  pi-oduction. 

As  a  deduction  from  production,  they  must  ultimately  come  out 
of  the  x^roducers,  either  of  commodities,  or  of  their  values.  If  an 
owner  of  land  pays  taxes,  he  pays  them  out  of  that  portion  of 
the  year's  annual  production  which  he  is  able  to  appropriate.  If 
the  land  enabled  him  to  appropriate  it,  i.  e.,  if  he  pays  the  tax 
from  an  income  derived  from  the  rent  of  the  land,  then  the  tax 
is  a  deduction  from  the  earnings  of  the  industries  carried  on  upon 
that  land.  If  the  land  lay  idle,  earning  no  income,  then  the  tax 
on  it  must  have  been  earned  in  some  industries  carried  on  upon 
other  land.  But  in  each  and  all  these  industries  one  set  of  men, 
viz.,  the  producers,  ordinarily  so  called,  create  or  bring  to 
market  the  commodity  or  service,  while  another,  viz.,  the  users, 
employers,  or  consumers,  by  their  demands  give  it  value.  Hence 
the  production  of  commodities,  and  services,  proceeds  from  one 
class,  and  the  production  of  values  proceeds  from  another.  The 
commodity  may  be  produced  in  London,  while  the  value  may  be 
given  to  it,  in  Moscow  or  Buenos  Ayres.  The  tax  may  be  col- 
lected in  London ;  its  chief  effect  may  be  felt  in  Louisiana. 

There  are  those  who  feel  competent  to  decide,  amidst  this  con- 
geries of  mazy  influences,  radiating  outward  indefinitely  thi'ough 
all  the  transactions  of  mankind,  what  the  ultimate  incidence  of  a 
tax  may  be.  To  me  it  seems  as  hopeless  as  to  attempt  to  set 
bounds  to  the  causative  operations  of  a  winter's  snow  or  a  sum- 
mer's rain. 

To  trace  the  degree  of  burden,  effected  by  a  tax,  upon  him  who 
pays  it,  involves  a  difficulty  whicli  does  not  apply,  however,  to 
tracing  the  benefits  of  its  expenditure  among  those  to  whom  it  is 
paid,  or  in  whose  midst  it  is  distributed.  The  former  involves  a 
disappearance  of  values,  the  latter  a  re- appearance.  In  the  former 
case  the  clews  disperse  as  when  water  sinks  into  the  sand.  In 
the  latter  the  visible  wealth  is  repi'oducing  itself  before  our  eyes. 
Hence,  tiiose  who  contrast  the  beneficial  effects  of  tlie  expendi- 
ture of  taxes  within  a  country,  with  the  draining  of  a  country  by 
foreign  tax-gatherers,  are  not  to  be  likened  to  the  metaphysical 
philosophers  who  are  seeking  to  found  an  ideal  theory  of  taxation 
on  speculations  as  to  its  ultimate  incidence.* 

*  Thus,  in  the  Political  Science  Quarterly  for  December,  IBiT,  a  report  of  Colonel  Sir 


466  ECONOMIC  P1IIL080PUY. 

A  part  of  the  incidence  of  King  George's  tax  on  tea  was  the 
American  Revolution,  and  the  Constitution  of  tlie  United  States. 
A  part  of  the  incidence  of  Caesar's  decree,  that  al]  the  world 
should  be  taxed,  may  have  been  the  birth  of  Christianity  and  the 
disintegration  of  the  Roman  Empire.  As  tlie  French  Academy 
was  compelled  to  declare  that  the  announcement,  on  the  part  of 
any  man,  that  he  had  solved  the  problem  of  the  quadrature  of 
the  circle,  should  be  deemed  conclusive  evidence  of  lunacy,  so  the 
notion  on  the  part  of  an  economist,  that  he  can  define  tlie  ultimate 
incidence  of  any  tax,  must  consign  him  to  the  limbo  of  vision- 
aries needing,  if  not  the  restraint  of  coercion,  at  least  the  tender 
rebuke  of  pitying  regard.  One  or  two  links  in  the  chain  of  cau- 
sation set  in  motion  by  a  tax  may  be  traced.  Tlien  the  trace  is 
lost  in  the  great  ocean  of  aggregate  effort  and  common  welfare. 

The  taxes  collected  to  promote  education  are  like  the  one-eighth 
of  a  farmer's  crop,  which  he  reserves  for  seed  for  the  next  year. 
It  may  be  said  to  be  a  tax  on  his  energies  to  be  compelled  to  pro- 
duce in  any  one  year  a  quantity  one-eighth  greater  than  he  can 
either  enjoy  or  sell,  and  of  which  his  only  use  is  to  throw  it  back 
into  the  ground  as  the  condition  of  reaping  the  next  year's  crop. 
Yet  the  seed-tax  imposed  by  nature  is  the  source  of  all  produc- 
tion. All  well-expended  taxes  are  certainly  in  the  same  cate- 
gory. This  is  proved  by  tlie  fact  that,  in  addition  to  paying  the 
regular  state  taxes,  men  freely  tax  themselves  to  support  chari- 
ties, religions,  amusements  for  others,   political  parties,   or  the 


George  Wingate  makes  the  following  very  clear  statement  of  the  effects  of  taxation  as 
a  mode  of  wealth  distribution.  lie  says:  "  Taxes  spent  in  the  country  from  which  they 
are  raised  are  totally  different  in  their  effect  from  taxes  raised  in  one  country  and 
spent  in  another.  In  the  former  case,  the  taxes  collected  from  the  population  at 
large  are  paid  away  to  the  portion  of  the  population  engaged  ia  the  service  of  govern- 
ment, through  whose  expenditure  they  are  again  returned  to  the  industrious  classes. 
(More  accurately,  to  the  general  circulation.)  They  occaision  a  different  distribu- 
tion, but  no  loss  of  national  income  (capital).  .  .  .  But  the  case  is  wholly  different 
when  the  taxes  are  not  spent  in  the  country  from  which  they  are  raised.  In  this  case 
they  constitute  no  mere  transfer  of  a  portion  of  the  national  income  from  one  set  of 
citizens  to  another,  but  an  absolute  loss  and  extinction  of  tlie  whole  amount  withdrawn 
from  the  whole  taxed  country.  As  regards  its  effect  on  national  production,  the  whole 
might.as  well  be  thrown  into  the  sea  as  transferred  to  another  country,  for  no  portion 
of  it  will  return  to  the  taxed  country  in  any  shape  whatever." 

The  economic  principle  involved  here  is  not  altered,  when  the  nation  which  receives 
the  money  exported  sends  goods  in  exchange  instead  of  rendering  services  in  the  shape 
of  protection  from  foreign  or  domestic  violence  The  economic  effects  described  are  due 
to  the  depletion  of  the  vpealth  of  the  country  thnt  parts  with  its  money  for  any  kind  of 
services  rendered  by  foreign  parties  (whether  in  the  nature  of  protection  from  violence 
or  protection  of  commodities),  instead  of  having  those  services  rendered  by  its  own 
population.— iV.  Y.  P)-ess. 


DIRECT  TAXATION.  467 

extra-constitutional  part  of  state  woi'k,  and  many  other  social 
benefits.  In  all  these  cases  men  count  the  present  tax  to  be  only 
the  seed  sown  of  ultimate  profit.  In  the  degree,  therefore,  that 
men  are  far-sighted,  sagacious,  and  enlightened,  they  are  willing 
to  sustain  momentary  taxation  to  effect  ultimate  results  in  which 
they  feel  that  all  have  a  common  interest. 

Adam  Smith  thought  it  extremely  important  that  taxes  should 
be  direct  and  certain,  so  that  each  man  should  know  exactly  tiie 
extent  of  his  burden.  Cui  bono  f  The  assumption  is  that  the 
man  who  feels  them  keenly  will  resist  their  unjust  imposition. 
But  is  it  a  civic  virtue  so  much  higher  to  resist  taxation,  than  to 
pay  taxes,  that  special  pains  should  be  taken  to  make  it  painful  ? 
And  are  men  to  be  deemed  so  mean,  and  void  of  public  spirit,  that 
no  naan  will  be  supposed  capable  of  resisting  a  tax  unless  he  pays 
it  himself  ?  Of  what  great  value  is  it,  to  any  man,  to  have  burdens 
made  so  extremely  evident  ?  Besides,  if  he  on  whom  the  burden 
fii-st  falls,  after  enduring  all  the  pain  of  paying  the  tax,  really 
passes  it  over,  without  knowing  it,  on  some  one  else,  would  it  not 
have  been  more  painless,  and  just  as  true,  to  have  collected  the 
same  amount  of  tax,  by  a  mode  in  which  no  person  whatever 
would  have  been  pained  by  this  unnecessary  consciousness  of 
being  taxed  ?  If  the  wisest  economist  can  not  define  the  cases 
in  which  a  tax  is  ti'ansferred,  why  should  the  humblest  tax- 
payer be  pained  with  the  belief  that  he  is  bearing  a  burden  which, 
perhaps,  he  is  only  transferring  to  another  ? 

The  English  ratepayei's  are  taxed  for  the  dwellings  they  occupy. 
Do  they,  or  do  they  not,  get  their  rents  for  a  sum  made  less  by  the 
amount  of  the  rate,  than  if  they  paid  no  rate  ?  Economists  like 
Mr.  Goschen  are  wholly  unable  to  say.  If  they  do,  then  the  land- 
lord bears  the  burden.  But  the  landlord  is  so  wealthy  that  pay- 
ing a  tax,  or  accepting  a  lower  rent,  is  a  mere  affair  of  figures  to 
his  steward.  How  can  a  tax  be  a  burden  to  one  who  does  not 
know  of  it,  and  to  one  who  perhaps  produces  nothing,  but  osten- 
tation and  ennui  f 

The  notion,  that  the  incidence  of  taxes  should  be  made  certain, 
is  like  the  kindred  notion,  that  the  law  should  be  made  simple.  It 
demands  an  impossiI>ility  in  finance.  If  the  search  for  the  inci- 
dence of  taxes  has  brought  to  light  any  one  valuable  princii)le  in 
taxation,  of  general  ajjplication,  it  is  that  the  taxpayer  bears  with 
most  ease  three  classes  of  taxes,  viz.  : 

1.  Those  which  indirectly  pi-omote  the  energy  of  national  j)ro- 
duction,  in  a  degree  which  more  than  supplies  to  the  taxpayer  the 


468  ECONOMIC  PHILOSOPHY. 

means  of  paying  the  tax,  so  that  where  a  penny  is  taken  out  of 
one  pocket  in  taxes,  a  shilling  is  put  into  the  other  in  the  form  of 
better  wages,  more  industries,  or  higher  profits.  These  are  the 
protective  taxes,  educational  taxes,  and  all  taxes  that  perform  the 
seed-sowing  function. 

2.  Those  of  which  the  returns  come  into  the  treasury  of  his  own 
country,  while  the  taxes  are  paid  by  the  producers  of  other  coun- 
tries.    These,  too,  ai^e  the  protective  taxes. 

3.  Those  whose  first  incidence  is  a  temporary  scarcity  of  some 
product,  but  whose  speedy  effect  is  to  greatly  cheapen  its  supply. 

181.  Tlie  Practice  of  Modem  Governments  in  Taxa- 
tion— The  United  States.— Taxation,  nearly  everywhere,  is 
distinguished  into  general,  or  national,  and  local.  The  latter  is 
both  raised,  and  disbursed,  within  a  small  fractional  district,  or  sub- 
division of  a  state,  to  wit,  a  county,  parish,  town,  school  district, 
or  the  like,  by  some  form  of  local  boai'd.  The  local  taxation,  in 
the  city  of  New  York,  amounts  to  upwards  of  $20,000,000  a  year, 
which  is  several  times  more  than  that  of  the  State,  and  in  1860 
equalled  the  expenses  of  thirty  state  governments  combined. 
Mere  state  taxation  must  not  be  mistaken  for  the  index  to 
the  local  taxation.  Illinois  has  about  3,500,000  people,  and  raises 
for  state  purposes  about  $3,500,000.  If  this  be  a  fair  standard  for 
the  country  at  large,  the  total  state  taxation  would  not  exceed 
$60,000,000  a  year  for  all  the  states  and  territories.  Adding,  how- 
ever, the  cost  of  local,  city,  park,  and  district  expenditures  of  all 
sorts,  probably  the  aggregate  local  taxation  of  the  country  equals 
the  aggregate  of  national  taxation.  The  latter  is  shown  by  the 
following  budget  for  1883  : 

UNITED  STATES  BUDGET,  YEAR  ENDING  JUNE  30,  1883. 

[In  milliona  and  tenths  of  millions.] 
Receipts : 

Customs $214  7 

Internal  Revenue 144.7 

Direct  tax .1 

Sale  of  public  lands 7.9 

Miscellaneous 30.8 


Net  ordinary  receipts $398.2 

ExjJenditures  : 

War  Department $48.9 

Navy  Department  15.3 

Indians 7  3 

Pensions 66  0 

Miscellaneous 68.7 


Net  ordinary  expenditures $206.2 

Interest  on  public  debt 59.2 

Total $265.4 


TAXATION  m  THE  UNITED  STATES. 


469 


The  accompanying  chart  shows  the  total  amount  of  revenue  for 
each  year,  the  general  course  of  expenditure,  and  the  degree  in 
which  the  national  revenues  of  the  United  States  have  been  derived 
from  customs  duties,  from  the  foundation  of  tlie  government. 

It  is  a  plausible  aphorism  of  Mr.  Mill  that  customs  duties,  so 
far  as  they  are  protective,  can  produce  no  revenue,  for  they  pro- 
tect the  domestic  production,  only  in  the  degree  that  they  exclude 
the  imported  article,  and  they  produce  revenue  only  on  the  quan- 
tity they  admit.  No  instance  illustrates  more  signally  the  im- 
portance of  studying  economics  in  the  school  of  history  and  ex- 
perience, instead  of  burrowing  under  a  barren  debris  of  ruinous 
metaphysical  assumptions,  however  acute  they  may  seem  to  be. 

The  above  aphorism  of  Mill  is  on  a  par  with  the  ancient  demon- 
stration, by  the  sophists,  that  motion  is  impossible,  because  as  to 
any  body  in  space  there  are  only  two  portions  of  space  in  which 
it  can  move,  since  all  space  is  comprised  in  these  two  portions, 
viz.,  the  space  where  it  is,  and  the  space  where  it  is  not.  It  can 
not  move  in  the  space  where  it  is,  because,  so  long  as  it  continues 
in  that  space,  it  moves  not.  And  it  can  not  move  in  the  space 
where  it  is  not,  because  it  can  never  be  in  the  space  where  it  is  not. 
Hence  it  can  not  move  at  all.  As  specimens  of  mere  chop  logic, 
one  of  these  is  as  good  as  the  other,  and  both  are  worthless. 
Bodies  do  move,  and  not  only  do  protective  duties  collect  revenues, 
but  the  entire  body  of  tariff  laws  which  include  protective  duties, 
always  collects  more  revenue  than  those  which  aim  not  to  protect. 
This  will  appear  clearly  from  the  following  table  of  relative  pro- 
ductiveness of  customs  tariffs  in  the  United  States  during  the  so- 
called  free  trade  or  low  revenue  periods,  compared  with  the  more 
intentionally  protective  periods  : 

TABLE  SHOWING  AVERAGE  IMPORTS  AND  AVERAGE  CUSTOMS,  REVENUE 

UNDER  "FREE  TRADE"  ASCENDENCY,  AND  THE  SAME  DURING 

PERIODS  WHEN  PROTECTIONISTS  WERE  IN  POWER. 


Years. 

Amount  Imports 

Average  Revenue 

Ratio  of  Reve- 

per Year. 

from  Customs. 

nue  to  Imports. 

Bev.        Im. 

1821-3 

3  years 

Inc. 

F.T. 

$  50,758,073.33 

8  16,557,543.17 

$1  to  S3.06 

1824-33 

10  years 

Inc. 

Piotcct'n. 

66,515,935.30 

23,006,272.30 

1  to    2.88 

1834-41 

8  years 

Inc. 

K.  T. 

108,407,276.00 

17,183,741.60 

1  to    7.03 

1842-40 

5  years 

Inc. 

Protect'n. 

91,126,945.40 

21,331.220.03 

1  to    4.27 

1847-61 

15  years 

Inc. 

F.T. 

239,167,587.00 

47,005,530.45 

1  to    5.02 

4V0  ECONOMIC  PHILOSOPHY. 

Or,  varying  the  mode  of  expression,  we  find  that,  from  1821  to 
1823,  a  "tariff  for  revenue"  collected  only  $3.26  of  revenue 
on  every  $10  worth  of  imports,  while  in  the  next  ten  years,  over 
most  of  which  a  protective  tariff  extended,  we  collected  under  a 
protective  tariff"  $3.47  of  revenue  on  every  $10  worth  of  goods,  in- 
creasing our  average  importation  by  $16,600,000  per  year,  our 
average  revenue  by  $6,500,000  per  year,  and  the  ratio  of  revenue 
to  goods  imported.  From  1834  to  1841,  inclusive,  eight  years  of 
free  trade,  and  of  disaster  caused  by  excessive  importations,  our 
average  importations  nearly  doubled,  while  our  tariff  for  revenue 
fell  off  nearly  $6,000,000  per  annum,  and  we  collected  only  $1.46 
of  revenue  on  $10  of  imports.  In  the  five  i^rotective  years  from 
1842  to  1846,  inclusive,  our  importations  were  less  by  $16,000,000, 
and  the  duties  collected  more  by  $3,000,000,  the  ratio  of  duties 
rising  to  $2.34  per  $10  of  imports.  From  1846-61  the  imports  were 
made  large  by  our  great  supply  of  gold  from  California,  by  our 
increased  opening  up  of  Western  lands  through  our  extending 
railways,  by  the  great  demand  for  our  exports  occasioned  by  the 
Irish  famine  of  1846-9,  monetary  crisis  in  England  in  1847,  repeal 
of  English  duties  on  bread-stuffs  in  1847-9,  Crimean  war  in 
1851-4,  French,  Hungarian,  and  German  revolutions  in  1848,  and 
the  like.  But  the  revenue  on  every  $10  of  imports  fell  to  $1.98, 
thus  showing  that  in  no  instance  have  duties  "for  revenue 
only  "  been  so  productive  of  revenue  on  a  like  volume  of  impor- 
tations nor  so  productive  absolutely  as  duties  levied  for  both 
revenue,  and  protection.  In  the  light  of  these  facts,  Mr.  Mill's 
"obvious  truism,"  that  " duties  which  protect  can  produce  no 
revenue  and  duties  which  produce  revenue  can  afford  no  pro- 
tection,"* becomes  a  practical  falsehood.  From  1861  to  1870, 
under  protective  tariffs  the  revenue  advanced  from  $39,000,000 
to  $180,000,000,  each  increase  of  protection  being  attended  by  a 
steady  rise  in  the  ratio  of  the  revenue  collected  to  the  goods 
imported.  In  1861  we  collected  $1.18  of  revenue  per  $10  of 
imports;   in  1870  it  is  $5  of  revenue  per  $10  of  imports. 

Under  the  •'  free  trade  "  tariff  of  1857-60,  the  government  col- 
lected, in  the  latter  year,  on  an  importation  of  goods  to  the  value  of 
$334,350,453  a  revenue  of  only  $39,582,125.64,  or  $1  of  revenue  to 
$8.50  worth  of  goods  imported.  Under  the  tariff  known  as  the 
Morrill  or  war  tariff,  the  rates  were  increased  at  nearly  every 
session  of  Congress  during  the  war,  especially  on  iron  and  steel, 

*  Mill's  "  Political  Economy,"  vol.  2,  p.  538  (book  v,  chap.  x.  sec.  1). 


1 

I 


THE  MORRILL   TARIFF. 


471 


cottons  and  woolens,  and  we  collected  in  1869  a  customs  revenue 
of  8177,151,126  on  a  total  importation  of  $415,569,872,  being  $1  of 
revenue  on  every  $2. 37  of  goods  imj)orted.  Purely  in  productive- 
ness of  revenue  the  tariff  of  1869  was  three  and  a  half  times 
more  effective  than  the  tariff  of  1860.     To  collect  the  revenue 

Ratio  op  Revenue  to  Imports  during  40  Years.    Scale,  $10,000,000  to  Section 

LiNi;. 


3U0 

3  Years' 
Low  Duties 
Averaged . 

10  Years' 

Protective  Duties 

Avera-ged. 

8  Years'  - 

Low  Duties 

Averaged. 

5' Years' 
Prote'ctive 

Duties 
Averaged, 

15  Years'  Low 
Duties  Averaged. 

IMPOB 

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of  1869,  under  the  tariff  of  1860,  would  have  required  an  importa- 
tion of  foreign  goods  to  the  value  of  $1,200,000,000  per  annum,  a 
quantity  whose  importation  was  practically  a  three-fold  impossi- 
bility, because  (1)  Europe  could  not  take  so  large  a  quantity  of 
our  products  as  would  be  re(iuired  to  pay  for  them;  (2)  we  could 
not  produce  them,  and  (3)  the  impt)rtatiou  of  so  large  a  quantity 


472 


ECONOMIC  PIIILOSOPHT. 


of  manufactured  goods  would  have  completely  destroyed  our 
own  manufactures.  The  following  table  shows  the  rapid  increase 
in  the  efficiency  of  the  tariff  during  this  period  : 


Year. 


18B1 
1862 
1863 
1864 
1865 
1866 
1867 
1868 
1869 


Value  of 

Merchandise 

Imported. 


$384,350,453 
205,819,823 
252,187,587 
328,514,659 
234,434,167 
437,638,966 
389,924,977 
357,436,440 
415,569,873 


Revenue, 


$39,582, 

49,056, 

69,059. 

102,316, 

85,928, 

160,000, 

176,417, 

164,464, 

177,151, 


125.64 

308.00 
942.00 
153.00 
260.00 
000.00 
810.88 
500.00 
126.00 


Ratio  of 

Revenue  to 

Imports. 


$1 
1 
1 
1 
1 
1 
1 

1 


to  $8. 50 


to 
to 
to 
to 
to 
to 
to 
to 


4.01 
3.65 
3.21 
2.76 
2.73 
2.43 
2.11 
2.34 


The  following  table  presents  the  contrast  between  a   term  of 
years  of  "  free  ti'ade,"  and  the  like  term  of  protectionist  years  : 

COMPARATIVE   POWER    TO    COLLECT    TAXES  UNDER    CONTRASTED 

TARIFF  POLICIES. 
Under  Free  Trade.  \\  Under  Protection. 


Years  ended 
June  IQ. 

1847  . 

1848  . 

1849  . 

1850  . 

1851  . 

1852  . 

1853  . 

1854  . 

1855  . 

1856  . 

1857  . 

1858  . 

1859  . 

1860  . 

1861  . 

Total 


Total  Ordinary 
Receipts. 

$26,467,403.16 

35,698,699.21 

30,721,077.50 

43,592,888,88 

52,555,039.33 

49,842,815.60 

61,587,031.68 

73,800,341.40 

65,350,574.68 

74,056,699.24 

68,965,812.57 

46,655,365.96 

52,777,107,92 

56,054,599.83 

41,476,299.49 


$779,605,256,451      Total 


Years  ended 
June  30. 

1867  . 

1868  . 

1869  . 

1870  . 

1871  . 
'1872  . 

1873  . 

11874  . 

!l875  . 

1876  . 

1877  . 

1878  . 

1879  . 

1880  . 

1881  . 


Total  Ordinary 
Receipts. 

$462,846,679.92 
876,434,453.82 
357,188,256.09 
395,959,833.87 
364,431,104.94 
365,394,229.91 
322,177,673.78 
299,941,090.84 
284,020,771.41 
290,066,584.70 
281,000,642.00 
257,446,776.40 
272.822,136.83 
333,526,610.98 
360,782,292.57 

$5,032,539,138.06 


Whether  this  enormous  increase  of  revenue,  under  protective 
duties,  was  attended  by  greater  disadvantages  or  advantages  to  the 
industry  and  prosperity  of  the  country,  may  more  properly  be 
considered  when  we  come  to  discuss  the  merits  of  protection  as  an 
economic  policy,  i.e..,  as  it  affects  the  people. 

No  one  test  of  the  general  prosperity  of  a  country,  however, 
is   more   satisfactory  than  the  rate  of   immigration  into  it,  ay 


PROTECTION  STIMULA TES  IMMIORATION.  4  73 

that  measures  its  general  economic  desirableness,  relatively, 
to  all  competing  countries.  In  the  period  of  low  duties,  many- 
extraordinary  extei'ior  circumstances  concurred  to  stimulate 
immigration,  such  as  the  new  gold  crop  of  California,  the  new 
railroad  epoch  in  the  United  States,  the  Irish  famine,  Crimean 
war,  and  revolutions  in  Europe.  In  the  pi-otective  period  all 
these  wei'e  wanting,  and  no  prominent  cause  but  the  prosperity 
induced  by  protective  policies,  and  an  abundance  of  paper  money, 
existed  to  invite  population.  Yet  the  immigration  in  the  first 
period,  viz.,  3,817,931,  was  far  exceeded  by  that  in  the  second, 
5,998,334.  In  short,  in  a  period  of  high  duties,  when  the  amount 
of  revenue  collected  was  %\  times  greater  than  under  low  duties, 
the  immigration  was  still  twice  as  great  as  under  the  low  duties, 
indicating  a  condition  of  labor  capable  of  attracting  twice  as 
many  persons.     These  facts  are  shown  in  the  diagram : 

Comparative  Power  to  collect  Taxes. 
1847-1861.  ■  Free  Trade. 

1667—1881.  =^====^======^==^  Protection. 

Comparative  Power  to  attract  Immigrants  while  collecting  these  Taxes, 
1847—1861.  -  Free  Trade. 

1867—1881.  '■'  Protection. 

As  a  mere  fiscal  policy  for  the  pi'omotion  of  revenue,  the 
foregoing  figures,  embodying  much  of  the  experience  of  the 
United  States,  show  that  tariffs  designed  to  protect  do,  in  the 
aggregate,  produce  most  revenue. 

The  state  and  local  taxation  rests,  in  most  of  the  States,  on  land 
and  its  improvements,  and  fixed  capital  generally,  aided  by 
license  taxes  on  the  sale  of  liquors  at  retail,  taxes  on  personal 
property,  and  in  .some  States  on  railways,  and  on  certain  occupa- 
tions. It  is  all,  or  nearly  all,  claimed  to  be  direct  taxation,  as 
that  word  is  used  by  the  economists,  ^.e.,  it  can  not,  it  is  thought, 
be  ti'ansferred,  by  the  party  that  pays  it,  so  that  its  ultimate  burden 
shall  rest  on  another. 

Whether,  however,  taxes  on  land  are  paid  by  the  landlord,  or  by 
the  occupier,  has  of  late  been  much  disputed.  In  England,  where 
the  occupier  pays  them,  in  the  first  instance,  it  is  often  asserted 
that  ultimately  the  burden  is  shared  by  the  huid-proprietor.  In 
America,  where  tliey  are  at  first  paid  by  tlie  land-owner,  it  is 
often  asserted  that  he  is  aljle  to  add  them  to  his  rents.  This  can 
not  be  proven,  and  is  very  doubtful.  The  rates  of  land  rent 
are  determined  by   the  competition  of   tenants  to  hire,  and  by 


4V4  ECONOMIC  PHILOSOPHY. 

the  average  earnings  of  capital  in  other  occupations.  For  lasJ- 
lords  are  presumed  not  to  seek  to  extend  investments  in  real  estate, 
beyond  the  point  where  as  large  an  average  return  can  be  got 
from  the  capital  invested,  in  the  purchase  both  of  land  and  im- 
provements, as  could  be  derived  from  the  same  capital,  invested  in 
other  forms  of  property,  which  would  require  no  more  care. 

It  is  by  no  means  clear  that  laying  the  taxes  on  land  either  in- 
creases their  value  to  tenants,  or  increases  the  returns  from  the 
general  avenues  for  the  investment  of  capital. 

Rents  are  very  much  lower  in  England,  where  land  is  untaxed, 
than  on  like  values  of  property  in  France  and  America,  where  it 
is  taxed.  But  there  are  too  many  factors,  more  potent  than  this, 
to  justify  attributing  it  to  this  chiefly. 

Hardly  any  of  the  state  taxes  rest  on  consumption.  Nearly  all 
aim  to  tax  capital.  This  is  the  outcome  of  universal  suffrage.  In 
the  rural  districts  about  one-half  of  the  voters  are  taxpayers, 
under  a  system  whicli  aims  to  tax  capital  and  land  only.  In  the 
cities,  only  from  one  person  in  five,  to  one  person  in  twelve,  is  a 
taxpayer.  The  effect  of  having  taxes  laid  by  the  non-property- 
holders,  and  paid  by  the  property -holders,  is  to  infuse  a  commu- 
nistic spirit  into  all  tax  voting,  the  non-taxpaying  classes  com- 
bining together  to  have  as  much  money  expended  as  they  can, 
since,  the  more  money  is  expended,  the  greater  their  chance  of 
getting  some  of  it. 

A  school  district,  in  one  of  the  suburbs  of  New  York,  had,  a  few 
years  ago,  so  many  wealthy  taxpayers,  who  were  too  aristocratic 
to  send  their  children  to  any  public  school  whatever,  and  so  many 
voting  parents  of  poor  children,  determined  to  give  them  all  the 
accomplishments  of  a  fashionable  education,  at  the  cost  of  their 
wealthy  neighbors,  that  by  introducing  instruction  in  modern 
languages,  music,  etc.,  tlie  cost  of  instruction  was  brought  up  for 
a  time  to  $600  per  pupil  per  year,  a  cost  greater  than  the  wealthier 
parents  were  paying,  for  the  tuition  of  their  own  children,  at 
Harvard  or  Yale. 

Thus,  the  theory  of  Adam  Smith  that,  where  taxes  are  most 
certain  in  their  incidence,  they  will  be  most  economically  laid  and 
expended,  undergoes  an  explosion,  due  to  the  fact  that  Smith 
made  no  account  of  the  interest  which  should  govern  their  laying 
or  expenditure.  It  was  because,  in  this  case,  the  tax  was  certain 
to  fall  on  the  rich,  and  they  were  in  the  minority,  and  was  certain 
to  benefit  the  poor,  and  they  were  in  the  majority,  that  the  tax 
was  laid  wastefully. 


TAX  ON  LIQUORS  AND  TOBACCO.  475 

The  chart  shows  that  nearly  the  whole  means  of  mamtaining 
the  National  Government,  from  its  foundation  to  the  present 
time,  have  been  derived  from  duties  on  imports,  except  that  in 
1835  to  1836  nearly  half  the  expenses  of  government  were  paid 
by  sales  of  public  lands,  and  since  1862  the  revenue  from  the 
internal  or  excise  taxes  was  for  several  years  greater,  and  is  still 
neai'ly  as  great,  as  from  duties  on  imports.  Both  these  forms 
of  taxation  rest  on  consumption,  except  as  they  may  in  certain 
instances  rest  on  the  producer  of  the  taxed  product.  The  degree 
in  which  they  so  rest  will  be  discussed  in  chapter  xv. 

Taxes  on  alcoholic  beverages  and  tobacco  are  so  popular  in  the 
United  States,  owing  to  the  hostility  to  the  accustomed  use  of 
these  two  articles,  on  moral  and  hygienic  grounds,  that  it  has 
thus  far  been  dangerous  to  any  politician  to  advocate  their  repeal, 
notwithstanding  they  were  imposed  only  as  war  taxes,  and  the 
revenue  derived  from  them  is  a  surplus  and  a  burden  which  it  is 
desirable  to  get  rid  of,  and  which  interferes  with  the  most  happy 
adaptation  of  our  revenue  system  to  the  real  wants  of  the  coun- 
try. Whether  the  taxes  on  liquor  and  tobacco  do  in  fact  dis- 
courage their  use,  in  any  degree,  is  open  to  question.  The  pre- 
vailing modes  of  partaking  of  both,  by  the  custom  called  "treat- 
ing," imply  that  the  person  who  pays  for  them  usually  does  so 
from  some  motive  of  hospitality  or  ostentation  among  his 
friends,  or  to  cultivate  the  good-will  of  persons  with  whom  he 
desii-es  to  ingratiate  himself.  All  these  pui-poses  are  more  com- 
pletely subserved  by  the  dearness  of  the  article,  rather  than  by  its 
cheapness.  Perhaps  the  masses  of  the  buyers  of  liquors  and 
tobacco  prefer  them  to  be  high-priced  rather  than  low-priced. 
Human  nature  has  never  wholly  escaped  that  infatuation  for  the 
ostentatiously  expensive,  which  induced  the  gourmands  of  Rome 
to  melt  pearls  into  their  wine,  not  because  they  improved  its 
flavor,  but  because  they  increased  that  display  of  cost  which  was 
a  chief  purpose  in  all  their  entertainment,  or  to  make  their  soups 
of  the  livers  of  singing  birds  because  they  were  high-priced. 

It  is  certain  that  an  indirect  effect  of  the  high  taxes  on  wines  of 
every  kind,  is  to  promote  largely  their  adulteration,  and  to  in- 
crease the  difficulty  of  making  any  use  of  wine  for  medical  pur- 
poses, which  would  be  an  economic  consideration,  incase  it  shall  be 
finally  determined  that  wine  has  any  medical  utility. 

Nor  have  the  Americans  ever  adopted  the  practice,  which  pre- 
vails in  England,  of  destroying  the  flavor  of  high  wines,  or  alcohol 
needed  for  chemical  and  manufacturing  purposes,  without  destroy- 


476  ECONOMIC  PUILOSOPHY. 

ing  its  utility,  by  infusing  into  it  a  portion  of  tvood-naphtha.  It 
tlius  becomes  metbyllated  spirits,  which  in  England  are  free  of 
tlie  excise  tax.  Here,  therefore,  alcohol  used  in  the  mechanic 
and  manufacturing  arts  is  unnecessarily  and  wastefully  taxed, 
while  .many  good  objects,  and  no  bad  purposes,  would  be  served 
by  freeing  it  from  tax. 

182.  Taxation  in  Great  Britain — Local. — The  total 
taxation  of  the  United  Kingdom  of  Great  Britain  and  Ireland 
for  the  year  of  1872-3*  was  £102,434,866,  or  £3  3s.  2d.  per 
head  of  the  population. f  Of  this  the  local  burden  was  £40,991,- 
770,  and  the  national  taxes  were  £79,763,298.  Of  the  local  tax- 
ation 33.9  millions  were  contributed  by  England  and  Wales,  2.8 
millions  by  Scotland,  5.1  millions  by  Ireland.  The  following  is 
a  complete  statement  of  the  receipts  for  local  purposes  : 

Amount  0/ Direct  and  Indirect  Taxation,  an4  of  other  Sources  of  Eectipts  for  the  pur- 
poses of  Local  Expenditure. 

Levied  by  Rates.  England  &  Wales.        Scotland.  Ireland.  Total. 

Direct £18,619,378        £l,fi83,008        £2,514,001        £^2,017,677 

Indirect,  from  Dues,  Tolls,  eic.         3,939,238  455,454  300,224  4,694,910 

Total  of  Taxes £37,511,993 

Other  Sources  of  Beceipts. 

Sales  or  Rents  of  Property 923,001  285,060  30,961  1,239,0.32 

Government  Contributions....  962,895  123,738  1,900,059  2,087.592 

Loans 6,583  812  145,653  169,995  6,899,460 

Various  Sources 2,926,984  138,703  187.946  3,253,693 

Local  Taxes 22,558,616  2,148,462  2,814,915              

Total £33,955,308       £2,831,676         £5,103,876       £40,991,770 

The  rates  are  taxes  paid  by  the  occupier  of  lands  and  houses, 
and  for  the  collection  of  which  a  warrant  issues  authorizing  only 
a  seizure  of  the  occupier's  goods  and  chattels.  They  are  fre- 
quently spoken  of,  in  English  economic  woi'ks,  as  a  tax  on  lands, 
but  differ  wholly  from  an  American  tax  on  land,  in  the  fact  that 
for  delinquency  in  the  payment  of  the  latter,  the  title  to  the  land 
itself  is  sold,  while,  for  failure  to  pay  the  English  rate,  only  the 
goods  of  the  occupant  are  distrainable.  This  distinction  probably 
determines  the  incidence  of  the  tax.  The  Engli.sh  rate-payers 
will  never  succeed  in  putting  the  burden  of  their  rates  in  the 
first  instance  on  the  land-owner,  until  they  enact  that  the  warrant 
issued  to  collect  the  tax  shall  sell  the  land  itself,  and  not  the  goods 
of  the  occupier. 

The  rates  levied  are  liable  to  be  increased  in  number,  by  any 
act  of  parliament  which  discovers  a  new  local  object  for  which 

*  "  Condition  of  Nations,"  by  Kolb,  translated  by  Brewer,  p.  61. 
t  Each  ponnd  sterling  equals  $4.87. 


ENGLISH  TAX  RA  TES.  4  7  7 

money  needs  to  be  expended,  or  diminished  by  any  act  consolida- 
ting' or  repealing-  previous  rates.  They  consist  of  two  classes,  viz. : 
rates  levied  in  primary  districts,  such  as  a  parish,  which  may  be 
likened  to  what  Americans  would  call  township  taxes,  and  rates 
levied  in  aggregate  districts,  such  as  a  county.*  There  are  twelve 
principal  kinds  of  parish  rates,  viz. :  (1)  the  poor  rate,  (2)  the  high- 
way rate,  (3)  the  burial  board  rate,  (4)  the  lighting  and  watching 
rate,  (5)  the  general  district  rate,  (6)  the  sewei*age  rate,  (7)  the 
towns  improvement  rate,  (8,  the  animal  contagious  diseases  rate, 
(9)  the  church  rate,  (10)  the  sewers  rate,  (11)  the  genei-al  sewers 
rate,  (12)  the  drainage,  embankment,  and  enclosure  rates.  This  is 
by  no  means  a  complete  list,  as  Mr.  Fawcettt  mentions  also  a 
public  library  and  museum  rate,  parish  improvement  rate,  bor- 
ough lunatic  asylum  rate,  borough  library  and  museum  rate, 
borough  baths  and  w^ash-houses  rate,  boi'ough  improvement  rate, 
and  borough  burial-board  rate.  Mr.  Fawcett  regards  these  rates 
as  a  feasible  mode  of  carrying  out,  not  only  gratuitous  instruction, 
and  all  forms  of  special  education,  but  state  emigration,  provision 
for  children  whose  support  is  found  inconvenient  to  their  parents, 
the  encouragement  of  co-operative  associations,  the  purchase  of 
land  from  landlords  for  the  tenants,  and  advance  of  capital  to 
work  the  land,  and  other  forms  of  socialistic  relief.  This  con- 
stantly mcreasing  demand  upon  the  rates,  he  says,  is  encouraged 
by  the  opinion  that  the  wealth  of  England  is  so  great  that  there 
is  no  need  for  economy. 

Besides  the  parish  rates,  there  are  the  county  rates,  which  are 
expended  chiefly  for  county  bridges,  gaols,  shire  halls,  county 
lunatic  asylums,  and  county  police;  the  hundred  rate  for  mak- 
ing good  the  damages  occasioned  by  a  riot  ;  the  borough  rates 
which  ax'e  levied  in  cities  for  like  purposes  to  those  for  which 
county  rates  are  levied  in  the  country. 

Mr.  Chalmers  X  says  that  local  government  in  England  may  be 
fitly  described  as  consisting  of  a  chaos  of  authorities,  and  a  chaos 
of  rates.  With  few  exceptions,  all  the  various  areas  intersect,  and 
overlap.  A  very  jungle  of  jurisdictions  is  brought  about  by  the 
circumstance  that  all  these  areas  are  governed  by  difTerent  au- 
thorities, elected  or  selected  at,  diflFerent  times,  by  different  means 
or  bodies.     These  defects,  and  difficulties,  have  resulted  from  the 


*  Report  of  select  committee  on  local  taxation,  Goschcii,  153. 
t  "Manual  of  Politiciii  Kconomy,"  p.  607. 

X  "  Local  (Joveniment."  The  "  Englisli  Citizen  Series,"  by  Mr.  Chalmers.  McMillan 
&Co.,  1883. 


478  ECONOMIC  PHILOSOPHY. 

English  nabit  of  legislating  by  piecemeal,  the  shortcomings  of 
existing  institutions  being  remedied,  from  time  to  time,  by  a  species 
of  patchwork.  This  system,  or  want  of  system ,  it  is  not  altogether 
easy  to  replace,  numerous  vested  interests  being  enlisted  in  favor 
of  its  permanency.  Under  it,  offices  are  unnecessarily  multi- 
plied, and,  there  not  being  a  redundance  of  talent  available  for 
the  local  public  service,  the  latter  suffers  in  an  appreciable 
degree.  Under  the  circumstances,  it  is  not  singular  that  confusion 
and  extravagance  should  be  the  characteristic  features  of  the 
whole  system. 

The  paupers  number  843,000.  They  multiply  in  proportion  to 
the  adequacy  of  the  provision  for  their  support,  and  the  unwil- 
lingness of  the  government  to  protect  industry,  though  they  sup- 
port the  idle.  The  rule  is  universal,  that  if  taxpayers  convert 
their  backs  into  a  comfortable  saddle,  they  will  always  find  persons 
obliging  enough  to  ride,  particularly  where  walking  is  made  pre- 
carious and  difficult.  The  paupers  cost  a  sum  equal  to  nine-tenths 
of  the  amount  required  to  maintain  the  navy  and  fleet*  equipped 
with  all  the  appliances  of  modern  warfare,  and  the  number  of 
adult  able-bodied  paupers  is  about  the  same  as  that  of  the  army 
and  navy  combined,  excluding  soldiers  serving  abroad. 

There  is  no  system  of  town  government,  and  no  town  budget. 
The  areas  from  which  taxes  are  collected  overlap  each  other 
in  endless  confusion.  No  particular  local  area  can  accurately 
tell  how  much  it  pays,  except  for  some  one  purpose,  for  when  it 
comes  to  pay  for  a  different  purpose  it  will  find  itself  part  of  a 
different  area,  and  its  rate  for  that  purpose  will  be  levied  by  a 
different  board,  or  by  different  officers  at  a  different  time,  and  on 
a  different  valuation.  Very  few  of  the  towns  are  incorporated, 
and  those  that  are  incorporated  are  not  thereby  delivered  from 
the  jurisdiction  of  conflicting  local  boards.  Mr.  Goschen  says  : 
"There  is  no  labyrinth  so  intricate  as  the  chaos  of  our  local 
laws."  Mr.  Chalmers  says  :  "  There  is  neither  co-ordination  nor 
subordination  among  the  numerous  authorities  that  regulate  our 
local  affairs." 

Some  attempt  has  been  made  to  lessen  extravagance  in  the  levy- 
ing of  local  rates  by  causing  the  local  boards,  which  levy  these 
various  rates,  to  be  elected  on  the  plural  system,  so  as  to  accord  to 
taxpayers  a  voting  influence  proportionate  to  their  burdens.  For 
instance,  the  board  of  guardians  which  disburses  the  poor  rates 

*  Cost  of  Navy  for  1878,  £10,978,592  ("  Condition  of  Nations,"  Kolb,  p.  56). 
tCost  of  the  Poor,  9,771,000  (Goschen  on  "  Local  Taxation,"  p.  15). 


THE  ENGLISH  B UDGET.  479 

consists  of  the  justices  of  the  peace  resident  within  the  union 
(district  under  one  set  of  officers  for  poor  relief),  and  of  a  cer- 
tain number  of  elected  guardians  who  are  voted  for  by  the  rate- 
payers, upon  a  plural  scale,  under  which  both  owners  and  occu- 
piers of  property  renting  for  less  than  £50  have  one  vote,  if 
rentinff  for  £50  and  less  than  £100  two  votes,  if  for  £100  and  less 
than  £150  three  votes,  and  an  added  vote  for  each  £50,  up  to  six 
votes,  where  the  increase  of  voting  power  stops.  Members  of  the 
various  boards  are  required  to  possess  certain  property  qualifica- 
tions, those  of  a  town  councillor  being  the  ownership  of  real  or 
personal  property  of  the  value  of  from  £500  to  £1,000. 

183.  General  Taxation  in  Great  Britain. — The  principles, 
which  govern  the  adjustment  of  the  general  tax  system  of  Great 
Britain,  are  so  often  travestied  in  their  statement,  that  a  more  care- 
ful survey  of  the  facts,  than  is  usually  made,  should  precede 
any  discussion  of  their  principles.  Each  year's  budget  is  nearly 
alike.  In  1882  the  total  revenue,  national  and  local,  was  £148,371,- 
480,  or  in  dollars  $741,857,400,  to  a  total  population  of  35,262,762. 
The  following  budget  for  an  earlier  year  may  serve  our  use : 

GROSS  PUBLIC  REVENUE. 

Year  ending 
March  31,  1878. 

Customs. . . .   £19,969,000 

Excise 27,464,000 

Stamps 10,956,000 

Land  Tax  and  House  Duty 2,670,000 

Property  and  Income  Tax 5,820,000 

Post  Office 6,150,000 

Telegrapti  Service 1,310,000 

Crown  Lands 410,000 

Interest  on  Advances  and  Miscellaneous 5,014,298 


Total  £79,763,298 

GROSS  PUBLIC  EXPENDITURE. 

Interest  and  Management  of  National  Debt £28,412,750 

Civil  List  and  Civil  Charges 16,387,139 

Army 14,(10^',  445 

Repayment  to  Army  Funds 500,000 

Army  Purchase  Commission 504,719 

Navy 10.978.592 

Charge  of  Collection  of  Revenue 7,012,850 

Total £82,403,495 

Since  1840  the  gross  revenue  collected  from  duties  on  imports 
has  never  been  above  25j  millions  of  pounds,  nor  below  20,  until 
1877,  when  it  fell  to  19  millions.  On  the  whole,  however,  the 
average  customs  revenue  has  declined,  in  the  forty  years,  from 
the  larger  of  these  figures  to  the  smaller,  or    about   one-fiftli, 


480  ECONOMIC  PHILOSOPHY. 

and  is  still  declining.    The  rate  of  this  decline  is  shown  by  the 
following  figures : 


In  1858 £23,382,141 

"1860 24,391,084 

"  1862 23,692,955 

"  1864 23,234,356 

"1866 21,302,239 

"  1868 22,664,981 


In  1870 £21,499,843 

"1872 20,225,892 

"  1874 20,323,325 

"  1876 20,020,000 

"  1877 19,922,000 

"  1878 19,969,000 


In  the  year  1861,  of  the  total  customs  revenue  of  £23,500,000, 
sugar  yielded  nearly  £6,500,000,  tobacco  over  £5,500,000,  spirits 
and  wine  nearly  £4,000,000.  In  1870,  sugar  yielded  £5,396,561. 
In  1871  the  duty  was  reduced,  and  in  1874  it  was  repealed. 
For  fifteen  years,  from  1863  to  1879,  there  was  an  average  annual 
increase,  in  the  yield  from  the  same  rate  of  duty  on  tobacco,  of 
£158,140,  thus  nearly  compensating  for  the  repeal  of  the  duty 
on  sugar. 

As  the  post-ofRce  represents  an  expenditure  fully  equal  to  its 
earnings,  this  item  of  £6,150,000  may  be  estimated  as  not  forming 
any  part  of  the  actual  revenue.  The  government  is  supported 
therefore  by  duties  on  imports,  excise  (on  the  domestic  manufac- 
ture and  sale  of  liquoi-s  and  tobacco),  by  stamp  duties  and  tax 
on  incomes. 

Of  the  duties  on  imports  at  present  collected,  about  one-half 
($45,000,000)  are  collected  on  tobacco,  and  about  one-half  of 
England's  importation  of  tobacco,  to  wit,  30,000,000  pounds, 
comes  from  the  United  States.  The  duty  ranges  at  from  3s.  6d. 
(87  cents)  sterling,  to  3s.  M.  on  the  leaf,  to  5s.  ($1.20)  on  the  manu- 
factured plug  tobacco,  cigars,  and  snuff.  The  duty  is  prevented 
from  being  protective  of  the  cultivation  of  the  plant  by  a  statute 
of  13th  Victoria,  prohibiting  the  cultivation  of  the  plant,  ex- 
cept in  the  drug  gardens  of  three  universities,  on  an  area  not 
exceeding  one  pole  of  land.* 


*  Shadwell,  an  English  economist  ("  Pol.  Econ.,"  p.  610),  says  concerning  this  pro- 
vision :  "  The  celebrated  order  of  the  Dutch  government  to  destroy  the  spice  trees  in 
certain  parts  of  its  East  Indian  possessions  has  always  been  cied  as  an  instance  of  the 
prompting  of  a  narrow  commercial  selfishness,  and  Humboldt  could  give  no  stronger 
instance  of  the  arbitrary  tyranny  of  the  Spanish  government  than  its  order  to  the 
Viceroy  of  Mexico  to  destroy  the  vines  and  olive  trees  which  had  been  planted  in  that 
colony.  Yet  the  first  of  these  was  certainly,  and  the  second  may  possibly  have  been, 
not  a  whit  more  tyrannical  than  the  prohibition  which  is  still  enforced  by  our  own 
government  against  the  cultivation  of  tobacco  in  the  United  Kingdom.  It  is  not 
simply  the  legacy  of  a  distant  age,  but  the  experiment  of  allowing  its  cultivation 
has  been  fairly  tried  and  abandoned  for  fiscal  reasons.  In  England,  indeed,  it  was 
prohibited  almost  as  soon  as  it  lad  commenced,  but  in  Scotland  it  was  permitted 
down  to  the  middle  of  the  last  century,  and  was  suppressed  on  account  of  the  difll- 


THE  D  UTY  ON  TOBA  CCO.  4  8 1 

Tlie  difference  of  thirty-three  cents  per  pound  by  which  the  duty 
on  the  manufactured  article  exceeds  the  duty  on  the  leaf  is  prohibi- 
tory of  the  importation.*  Nor  is  thei-e  any  excise  (internal  reve- 
nue) duty  on  British  manufactured  tobacco  to  countervail  the 
protective  effect  to  the  British  manufacturer,  of  this  difference  of 
duty.t 

While  British  writers  usually  speak  of  the  specific  duty  on  the 
leaf,  as  equivalent  to  an  ad  valorem  duty  of  500  per  cent.,  i.  e., 
that  the  duty  is  five  times  as  great  as  the  ordinary  foreign  price 
of  the  product,  this  assumes  that  the  foreign  price  of  the  pro- 
duct is  8d.  sterling,  or  16  cents  per  pound.  Tiie  price  at  which 
the  tobacco  shipped  from  the  United  States  is  invoiced  is,  liow- 
ever,  only  6f  cents  jier  pound,  and  on  this  invoice  price  the 
English  duty  instead  of  being  500  per  cent,  would  be  1,250  per 
cent.,  while  the  duty  on  cigars  and  the  higher  forms  of  tlie 
manufacture  Avould  be  about  2,000  per  cent.,  of  which  400  per 
cent,  would  be  protective  to  the  British  tobacco  manufacturer. 

While  the  law  governing  the  tobacco  duty  suppresses  the  domes- 
tic production  of  the  leaf,  in  order  to  avoid  protecting  the  Irish 
farmer,  it  still  maintains  in  behalf  of  the  British  manufacturer 
a  strictly  protective  duty,  four  times  higher  in  its  protective 

ciilty  of  enforcing  the  payment  of  the  excise  duty  upon  home-grown  tobacco.  Ire- 
land still  remained  ffee  in  this  respect ;  but  here  again,  as  in  the  case  of  Scotland, 
as  soon  as  the  cultivation  of  tobacco  assumed  any  large  proportions  it  was  prohibited 
by  the  government.  It  was  finally  suppressed  by  the  Act  2,  William  IV.,  cap.  20, 
"the  vigorous  enforcement  of  which,"  says  Mr.  McCulloch,  "notwithstanding  the 
clamors  it  occasioted,  was  highly  creditable  to  the  government  (p  238)."  This  pro- 
hibition ia  still  made  a  matter  of  complaint  by  Irish  politicians  ;  and  as  some  parts 
of  Ireland  are  well  qualified  for  tobacco  culture,  it  is  much  to  be  regretted  that  so 
poor  a  country  should  have  been  deprived  of  one  chance  of  retrieving  its  fortunes. 
It  does  not  appear  why  English  officials  should  find  it  more  dilKcult  to  levy  an  ex- 
cise duty  on  tobacco  than  their  brethren  iu  France,  where  the  culture  of  tobacco  is 
permitted.  Perhaps  the  real  secret  of  the  difficulty  is  the  exorbitant  height  of  the 
duty,  which,  as  it  amounts  in  some  cases  to  500  per  cent.,  holds  out  a  great  tempta- 
tion to  smuggling,  and  as  long  as  this  temptation  remains  the  revenue  will  always  be 
defrauded,  whether  it  is  collected  by  custom  house  or  by  excise  officers. 

*  On  this  point  Chambers'  Encyclopedia,  Art."  Tobacco,"  eays:  "  Tobacco,  owing  to 
the  high  rate  of  duty  when  in  any  manufactured  form,  is  mostly  imported  in  the  leaf; 
but  small  quantities  are  brought  in  chiefly  for  re-export,  in  various  states  of  manufac- 
ture." Our  customs  returns  for  If8'-J  show  an  export  from  tlie  United  States  to  Eng. 
land  of  299,000  cigars,  worth  $10,151,  no  snuff,  and  all  other  manufactures  of  tobacco 
only  $004,141. 

t  On  this  point  Chambers'  Encyclopedia,  Art."  Excise,"  Bays  :  "  The  only  articles  on 
which  excise  duties  are  now  charged  are  spirits,  malt,  sugar,  chicory,  rice,  horses,  anc' 
the  passenger  receipts  of  railway  companies."  Those  who  alllrrn,  therefore,  that  the 
heavy  import  duties,  provided  by  the  British  tariff  on  a  few  articles,  are  prevented  from 
being  protective  by  countervailing  excise  duties,  are  in  error  as  to  the  first  and  lead- 
ing item. 


482  ECONOMIC  PHILOSOPHY. 

quality  than  any  protective  duty  in  the  American  tariff,  and  taxes 
a  raw  material  of  manufacture,  by  a  duty  from  twelve  to  fifteen 
times  higher  than  any  American  duty. 

Nor  is  either  the  protective  or  the  obstructive  principle  absent 
in  other  features  of  the  British  tariff  and  excise.  The  duty  on 
rum  yields  $11,150,000,  while  the  molasses,  and  other  materials 
from  which  rum  is  distilled,  come  in  free.  There  is  a  difference 
between  the  excise  duty  on  home-made  spirits,  and  the  import 
duty  on  those  imported  from  abroad,  which  acts  as  a  protective 
duty  in  favor  of  English  distilleries.*  Brandy  pays  duties 
amounting  to  $7,935,000  and  wine  $7,000,000.  While  British 
grapes  are  not  a  marked  success,  their  customs  laws  seem  to  aid 
materially  to  strengthen  the  manufacture  and  sustain  the  high 
reputation  of  British  brandy.  From  ninety  to  one  hundred  fluid 
articles,  chiefly  patent  medicines,  from  America,  pay  a  duty  of 
$3.36  per  gallon. 

In  proportion  to  population,  Great  Britain  collects  $3  per  capita 
of  revenue  from  customs  duties,  as  against  the  same  sum  collected 
by  the  United  States.  None  of  its  duties  rest  on  food  or  manu- 
factured articles  of  wood,  wool,  silk,  cotton,  linen,  or  the  metals. 
To  collect  her  revenues.  Great  Britain  is  divided  into  133  cus- 
toms districts,  each  with  a  collector  and  subordinates,  against 
about  128  districts  for  the  vast  area  of  the  United  States.  la 
London  alone  there  are  about  1,550  customs  officials  and  in  Liv- 
erpool about  850.  The  American  system  employs  4,137  men 
in  all,  and  involves  a  total  cost  for  collection  in  1880  of 
$5,995,878.06.  It  is  not  believed  that  the  force  employed  or  the 
total  cost  varies  materially  under  the  British  and  American  sys- 
tems, in  proportion  to  the  sum  collected.  Summing  up  the  three 
classes  of  duties  on  which  we  have  made  no  comment,  a  well-in- 
formed wi'iter  says, ' '  From  the  stamp  duties,  land  and  house  tax, 
and  income  tax,  not  charged  in  the  United  States,  Great  Britain 
collects  $116,000,000  annually.      Every  bill  of  exchange  or  re- 

*  Shadwell,  "Pol.  Econ."  p.  601,  saye:  "The  higher  rate  of  duty  on  spirits  is  adopted 
as  a  compensation  for  the  restrictions  upon  native  distilleries,  which,  according  to  them, 
placed  them  at  a  disadvantage  in  competing  with  foreign  rivals.  But  H.  Fancher  dis- 
putes the  validity  of  the  excuse.  One  of  the  excise  regulations  which  is  compensated 
in  this  way  is  the  prohibition  against  brewing  and  distilling  at  the  same  time,  but  he 
denies  that  there  are  any  manufactures  on  the  continent  who,  by  being  allowed  to 
brew  and  distill  at  the  same  time,  gain  any  advantage  over  their  English  rivals.  If  this 
is  so  it  is  obvious  that  the  difference  between  the  customs  and  excise  duty  on  spirits  acts 
as  a  check  on  importation,  and  must,  to  some  extent,  relieve  the  native  manufacturers 
from  the  wholesome  influence  of  competition  and  subject  the  consumers  to  a  corre- 
eponding  loss." 


PliOFITS  OF  TRADE.  483 

ceipt,  all  professions,  trades,  and  incomes,  exery  deed,  probate, 
legac\',  house,  carriage,  servant,  gun,  or  dog  must  pay."  A 
laundry  woman,  who  sent  her  washing  home  by  her  infant  son, 
was  made  to  pay  a  jiorter's  license  on  the  boy.  But  the  noble- 
man who  can  ride  125  miles  in  a  right  line,  without  once  getting 
off  his  own  land,  may  congratulate  himself  on  the  fact  that  men 
of  his  class  have  had  such  an  influence  in  shaiiiug  the  system  of 
taxation,  that  no  warrant  for  the  collection  of  taxes,  and  no  execu- 
tion for  debt,  can  sell  a  foot  of  this  land  from  its  proprietor. 

184:.  India — Taxation  by  Pi'ofits  of  Enforced  Foreign 
Trade. — New  devices,  in  government  and  society,  often  exist  for 
long  periods,  before  they  come  to  be  recognized  by  their  right 
names.  To  sustain  a  vast  empire,  highly  free  and  liberal  as  to  its 
conquering  elements,  but  equally  despotic  and  cruel  toward  its 
conquered,  without  any  other  taxation  on  the  subject  peoples 
than  that  derived  from  the  profits  on  their  trade,  is  a  compara- 
tively new  device  in  government,  and  it  is  not  wonderful  that  it 
should  not  be  fully  understood. 

Many  are  reluctant  to  admit  that  the  profits  of  trade  can  be  a 
mode  of  taxation.  In  a  small  way,  laws  have  here  and  there 
been  passed,  in  America  and  England,  which  assume  that  when  a 
merchant  obtaips  a  certain  degree  of  power  over  his  customers, 
sufficient  to  compel  them  to  trade  only  with  him,  the  profits  of 
voluntary  trade  may  often  become  a  severe  form  of  despotic 
swindling.  Legislators  perceiving  this,  have  forbidden  the  system, 
on  the  part  of  manufacturers,  of  paying  men  in  store  ordei's,  for 
goods  to  be  purchased  at  the  employer's  store,  and  at  his  prices, 
since  the  buyer,  or  workman,  is  thus  deprived  in  the  pui'chase  of 
his  goods  of  all  the  healthy  effects  of  competition. 

The  British  system  of  taxing  its  outlying  empire,  and  especially 
the  Mohammedan,  heathen  and  barbai'ian  portions  of  it,  by  sim- 
ply collecting  from  them  the  profits  of  a  species  of  trade  more 
or  less  enforced  by  her  military  arm,  is  a  device  of  this  kind. 
No  sketch  of  British  taxation  would  be  faithful  to  the  subject, 
which  omitted  to  trace  her  system  of  sustaining  military  and 
financial  governments,  in  a  more  or  less  acute  form  of  armed  coer- 
cion, or  cut- throat  loans  over  Ireland,  Turkey,  Egypt,  India, 
China,  Jajian,  South  Africa,  the  islands  of  the  Indian  Archi- 
pelago, Australia,  New  Zealand,  Tasmania,  Cyprus,  Malta,  and 
even  Brazil,  and  Mexico,  for  the  sake  of  the  profits  that  can  1)0 
reaped  from  their  trade.  Great  Britain  has  now  2(')0,()00,0()0  of 
people  under  her  sway,  of  whom  220,000,000  ai'O  heathens  who  do 


484  ECONOMIC  PHILOSOPHY. 

not  desire  her  kindly  and  ofRcious  interposition  in  their  behalf. 
Yet  from  all  those  people  she  gathers  no  taxes  by  that  name,  for  the 
support  of  her  imperial  government.  Since  about  1846,  the  well- 
understood  policy  of  Great  Britain  has  been  to  I'equire  each  of 
her  provinces,  Canada,  Australia,  India,  the  Cape  Colony,  etc., 
to  raise  within  itself  the  revenue  required  for  its  own  government 
expenditures  and  national  defense,  without  contributing  any 
thing  toward  defraying  the  cost  of  her  own  supervision  of  their 
affairs,  though  much  of  the  attention  of  the  imperial  government 
is  given  to  guarding  its  ascendency  over  them.  Its  own  compen- 
sation for  the  enormous  cost  at  which  it  stands  ready  at  all  times 
to  preserve  its  dominion  over  them,  with  the  last  drop,  if  need  be, 
of  British  blood,  is  found  in  the  two  jirivileges  of  ' '  furnishing 
Englishmen  with  a  career,"*  in  governing  these  outlying  peo- 
ples, and  in  furnishing  English  manufacturers  with  a  market  for 
their  goods. 

The  British  Empire  is,  therefore,  maintained  by  military  force, 
for  the  sake  of  the  profits  involved  in  the  system  of  trading  that 
arises  between  a  conquering  race  of  shop-keepers,  bankers,  and 
artisans,  and  the  world's  conquerable  races  of  borrowing  farmers, 
peasants,  and  laboring  barbarians.  As  government  may,  in 
military  periods,  accept  as  a  tax  the  military  services  of  its  sub- 
jects, or  the  rents  of  their  land,  or  their  gifts,  as  of  Peter's  Pence 
to  the  Pope,  and  so  the  real  taxation  is  concealed  under  another 
name,  so  England's  taxation  by  an  empire  of  shop-keepers, 
existing  only  for  purposes  of  trade,  appropriately  takes  the 
form  of  profits  of  trade. 

"One-seventh  of  India,"  says  J.  Seymour  Keay,t  "was  con- 
quered by  the  English  by  force  ;  six-sevenths  were  obtained  by 
breach  of  trust."  Native  princes  were  told  that  they  needed  and 
must  have  the  protection  of  British  troops,  and  immediately  upon 
accepting  the  protection,  they  became  prisoners  in  their  own  pal- 
aces. Native  merchants  were  supplied  with  every  thing  they  de- 
sired to  sell,  so  cheaply  by  British  manufacturers,  that  they  ceased 
to  be  customers  of  the  Hiiidoo  manufacturers  and  artisans,  though 
the  latter  had  invented  the  loom  and  the  cotton  thread,  and  the 
former  had  only  substituted  coal  and  steam,  as  workers,  for  human 
muscle. 

Anterior  to  the  rule  of  the  British  in  India,  that  country  in- 
cluded, in  its  population,  all  ranks  and  grades  of  wealth,  except 

*  Tlie  language  of  Wm.  E.  Gladstone,  in  defending  the  British  occupation  of  Egypt, 
t  "  Spoliation  of  India."    See  Nineteenth  Century  for  July,  1883. 


SPOLIATION  OF  INDIA.  485 

the  famine-stricken  and  the  suffering.  Its  industry  had,  for  genera- 
tions, been  a  success,  in  a  material  point  of  view.  It  had  capital- 
ists, as  well  as  ryots  (peasant  farmers),  manufacturers  of  looms 
and  fabrics  as  well  as  cultivators  of  rice,  merchants,  traffickers, 
great  landlords,  nobles,  rich  priesthoods,  scholars,  philosophers, 
palaces,  temples,  bankers,  money-lenders,  and  all  the  appliances 
of  a  vast  and  active  interior  commerce,  engaging  the  activities  and 
satisfying  all  the  Avants  of  a  population  larger  than  that  of  all  Eu- 
rope. To-day,  after  a  career  of  robberies  of  capitalists  under  pre- 
tense of  extorting  tributes,  indemnities,  confiscations,  and  fines — 
after  the  people  have  been  mown  down  like  grass  by  decimating 
famines  that  recur  every  few  years,  the  country  contains  virtually 
a  population  of  200,000,000  paupers,  with  hardly  a  native  employ- 
ing capitalist,  or  landholder,  where  formerly  there  were  hundreds, 
— to  advance  the  food  required  for  the  employment  of  any  large 
force,  to  till  the  soil,  or  undertake  any  other  enterprise.  In  a  single 
famine,  and  in  a  single  province  (Mysoi'e),  in  1877,  out  of  a  pop- 
ulation of  5,000,000  fully  1,500,000  died  of  famine.  The  total  num- 
ber of  persons  who  perished  in  the  various  famines,  induced  by 
the  dislocation  of  native  commerce  among  the  people  themselves 
in  the  interests  of  a  foreign  trade,  probably  exceeds  the  entire 
present  population  of  England.* 

The  Indian  people  pay  a  revenue  of  $350,000,000  annually,  for  a 
government  wholly  alien  in  its  spirit  and  aims.  Of  this  $150,000,- 
000  is  paid  in  salaries  to  Englishmen,  civil  and  military.  In  the 
civil  service  the  average  salary  of  a  native  officer  is  $100  a  year  ; 

*  Mr.  Mart'n  Wood  Pays  :  "  In  the  fifty-two  years  ending  1854  there  was  a  record  of 
thirteen  or  fourteen  famines,  with  a  probable  loss  of  life  of  5,000,000.  But  in  tlie  period 
of  only  eighteen  years  from  1860  to  1878  there  were  sixteen  famiLes,  witli  a  loss  of  life 
of  nearly  12,000,000.  Mr.  Wm.  Digljy  gives  famines  of  18G1  to  1870,  six  in  number, 
deaths,  4,585,000  ;  and  from  1871  to  1880,  six  in  number,  deaths,  6,7.36,420." 

In  Journal  of  the  Society  of  Arts,  February  26,  1886,  is  an  essay  on  "  Historical  and 
Recent  Famines  in  India,"  by  F.  C.  Downs,  containing  a  catalogue  of  all  known  Indian 
famines.  The  Famine  Commission  estimate  that  for  the  two  years  1876-8,  in  a  popula- 
tion of  190,000,000,  there  were  5,250,000  deaths  in  excess  of  what  would  have  occurred 
if  the  seasons  (supplies)  had  been  ordinarily  healthy  (abundant). 

General  Prendruft  estimated  the  government  had  expended  £24,,^00,000  in  works  of 
irrigation,  all  of  which  had  paid  good  dividends,  and  had  sunk  £23,500,000  in  hopelessly 
trying  to  mitigate  famines  in  which  at  least  10,000,000  lives  had  been  lost  during  the 
century. 

In  some  of  these  famines  the  number  of  bodies  exposed  on  the  highway  was  so  great 
and  their  appearance  so  hideous  that  even  the  horses  of  the  British  officers  would  not 
ride  by  them.  The  stench  was  so  pervad  ing  that  sappers  and  miners  were  sent  ahead  to 
bury  i\w  bodies  before  the  governor-general  could  pass  through.  In  the  corruption  of 
these  exposed  bodies  the  Asiatic  cholera,  called  by  the  Hindoos  "  The  British  Cholera," 
•rigiuated. 


486  ECONOMW  rUlLOSOPIlY. 

the  average  salary  of  an  English  officer  is  $6,000  a  year.  Out  of 
a  total  white  population  of  68,000  persons,  exclusive  of  the  army, 
25,402  ax*e  governing  officers,  and  their  salaries  amount  to  $63,- 
882,865,  while  11,231  native  officers  draw  in  all  less  than 
$11,000,000. 

A  native  army  of  125,000  men  is  officered  by  2,800  British  offi- 
cers, while  an  English  army  of  64,000  troops,  with  3,200  British 
officers,  is  required  to  hold  the  native  army  to  its  work.  The  mer- 
cantile profits  of  English  traders  in  India  are  upwards  of  $70, 000,- 
000.  A  heavy  burden  of  railway  loans,  and  private  loans,  renders 
all  parts  of  the  population  tributary  to  London.  The  money  that 
is  loaned  to  them  is  but  a  small  portion  of  the  profits  that  have 
been  made  out  of  them.  Whole  cities  in  England  have  been 
built  up  on  the  profits  of  conducting,  17,000  miles  away,  the  ex- 
changes of  food  for  cloth  and  iron  which  the  people  of  India  could, 
far  more  economically  and  securely,  have  conducted  with  each 
other.  India  cotton  was  shipped  from  the  city  of  Calicut,  where 
the  manufacture  of  calicoes  began,  to  Manchester,  to  be  there  spun 
and  woven  after  designs  borrowed  from  India,  and  tlxence  shipped 
back,  84,000  miles  in  all,  one-seventh  of  the  distance  to  the  moon, 
to  be  sold  to  the  very  ryots  who  were  deprived  of  bread  by  the 
substitution  of  these  foreign  wares  for  their  own. 

Justice  is  administered  in  the  courts,  chiefly  as  a  means  of  pro- 
moting the  collection  of  revenue,  by  the  sale  of  stamps.  The  aver- 
age annual  income  of  the  majority  of  the  people  is  $10,  out  of 
which  they  pay  in  taxes  $1.50.  The  cultivation  of  120,000,000 
acres  of  land  is  taxed  directly  $105,000,000,  though  the  value  of 
the  crops  derived  from  the  land  is  only  $7  per  acre.  All  the  land 
of  India  is  nationalized,  and  is  taxed  to  nearly  the  value  of  the 
ground  rent.  At  all  times  a  large  proportion  of  the  population  is 
on  the  verge  of  starvation.  More  frequently  than  in  any  other 
part  of  the  world,  great  famines  set  in,  and  the  people  perish  by 
millions.  Meal  boiled  in  water,  or  boiled  rice,  is  all  the  food  the 
agricultural  classes  desire.  The  government  collects  on  salt  a 
direct  tax  of  2s.  6c?.  on  every  penny  woi*th,  or  3,000  per  cent. — a 
sum  which  represents  the  valueof  a  laborer's  services  for  a  month. 
It  is  collected  from  the  poorest  classes  as,  a  poll  tax,  without  regard 
to  whether  they  have  made  any  salt  or  not.  The  horrors  of  the 
salt  tax  are  incredible.  Instances  have  occurred  in  which  the 
laboi'er,  who,  in  digging  a  foundation  for  his  hut,  found  grains  of 
saline  earth,  and  laid  them  in  the  sun  to  dry,  was  lashed  for  eat- 
ing the  dried  earth  without  paying  the  salt  tax.    The  ryot  who 


SPOLIATION  OF  INDIA.  487 

scooped  out  a  channel  for  the  sea-water  witli  his  hands,  and 
sucked  up  the  salt  crystals  from  the  sand,  has  been  pursued  hy  the 
i"e venue  officer,  and  lashed  for  the  back  tax.* 

An  important  difference  between  the  English  spoliators  of  India 
and  all  previous  conquerors,  whether  Parsee  or  Mohammedan, 
was  that  the  earlier  conquerors  became  part  of  the  country,  and 
their  spoils  of  conquests,  fines,  and  rents  of  land,  remained  and 
were  expended  in  the  country.  The  English  spoliators  stayed 
only  long  enough  to  grasp  then*  plunder,  and  then  return  to  Eng- 
land. Since  the  Suez  Canal  has  shortened  the  route  to  India  the 
average  stay  of  Englishmen  in  India  has  been  still  more  tran- 
sient. Especially  is  it  far  more  destructive  of  the  industries  of  the 
country,  to  pay  aland  rent  of  one-half  or  more  of  the  raw  product 
of  the  soil,  to  foreign,  than  to  domestic  landlords. 

In  1831,  the  native  raanufactui'ers  and  dealers  in  cotton  and  silk 
piece  goods,  the  fabrics  of  Bengal,  petitioned  the  British  govern- 
ment, showing  that  of  late  years  they  had  found  their  business 
nearly  superseded  by  the  introduction  of  British  fabrics,  to  the 
suppression  of  the  native  manufacture.  They  said  the  fabrics  of 
Great  Britain  came  into  Bengal  fx'ee  of  duty,  while  the  manufac- 
tured cottons  of  Bengal  paid  10  per  cent.,  and  the  manufactured 
silks  24  per  cent. ,  to  get  into  Great  Britain.  They  very  rashly, 
but  politely,  asserted  their  confidence  that  "no  disposition  existed 

*  Mr.  Keay,  in  "  SpoliatioB  of  India,"  Nineteenth  Century  for  July,  1883,  eays  :  "  I 
despair  of  giving  any  adequate  idea  of  the  miseries  inflicted  on  a  helpless  people,  too 
poor  to  consume  aught  save  the  bare  necessaries  of  life,  by  this  method  of  compelling 
them,  on  pain,  as  it  were,  of  death  itself,  to  contribute  to  the  support  of  our  expensive 
government.  Even  to  wa^^h  a  little  salt  out  of  the  earth  is  held  to  be  a  heinous  crime. 
Here  is  a  story  vouched  for  by  a  member  of  the  Madras  Civil  Service,  and  quoted  in  a 
recent  publication  : 

"' A  laborer  in  Madras,  having  shifted  his  place  of  residence,  made  himself  a  new 
mud  hut.  When  he  came  to  occupy  the  hut,  he  found  the  earth  floor  strongly  impreg- 
nated with  saline  particles.  He  scraped  up  some  of  the  dirt,  separated  the  parts  as  well 
as  he  could,  and  put  the  salt  he  hud  collected  outside  to  dry.  This  was  observed  by  a 
revenue  collector,  and  the  man  was  proceeded  against.  He  was  imprisoned,  and  was 
condemned  to  receive  some  lanhes.' 

"  The  mass  of  the  poverty-stricken  classes  in  India  dare  not  risk  euch  punishments  as 
these.  For  bare  life,  however,  salt  must  be  had.  It  is  a  crime  to  separate  the  precious 
saline  particles  from  the  earth,  but  it  is  not  a  siatulable  offense  to  swallow  the  salt 
along  with  the  earth  itself.  Nothing  remains,  therefore,  for  muny  jioor  people,  but  to 
con-ume  the  revolting  compound.  Darwin  has  familiarized  us  with  the  fact  that  there 
is  a  class  of  worms  which  gain  nutriment  by  passing  the  soil  through  their  tube-like 
bodies.  It  has  remained  for  our  British  Government  of  India  to  reduce  large  numbers 
of  human  beings  to  the  same  expedient.  In  tlu^  suite  <  f  Hyderabad,  where  I  have  lived 
for  the  last  twenty  years,  the  people  are  entirely  dependent  on  British  salt,  and  great 
mortality  is  caused  among  the  poor  by  their  eating  earth  for  the  sake  of  its  saline 
flavor.    The  practice  is  common  throughout  India," 


488  ECONOMIC  PHILOSOPHY. 

in  England  to  shut  the  door  against  the  industry  of  any  part  of 
the  inhabitants  of  this  great  empire."  They  asked  either  that 
Bengal  fabrics  might  come  into  England  free,  or  that  English 
fabrics  might  pay  the  same  duty  on  entering  India  as  Indian 
fabrics  paid  to  enter  England. 

The  government  denied  the  request.  So  completely  were  the 
cotton  manufacturers  of  India  crushed,  that  certain  cultivators, 
who  had  paid  78  per  cent,  of  their  product  to  the  government  as  a 
ground-rent,  made  manure  of  the  remainder  for  want  of  a  market. 
Though  the  population  of  India  is  more  than  three  times  greater 
than  that  of  the  United  States,  Dr.  Carey  estimated  twenty-five 
years  ago  that  all  its  proprietary  rights  of  every  kind  in  the  land 
of  India  would  sell  for  hardly  more  than  those  of  the  State  of 
New  Jersey.* 

185.  Taxation  by  Profits  of  Enforced  Trade — Turkey. 
— The  motto  of  England  might  well  be,  ' '  Let  me  make  the  tariffs 
of  a  country,  and  I  care  not  who  wears  its  crown."  A  country 
can  be  subjugated  by  treaty,  more  cheaply  than  by  armies,  if  it 
will  only  make  a  satisfactory  treaty.  In  1675  Turkey  bound  her- 
self to  Great  Britain,  to  charge  only  3  percent,  duties  on  imports, 
16  cents  per  ship  anchorage,  and  no  internal  tax  whatever  to  any 
resident  alien.  The  Turks  are  said  to  have  been  seduced  into  this 
treaty  by  the  notion  that,  their  government  being  established  to 
convert  the  world  to  Moslemism,  it  was  an  impiety  to  permit 
Christians  to  contribute  to  its  revenues.  Certainly,  the  Chris- 
tians were  very  willing  to  profit  by  this  kind  of  scorn.  No  duty 
paid  by  foreigners,  therefoi-e,  has  ever  exceeded  7.6  per  cent,  in 
all  the  Ottoman  Empire.  The  native  farmers  and  grazers  pay  as 
high  as  63  per  cent,  of  their  profits,  a  special  tax  on  sheej),  olive- 
trees,  fig-trees,  tithes  of  all  other  products,  and  finally  a  tax  on 
exports.  But  even  foreigners  residing  in  the  country,  are  not 
permitted  to  pay  a  tax,  even  for  paving  or  lighting  their  own 

*  Dr.  Carey  says  C'  Social  Science,"  by  McKean)  :  "  The  gross  land  revenue  obtained 
from  a  country  that  is,  naturally,  one  of  the  richest  of  the  world,  and  with  an  area  of 
300,000,000  acres,  is  $73,000,000.  In  no  case  docs  the  land  subject  to  taxation  seem  to 
be  worth  more  than  four  years'  purchase  ;  while  over  a  large  portion  of  the  country 
it  appears  to  be  wholly  destitute  of  exchangeable  value.  There  being,  however,  some 
lands  tax  free,  it  is  possible  that  the  whole  may  be  worth,  on  an  average,  four  years' 
purchase,  giving  $288,000,000  as  the  money  value  of  all  the  rights  in  land  acquired  by 
the  people  of  India  in  the  thousands  of  years  it  has  been  under  cultivation.  The  few 
people  of  the  little  and  sandy  State  of  New  Jersey,  with  its  area  of  6,900  square  miles, 
have  acquired  rights  in  the  land  valued  at  $1.'50,000,000  ;  while  the  little  island  on 
which  stands  the  city  of  New  York,  would  sell  for  almost  twice  as  much  as  all  the 
])rnprietriry  rights  to  land  in  India,  with  its  luindrt'ds  of  millions  of  acres,  and  its  150,- 
p.:U,^i00  of  inhabitants  ! 


TURKEY  PL  UCKED.  489 

streets.*  Prior  to  the  treaty  of  1675,  Turkey  represented,  without 
decline  or  decay,  the  skilled  industries  and  numerous  populations, 
inherited  through  generations,  from  the  Byzantine  and  Eastern 
Roman  Empires,  invigorated  rather  than  enervated  hy  the  new 
blood  of  the  barbarian  Turks.  "Her  soldiers,"  saj^s  Freeman, 
"excelled  those  of  any  European  nation."  The  names  which  still 
cling  to  many  fine  pi'oducts  of  art,  such  as  Ottomans,  Damasks,! 
"Turkish"  velvets  and  carpets,  rugs,  robes,  and  chairs,  Morocco 
(then  tributary  to  Turkey),  Turkey  leather,  Damascus  steel,  Tur- 
key red,  Afghans,  Cashmeres,  Astrakhan,  Smyrna  goods  of 
various  kinds,  Tyrian  dyes,  attar  of  roses,  Arabian  horses,  all  in- 
dicate the  high  superiority  which  Turkish  industry  then  main- 
tained in  the  useful  arts.  England,  with  her  paltry  2,000,000  of 
people,  was  hai'dly  more  feared,  as  a  rival  to  Turkey,  than  Uruguay 
would  now  be  feared  by  England.  The  proud  Sultan  of  the 
Ottomans  deemed  it  scarcely  worthy  of  his  notice,  that  the 
obscure  island  of  the  north  was  charging  Turkish  iron  and  steel 
with  duties  of  from  $25  to  $150  per  ton,  in  the  hope  of  one  day 
developing  its  own  manufactures.  After  1700  it  prohibited  the 
importation  from  Turkey  or  elsewhere  of  calicoes,  chintzes,  and 
muslins.  Until  1842  it  prohibited  the  exportation  to  Turkey,  or 
elsewhere,  of  machinery  for  working  flax.  In  1720,  to  compel  its 
people  to  patronize  the  dear  woolens  and  linens  of  England,  in- 
stead of  the  cheap  calicoes  of  Turkey  and  India,  England  fined 
every  person  found  wearing  a  printed  calico  five  pounds,  and  the 
seller  twenty  pounds. 

While  this  unreciprocal  condition  of  the  duties  did  not  mate- 
rially affect  Turkey,  so  long  as  Turkey  and  England  continued  to 
use  like  processes  and  machinery,  it  immediately  exerted  an 
effect  upon  Turkey,  more  disasti'ous  than  war  could  have  done, 
when  England  (from  1767  to  1846)  strode  upward  on  her  career  of 

*  "  Modern  Turkey,"  1872,  by  Farley,  sayp  :  "  Tn  no  olher  country  in  tlie  world,  having 
equal  rank  as  a  state,  ....  do  foreigners  hold  eucli  a  privilef;ed  position  as  in  Turkey. 
For  example,  they  are  exempt  from  all  imposts  wnatsoever,  either  state  or  municipal, 
customs  dues  alone  excepted  ;  they  may  lead  a  life  of  pleasure  or  of  business  ;  may 
settle  and  amass  wealth  ;  or  may  travel  and  spend  it  ;  .and  at  all  times  nuiy  claim  the 
fullest  protection  which  the  laws  of  the  empire  are  capable  of  affording,  without  con- 
tributing one  piastre  to  the  expenses  of  the  state,  and  without  being  amenable  in  the 
smallest  degree  to  Ottoman  jurisdiction.  If  the  Porte  construct  a  road,  light  a  town 
with  gas,  or  pave  or  cleanse  the  streets,  it  can  not  compel  the  foreign  residents  to  con- 
tribute a  para  towards  the  cost,  while  the  whole  system  of  taxation  is  rendered  irregu- 
lar and  diflicult  in  consequence  of  the  mischievous  obstruct  ons  offered  by  these  char- 
acters in  nearly  every  relation  between  the  foreign  population  and  the  government." 

+  From  the  place  of  manufacture,  Damascus. 


490  ECONOMIC  PHILOSOPHY. 

invention,  substituting  coal  and  steam  for  human  muscle,  while 
forbidding  the  export  of  either  her  machinery  or  artisans  to  Tur- 
key, Immediately  Turkey  became  "the  sick  man  of  Europe," 
because  the  only  power,  in  Europe,  that  ever  admitted  all  foreign 
goods  free. 

The  Oriental  and  Levant  Trading  Company  rivalled  the  East 
India  Company  in  the  magnificence  of  its  profits,  and  the  exhaust- 
ing suction  it  was  able  to  practice  upon  a  country  still  nominally 
under  its  own  flag.  The  ruin  of  Turkey  by  foreign  trade  was 
more  complete,  as  respects  its  commerce  and  industries,  than  the 
ruin  of  Poland  by  partition,  or  than  the  prostration  of  Rome  by 
barbarian  subjugation.  Liverpool,  London,  and  Birmingham 
grew  by  the  fabrication  of  wares,  not  merely  of  a  kind  which  had 
previously  been  made  for  other  markets  in  Turkey,  but  at  prices 
which  excluded  Turkish  products  from  their  own  home  markets.* 

From  the  commercial  creditor,  England  has  gradually  become 
the  mortgagee  of  Turkish  revenues  and  provinces.  Egypt  is  in 
pawn.     The  Suez  is  an  English  highway.     The  Eastern  question 

*ln  London  Academy  oi  Nov.  25,  1876,  an  English  writer  says  :  "Throughout  beauti- 
ful landg,  once  the  garden  of  the  world,  the  human  species  is  becoming  extinct.  Works 
of  irrigation,  the  masterpieces  of  by-gone  dynasties,  are  indistinguishable  ruins.  The 
Great  Desert  of  Arabia,  encroacliing  on  the  once  fertile  Syrian  champaign,  has  crept 
onwards  year  by  year,  overlapping  and  overlapping,  till  the  sandy  ocean  has  joined 
hands  with  the  Mediterranean.  Around  Aleppo  alone,  in  the  space  of  twenty  years,  a 
hundred  villages  have  disappeared.  From  Smyrna  to  Ephesus  the  traveler  may  ride 
through  fifty  miles  of  the  most  fertile  soil,  blessed  by  the  finest  climate  under  the  sun, 
without  seeing  an  inhabitant  or  a  cultivated  field.  Vast  and  fruitful  tracts  of  country 
in  Turkish  Armenia,  the  Troad— nay,  the  very  environs  of  the  Bosphorus — tilled  only 
twenty  or  thirty  years  ago  with  all  the  care  of  garden  husbandry,  are  to-day  a  howling 
wilderness,  scattered  here  and  there  with  graves  and  ruins.  On  the  borders  of  Armenia 
rises  still,  with  lofty  walls  and  large  storehouses,  a  city,  peopled,  it  is  said,  within  the 
memory  of  man,  with  60,000  souls  ;  but  it  is  a  city  of  the  dead.  '  The  finest  country  in 
the  world,'  says  Sir  George  Bowen,  '  has  been  more  wasted  by  peace  than  other  lands 
have  been  wasted  by  war.'  " 

Farley  in  "  Modern  Turkey,"  p.  194  (1872),  says  :  "The  manufactures  in  steel,  for 
which  Damascus  was  so  famous,  no  longer  exist ;  the  muslin-looms  of  Scutari  and  Tir- 
nova,  which  in  1812  numbered  2,000,  are  now  reduced  to  legs  than  200  ;  the  silk  looms 
of  Salonica,  numbering  from  25  to  28  in  1847,  have  now  fallen  to  18  ;  while  Broussaand 
Diarbekhr,  which  were  so  renowned  for  their  velvets,  satins,  and  silk  stuffs,  do  not 
produce  a  tenth  part  of  what  they  yielded  thirty  years  ago.  Bagdad  was  once  the 
center  of  flourishing  trades,  especially  of  calico-printing,  tanning,  and  preparing 
leather,  pottery,  jewelry,  etc.  Aleppo  was  still  more  famous,  for  its  manufactures  of 
gold  thread,  of  cotton  tissues,  cotton  and  silk,  silk  and  gold,  and  pure  cotton  called 
nankeens,  gave  occupation  to  more  than  forty  thousand  looms,  of  which  at  present 
there  remain  only  about  five  thousand.  Various  causes  have  contributed  to  this  de- 
crease of  manufacturing  industry  ;  and  now  Sheffield  steel  supplies  the  place  of  that 
of  Damascus  ;  cloths  and  every  variety  of  cottons  have  supplanted  silk  ;  English  mus- 
lins are  preferred  even  to  those  of  India,  and  the  shawlsof  Persia  and  Cashmere  have 
given  way  to  those  of  Glasgow  and  Manchester." 


MISG  0  VERNMENT  OF  IRELAND.  491 

is  fast  becoming-  one,  of  the  degree  of  security  obtainable  by  Eng- 
land for  the  Indian  Empire,  in  consideration  of  pei'mitting  Con- 
stantinople to  become  a  Russian  capital. 

186.  Taxation  by  Profits  of  Enforced  Trade — Ireland. 

— From  1698  to  this  day,  Great  Britain  has  been  one  nation  and 
Ireland  another,  as  respects  taxation.  Never  in  a  single  instance 
has  a  British  Parliament,  or  inlluence  of  any  kind,  aimed  to 
legislate  or  administer  in  a  manner  to  foster  Irish  interests,  or  to 
place  them  on  an  equality  with  English,  Every  act  of  British 
taxation  has  treated  Ireland  as  an  alien  countrj^  whose  interests 
were  to  be  subordinated  to  Englishmen's  profits,  so  far  as  English- 
men themselves  could  see  clearly  where  their  own  x^rofits  lay. 
This  summmg  up  of  three  centuries  of  history  is  the  cause,  both 
of  the  chronic  disloyalty  of  Ireland,  and  the  conviction,  so  gen- 
erally felt  by  intelligent  men  of  other  nations,  that  England,  not 
having  the  moral  sagacity  to  rule  Ireland  fairly,  lacks  the  moral 
right  to  rule  Ireland  at  all.  Englishmen  usually  charge  the  ex- 
pression of  this  conviction,  by  native  Americans,  to  the  desire  to 
"cater  to  the  Irish  vote."  In  this  way  only  can  Englishmen  hear 
Great  Britain's  moral  vacuity,  in  governing  Ireland,  suitably  de- 
nounced, without  blushing.  This  charge,  however,  is  as  morally 
wide  of  the  truth  as  England's  misgovernment  in  Ireland  has  been 
wide  of  ethical  decency.  Americans,  by  their  Federtil  Union,  be- 
come instinctively  educated  to  the  principle  of  equity  among 
states,  and  fairness  on  the  part  of  large  states  toward  small,  as 
distinguished  from  the  English  notion  of  absorbing  and  sacrificing 
inferior  states  to  the  one  dominant  state.  An  American,  there- 
fore, no  sooner  learns  the  facts  which  show  that  Irish  interests 
have  invariably  been  sacrificed  to  English,  than  he  feels  their  in- 
justice, with  all  the  force  of  an  ethical  training  in  equal  politics, 
w^iich  Englishmen  do  not  possess,  and  can  not  borrow . 

In  1698,  William  III.,  Prince  of  Orange,  on  hearing  a  deputa- 
tion of  woolen  manufacturers  of  England  complain  of  the  increase 
of  woolen  manufacturing  in  Ireland,  as  something  prejudicial  to 
the  interests  of  English  manufacturers,  had  he  possessed  the 
modern  American  sense  of  right  and  equity  among  states,  w^ould 
have  answered,  "Sirs,  it  is  no  part  of  my  business  to  prevent 
Iri.sh  manufacturers  from  outstripping  English.  You  are  both 
subjects  of  a  common  realm  and  entitled  equally  to  the  care  of 
government."  Instead  he  promised  to  "do  all  that  in  him  lay  to 
discourage  the  woolen  tradfi  of  Ireland." 

In  1698,  a  majority  in  the  Irish  Parliument,  which  Mr.  Gardner, 


492  ECONOMIC  PHILOSOPHY. 

chairman  of  tlie  Ways  and  Means  Committee  of  the  saine  body 
in  1782-3,  denounced  as  "corrupt,"  was  induced  to  lay  an  export 
duty  on  cloths  sent  to  England,  instead  of  an  import  duty  on 
cloths  brought  from  England,  the  effect  of  which  was  to  deprive 
Irish  manufacturers  of  the  English  market.  At  this  time  the 
French,  by  raising  their  protective  duties  against  England,  were 
getting  that  foothold  which  soon  enabled  them  to  undersell  En- 
gland in  woolen  cloths  in  all  the  markets  of  Europe. 

On  measures  introduced  in  1783  by  Mr.  Gardner,  the  Irish  Par- 
liament adopted  a  definitely  i^rotective  policy,  which  England 
suffered  her  to  do  without  open  resistance,  owing  to  her  own 
humiliation  in  the  loss  of  America.  So  prosperous  was  Ireland 
for  a  brief  period  that  her  Parliament  appropriated  £50,000  to 
assist  Swiss  immigrants,  principally  artisans,  in  locating  in  Water- 
ford.  Her  population  increased  by  3,000,000  in  twenty  years.* 
In  1799,  when  the  act  of  union  with  England  was  first  proposed 
in  the  Irish  Parliament  and  defeated,  the  House  of  Commons,  in 
its  addx'ess  to  the  King,  stated  soundly  and  cogently  the  reasons 
for  defeating  it.  t 

The  late  premier  has  recently  given  the  seal  of  his  emphatic 
approval  to  the  statement  that  the  means  by  which  England 
cozened  and  bought  the  i^assage  of  the  Act  of  Union  through 
the  Irish  Parliament  were  intensely  corrupt.  Gladstone  thus 
gives  his  sanction  to  the  specifications  of  corruption  embod- 
ied in  Plowden's  and  other  narratives  of  this  transaction.     Un- 

*  Lord  Clare,  speaking  about  the  condition  of  Ireland  at  this  period,  says  :  "There is 
not  a  civilized  nation  on  the  face  of  the  habitable  globe  which  had  advanced  in  culti- 
vation, in  agricultare,  in  manufacture,  with  the  same  rapidity  iu  the  same  period  as 
Ireland." 

Lord  Plunkett,  describing  Ireland  at  the  same  time,  says  :  "  Laws  well  arranged  and 
administered,  a  constitution  fully  recognized  and  established,  her  revenues,  her  trade, 
her  manufactures,  thriving  beyond  the  hope  or  example  of  any  other  country  of  her 
extent." 

t  The  address  said :  "Giving  the  name  of  Union  to  the  measure  is  a  delusion.  .  .  . 
In  manufactures  any  attempt  it  makes  to  offer  any  benefit  which  we  do  not  now  enjoy 
is  vain  and  delusive,  and  wherever  it  is  to  have  effect,  that  effect  will  be  our  injury. 
Most  of  the  duties  on  imports  which  operate  as  protection  to  our  manufactures,  are 
under  its  provisions  to  be  either  removed  or  reduced  immediately,  and  those  which  will 
be  reduced  are  to  cease  entirely  at  a  limited  time,  though  many  of  our  manufactures 
owe  their  existence  to  the  protection  of  these  duties,  and  though  it  is  not  in  the  power 
of  human  wisdom  to  foresee  any  precise  time  when  they  may  be  able  to  thrive  without 
them.  Your  Majesty's  faithful  commons  feel  more  than  ordinary  interest  in  laying 
this  fact  before  you,  because  they  have  under  your  approbation  raised  up  and  nursed 
many  of  these  manufactures,  and  by  so  doing  have  encouraged  much  capital  to  be  in- 
vested in  them,  the  proprietors  of  which  are  now  to  be  left  unprotected,  and  to  he 
deprived  of  the  Parliament,  on  whose  faith  they  embarked  themselves,  their  families 
and  properties,  in  the  undertaking."    Plowden's  5ez;tew,  vol.  v.  Appendix,  page  34. 


THE  ACT  OF  UNION. 


403 


questionably,  Gladstone  would  not  have  sanctioned  the  charge 
without  knowing,  not  only  that  it  was  ti'ue,  but  that  it  would  not 
be  in  the  power  of  any  Englishman  to  deny  it.  Moreover,  no 
Englishman  of  note  has  denied  it,  and  it  therefore  stands  virtu- 
ally admitted  by  the  whole  English  nation.* 

The  Act  of  Union  was  designed  to  promote  Englishmen's  profits 
by  transferring  numerous  branches  of  industry  from  Ireland  to 
England.  This  was  effected  by  removing  all  duties,  or  nearly 
all,  from  English  goods  shipped  into  Ireland,  while  leaving  con- 
siderable duties  on  those  shipped  from  Ireland  into  England. 
The  doctrine  that  the  "consumer  always  pays  the  duty,"  and 
hence  that  Englishmen  would  only  be  taxing,  instead  of  benefiting, 
themselves,  was  forgotten.  The  practice  of  English  legislators,  in 
passing  the  Act  of  Union,  contradicts  the  English  economists, 
almost  without  exception.  The  following  schedule  of  rates  of 
duties,  from  Plowden's  Revieic,  shows  how  England  kindly  gave 
free  goods  to  Ireland  and  labored  on  under  the  burden  of  tariff 
taxes  on  all  goods  purchased  by  her  own  people  from  Ireland  : 


Ibish  Goods  SHirpED  into  England. 

£  s     d 

Beer 0  8      0 

Bricks,  tiles,  etc 5  12     10 

Candles lb  0  8       1 

Cordage ton  4  10       3 

Cider.  hhd  0  19       2 

Glass sq.  foot  0  2   2^ 

"  flint  or  enameled,  .per  cwt  2  3      6 

Leather lb  IJ^d  to   48 

Paper,  glazed per  cwt  0  6       0 

Silkribbon per  lb  0  5       0 

Gold  mixed  ribhon "  0  6       8 

Silk  Btockmgs,  gloves,  etc"  0  3       0 
Miscellaneous  Bilk,  silk  ware, 

per  lb  0  4       0 

Soap;.: "  0  0   2^ 

Spirits per  gal  0  5   1^ 

Starch per  lb  0  0   5^ 

Confectionery "220 

Tobacco "  0  1       T 

Snufl "  0  llOK 


English  Goods  bhipped  into  Ireland. 

£  s        d 

Beer 0  4        6 

Bricks,  tiles,  etc free 

Candles per  lb  free 

Cordage ton  free 

Cider hhd  free 

Glass sq.  foot  free 

'•  flint  or  enameled. per  cwt  free 

Leather per  lb    Id  to  28     Cd 

Paper   glazed per  cwt    0  0        5 

Silkribbon per  lb    0  2         1 

Gold  mixed  ribbons...         "0  2        9 

Silk  stockings,  gloves,  etc  "0  1         3 
Miscellaneous  silk,  silk  ware 

per  lb    0  1        8 

Soap free 

Spirits per  gal    0  3         7 

Starch per  lb  free 

Confectionery "        0  10        0 

Tobacco "01^ 

Snuff "00   WA 


*  The  charge  is  thus  set  forth  in  Battersley's  "  Repealer's  Manual  " :  "  The  amount  of 
salaries  given  to  those  who  held  places  during  the  King's  pleasure,  and  whose  votes 
mainly  conirived  to  carry  the  Union,  is  set  down  at  £08,877;  in  addition  there  were 
twenty-si.x  lawyers  who  received  places  ;  two  hundred  borough  mongers,  who  received 
for  their  votes  £1,500,000.  New  Titles— &\  were  given  for  marquises,  6  earls.  13  vis- 
counts, 3  viscountesses,  23  barons,  12  baronets.  .  .  .  The  price  of  a  single  vote 
was  familiarly  known— it  was  £8,000,  or  a  civil  or  military  appointment  to  the  value  of 
£2,000  per  annum.  They  were  considered  by  the  government  party  simple,  who  only 
took  one  of  three.  The  dexterous  always  managed  to  get  at  least  two  of  three,  and  it 
would  not  be  difficult  to  mention  the  names  of  twelve  or  twenty  members  who  con. 
trived  to  obtain  the  entire  three— the  £8,000,  the  civil  appointment,  and  the  military 
appointment," 


404 


ECONOMIC  PHILOSOPHY. 


The  decline  in  the  manufacturing  industries  of  Ireland,  in  the 
thirty  years  following  the  repeal,  and  even  prior  to  the  breaking 
out  of  the  potato  rot,  and  the  Irish  famine  of  1846-9,  reduces  the 
problem  of  the  unfitness  of  any  one  race  of  men  to  rule  another, 
to  the  definiteness  of  a  demonstration  in  mathematics.  The 
thirty  years,  preceding  1800,  were  years  of  as  great  prosperity  in 
Ireland  as  in  England,  and  of  a  growth  in  population  which,  if 
continued  to  the  present,  would  have  given  Ireland  to-day  20,- 
000,000  people.  It  is  difficult  to  estimate  the  amount  of  i)rofit, 
made  by  English  manufacturers  and  merchants,  out  of  the  sub- 
version of  Irisli  industries.*  They  sold  increasingly,  in  Ireland, 
the  goods  of  every  kind  which  Irish  artisans  had  been  making 
previous  to  the  Act  of  Union.  Temporarily,  therefore,  in  all 
these  thirty  years  the  Union  must  have  brought  to  English  mills 
exactly  the  grist  they  sought. 

Up  to  1846  the  Irish  people,  who  were  so  largely  driven  out  of 
manufactures,  continued  to  have  some  protection  on  their  agri- 
culture in  the  form  of  a  duty  on  the  importation  of  corn.     In 


*  The  following  tables  show  the  subversion  of  Irish  industries : 

NUMB3R  OF  MEN  EMPLOYED 
BEFOEE  THE  ONION. 

1800  Limerick,  one  branch  of  trade 15,000  1831 

"     Cork,  glove  makers,    "      "     3,000  " 

"        "      shoemakers,     "      "     300  " 

"    Youghal,  7  large  tanneries " 

"           "         wool  combers ''SOO  " 

"    Dublin,  all  trades 30,000  " 

"         "           prosperous  weavers 5,000  " 

"         "           stocking  making 600  " 

"    Drogheda,  stocking  making 2,000  " 

"    Dublin,  liberty's  weavers 4,000  " 

"    Kilkenny,  1  parish,  St.  Canice 4,000  " 

"    Carrack,  one  branch  of  trade 5,000  " 

"    in  all  Ireland,  working  at  cotton 30,000  " 

"    "    '■        "              "    linen  yarn 20,000  " 

"    Dublin,  silk  weavers 15,000  " 

Dublin,  1800,  master  woolen  manufacturers 91  1840 

"        "      hands  employed 4,918  " 

'■        "      master  wool  combers 30  " 

"        "      hands  employed 230  " 

"        "      carpet  manufacturers 13  1841 

"        "       hands  employed 720  " 

Kilkenny,  1800,  blanket  manufacturers 56  1822 

"            "     hands  employed    3,000  " 

Balbriggan,  1799,  calico  looms  at  work 2,500  1841 

Wicklow,  1800,  hand  looms  at  work 1,000  " 

Cork,           "      braid  weavers 1,000  1834 

' '               "     worsted  weavers 2,000  " 

"              "     hosiers 300  " 

"               "     cotton  weavers 2,000 

"              "     wool  combers 700  " 

"               "     linen  check  weavers 600  " 

"               "     cotton  spinners  bleuchers,  cali- 
co printers  by  thousands " 

The  importation  of  raw  s-lk  for  manufacture  shrank  from   144,275  pounds 
pounds  in  1831.    Shoes  exported  to  America  declined  from  a  value  of  $70,000 


AFTER. 

None 
500 
100 
None 

12 
10,000 
100 
None 
600 
100 

98 

40 

.500 

3,000 

441 

12 

603 

5 

66 

1 

None 

42 
925 
226 
None 

40 

90 

28 
220 
110 
None 

None 
to  3,190 
to  noth- 


IRISH  FAMINE.  495 

that  year  the  duties  on  corn  were  repealed.  There  had  been  a 
' '  bliglit "  in  1831,  caused  by  that  continual  cropping  of  land  to 
one  or  two  crops  without  rotation,  which  is  the  necessary  mode 
of  tilling  the  soil  where  no  sufficient  or  near  markets  exist.  The 
potato  rot  of  1816  would  never  have  occurred,  if  the  modes  of 
agriculture  had  continued  to  be  what  they  were  before  the  Act  of 
Union.  In  the  year  of  the  repeal  of  the  corn  laws,  therefore,  the 
gi'eat  famine  descended  upon  Ireland,  for  causes  as  inseparably 
resultant  from  the  economic  policy  of  England  as  w^ere  tlie 
similar  famines  in  India.  The  result  goes  far  toward  proving 
that  those  large  aggregations  of  men,  which  we  call  nations,  have 
not  yet  advanced  to  the  possession  of  a  conscience,  or  an  economic 
intelligence.  The  taxation  of  one  nation  by  another,  in  the  form 
of  profits  on  its  enforced  trade,  in  the  degree  tliat  barely  enriches 
the  taxing  nation,  but  plunges  the  taxed  nation  into  famine, 
while  it  is  really  a  form  of  persecution  more  painful  than  rack, 
stake,  or  thumbscrew,  more  unprincipled  than  the  Inquisition  and 
more  desolating  than  the  crusades,  still  receives  tlie  polite  genu- 
flexions of  thousands,  and  is  called  free  trade. 


ing.  The  export  of  fish,  soap,  candles,  disappeared.  Shipping  employed  in  carrying 
Irish  commerce  shrank  to  one-fifth  its  previous  tonnage.  Forty  vessels  had  once  car- 
ried Irish  goods  to  Newfoundland.  None  were  any  longer  required.  The  consump- 
tion of  tea  by  the  Irish  people  shrank  to  one-twentieth  in  18'31  what  it  had  been  in  1786. 
Before  the  Union,  200,000  people  were  employed  in  factories.  In  1850  only  24,725. 
— ["  Why  Ireland  is  Poor,"  by  John  V.  Scanlon. 


CHAPTER  XIII. 

TAXATION   CONTINUED. 

187.  France— Conditions.— The  practice  of  France,  in  rais- 
ing revenue,  is  as  little  studied  in  ilie  United  States,  as  that  of  Ger- 
many, or  Russia.  Yet  the  conditions,  of  each  of  these  countries 
are  more  nearly  like  those  of  America,  than  are  those  of  En- 
gland, whose  precepts,  if  not  whose  practice,  Americans  give  more 
attention  to,  than  to  those  of  any  country  outside  their  own. 
According  to  the  French  census  of  1872,  a  slightly  greater  propor- 
tion of  the  people  of  France  are  maintained  by  agriculture,  than 
of  the  United  States,  according  to  its  census  of  1880.  In  France, 
out  of  a  total  population  of  35,121,992,  no  less  than  18,513,325,  or 
52.71  per  cent.,  were  tillers  of  the  soil,  or  members  of  their  fam- 
ilies. The  number  in  mines  and  manufactures  (classed  as  indus- 
trial) were  8,451,344,  being  24.06  per  cent.,  8.43  per  cent,  of  the 
people  being  in  commerce,  2.51  per  cent,  in  transport,  credit 
banking,  and  commission,  0.62  per  cent  were  clergy  of  all  relig- 
ions, 5.99  per  cent,  wxre  annuitants,  1.56  per  cent,  were  in  the 
armed  force,  and  1.56  per  cent,  in  the  administration  of  the  gov- 
ernment.* It  is  remarkable,  in  contrast  with  England,  that  the 
number  of  those  doing  business  on  their  own  account,  as  propri- 
etors and  managers,  are  6,674,248,  while  the  total  of  those  acting 
under  direction  of  others  in  production,  as  directing  overseers, 
workmen  (ouvriers),  and  day-laborers,  amount  to  only  6,151,726. 
The  families,  including  the  domestic  servants,  of  those  who  are 
their  own  entrepreneurs,  or  employers,  in  the  work  of  produc- 
tion, number  21,604,526,  or  about  two-thirds  in  a  total  of 
34,356,081. 

Every  alternate  man,  in  France,  is  his  own  employer.     In  Great 


*  "  Condition  of  Nations,"  by  Kolb. 


IND  USTRIE8  OF  FRANCE.  49V 

Britain  about  seven-eighths  of  the  people  are  wage-workers.  The 
land  is  officially  parcelled  into  (in  1842)  126,210,194  parcels,  which 
are  held  by  11,053,702  propx'ietors,  with  the  allowance  that  one 
person  is  counted  as  many  times  as  a  proprietor  as  he  owns  land 
in  different  districts  of  taxation.  Out  of  5,970,171  men  and 
women  engaged  in  agriculture,  2,689,302  cultivate  their  own 
land.  Women  form  more  than  a  fourth  of  the  working  force  in 
agriculture,  a  third  in  mining  and  manufacturing  industries,  a 
fourth  in  commerce,  a  third  in  miscellaneous  occupations,  and 
six-sevenths  of  those  in  religious  orders,  as  monks  and  nuns.* 
The  nuns  largely  outnumber  the  entire  male  clergy,  both  secular 
and  recluse.  About  2,000,000  of  the  people  live  by  the  cultiva- 
tion of  the  vine,  directly,  apart  fi-om  those  engaged  in  the  manu- 
facture of  wine,  the  annual  product  of  which  is  50  gallons  per 
capita  for  the  whole  population  of  France,!  worth  about  £1  19s. 
ScZ.  per  gallon.  The  manufacturing  industries  employ  directly 
1,782,932  persons,  and  the  value  of  their  product  is  £390,240,000. 
They  must  directly  support,  therefore,  about  5,000,000  iDersons. 
The  total  value  of  the  foreign  trade  of  the  country  is  about  the 
same  as  that  of  the  United  States.  J 

In  1886,  one-third  the  population  could  neither  read  nor  write, 
Hi  per  cent,  could  only  read,  and  56  per  cent,  could  both  read 
and  write.  In  1855,  the  total  amount  expended  by  the  state,  the 
departments,  communes  and  individuals  upon  school  and  edu- 
cation was  £1,300,000  (of  which  only  £240,000  was  expended  by 
the  state),  against  £18,520,000  expended  for  land  and  sea  forces, 
and  £22,400,000  for  the  national  debt.  Only  one-third  of  the 
population  live  in  towns  of  more  than  2,000  inhabitants.  Two- 
thirds  are  officially  described  as  living  in  "flat  country."  There 
is  almost  no  emigi^ation  from  the  country  (less  than  20,000  per- 
sons a  year),  and  the  increase  of  population  is  very  slight.  The 
government  is  highly  centralized.  Whether  its  form  be  imperial, 
kingly,  or  republican,  the  central  power  at  Paris  maintains 
a  close  grip  on  the  appointment  of  mayors  of  cities,  prefects  of 
police,  and  other  executive  officers  throughout  the  country,  and 
reserves  to  itself  the  collection  of  all  revenues  and  the  conti-ol  of 
all  police.  In  the  sense  in  which  the  phrase  "local  govern- 
ment" may  be  used  in  America,  England,  or  even  Russia,  there 
is  very  little  local  government  in  France. 

*  Males,  13.102.    Females,  84.300.  t  In  187.5,  it  was  1,720,527,848  gals. 


498  ECONOMIC  PHlLOSOPnY. 

188.  France — Revenues.— In  1878,  the  French  budget  of 
revenue  foots  up  as  follows  : 

T)\,T€Ct   TciOC€S  * 

Ou  laud,  poll,  and  movement  tax,  door  and  window,  tax  on  in- 
dustries, etc ■  £15,684,560 

Special  Taxes  : 
On  horses  and  carriages,  lands  in  mortmain,  mines,  billiards, 
weights,    exclusive   tocieties,  and  apothecaries'  examin- 
ations.   1,024,651 

Kegistration,  stamps.  Crown  lands,  sale  of  movables  and  prop- 
erty without  heirs 25,518,400 

From  forests  1,52-^,904 

General  customs  duties,  including  those  on  sugar  and  salt 10,723,000 

Indirect  Taxes  : 

Proceeds  of  tobacco  monopoly ...   £13,859,000 

'•  gunpowder  .- 547,040 

Dutyondrinks 15,967,000 

home  sugar 4,910,360 

With  duties  on  salt,  matches,  chicory,  paper,  oil,  soap,  caudles, 
vinegar,  railway  passengers,  other  passengern,  dynamite 
factories,  in  all  amount  to  a  total  for  indirect  taxes  of  —  42,265,130 

Postal  revenue 4,555,040 

Suudries 4,915,941 

Other  sundries 634,5i9 

Extraordinary  sources 2,920,227 

Totalrevenue £109,865,132 

Such  an  exhibit  does  not  show  clearly  how  much  of  this 
revenue  is  collected  on  imports,  but  the  amount  is  currently  stated 
at  from  $65,000,000  to  $75,000,000.  Wool  of  all  kinds  is  free  of 
duty,  since  1881,  as  against  a  duty  of  25fr.  per  quintal,  previously 
existing.  As  France  has  about  25,000,000  sheep,  this  is  a  with- 
drawal of  protection  from  the  wool-grower.  Sawed  marble  is  free, 
but  sculptured  marble  pays  protective  duties.  Every  form  of  iron 
pays  duties  on  its  importation,  proportionate  to  the  amount  of 
labor  invested  in  it,  except  iron  dross  and  slag.  About  fifty  kinds 
of  chemicals,  thirteen  kinds  of  colors,  and  ten  kinds  of  dyes,  includ- 
ing Prussian  blue,  pay  protective  duties.  Starch,  wax,  feathers, 
glass  in  plates,  yarns,  threads,  warps  and  tissues  of  flax,  hemp, 
jute,  cotton,  wool,  and  silk,  paper  of  all  kinds,  pasteboard,  dressed 
skins,  belting,  morocco,  watch  and  clock  movements  and  materials, 
nails,  planks,  boards,  tackle,  apparel,  and  furniture  of  ships,  but- 
tons, cattle,  sheep,  hogs,  game,  poultry,  turtles,  fresh  and  salted 
meats,  butter,  honey,  whale  oil,  and  sperm,  petroleum  oil, 
(much  heavier  orn  the  refined  than  on  tlie  crude),  lemons, 
almonds,  camphor,  dyes  derived  from  coal  tar,  and  numerous 
other  raw  materials  and  finished  products,  all  pay  duties,  and 
those  duties  necessarily  work  protection  to  the  French  producer, 
wherever  the  article  is  produced  in  France,  and  the  imjjorted  arti- 
cle competes  with  the  domestic. 


PROTECTIVE  DUTIES.  499 

For  the  year  1883  the  product  of  state  taxes  was  $608,603,151.* 
The  direct  taxes,  viz.,  taxes  on  public  lauds,  forests,  real  estate, 
houses,  apartments,  billiards,  etc.,  produced  $146,290,951.  Of  in- 
direct taxes  the  registration  tax,  being  a  tax  on  the  formation  of 
new  companies,  and  the  transfer  of  houses  and  landed  property 
by  purchase,  is  the  most  productive.  The  other  indirect  taxes  are 
stamps,  which  are  virtually  taxes  on  trading  and  exchange,  and 
excise,  which  are  taxes  on  consumption.  The  entire  indirect  taxes 
for  France  and  Algeria  yielded  $453,006,705.  The  customs  duties 
yielded  $71,301,920  for  France,  and  $1,505,593  for  Algeria.  The 
customs  duties  in  France,  therefore,  form  only  about  one-eighth 
of  the  whole  revenue,  which  seems  a  much  smaller  proportion 
than  in  Great  Britain  or  the  United  States.  Possibly  this  differ- 
ence may  be  owing,  however,  to  the  fact  that  in  the  latter  coun- 
tries there  is  a  large  local  revenue  not  counted  as  national,  which 
in  France,  owing  to  its  more  centralized  system,  is  included  in  the 
national  revenue.  The  articles  which  are  imported  free  are  raw 
and  waste  silk,  cotton,  wool,  flax,  hemp,  jute,  skins,  lard  and  tal- 
low, undressed  fur,  skins,  guano,  oil  fruits  and  oil  seeds,  sow- 
ing seeds,  exotic  gums,  timber,  staves,  wood,  saff'ron,  indigo, 
copper,  lead,  pewter,  and  zinc— in  all  of  the  value  of  $383,427,521. 
These  articles  are  almost  wholly  obtained  by  import,  and  there  is 
almost  no  production  of  them  for  export. 

The  articles  whose  importation  is  chiefly  charged  with  protec- 
tive duties  are  manufactures  of  cotton,  flax,  hemp,  jute  and  silk, 
yarns  and  tissues,  cattle,  horses,  mules,  cheese,  colonial  products, 
mcluding  foreign  sugar,  coffee,  cocoa,  tea,  pepper,  etc.,  refined 
and  raw  French  sugar,  coal  and  coke,  perfumery,  wines,  brandy 
and  spirits,  mirrors  and  bottles,  paper  and  pasteboard,  dressed 
skins,  manufactures  of  leather,  jewelry,  manufactures  of  metals, 
fancy  goods,  manufactures  of  wood,  wearing  apparel,  and  other 
articles. 

Of  most  of  these  the  export  is  much  larger  than  the  import. 
Of  manufactures  of  leather  the  export  is  twenty  times  greater 
than  the  import  ;  jewelry,  nine  times  ;  metals,  three  times  ; 
fancy  goods,  ten  times  ;  wearing  apparel,  twelve  times  ;  brandy, 
six  times  ;  manufactures  of  cotton,  flax,  hemp,  jute,  and  silk 
three  times,  and  perfumery  sixteen  times.  But  of  cattle  the  im- 
port is  eight  times  greater  than -the  export. 

*  United  States  Consular  Eeports,  No.  51,  March  1885,  p.  519. 


500  ECONOMIC  PHILOSOPHY. 

The  French  divide  their  foreign  trade  as  follows  (in  millions  of 
dollars)  : 

Imports.  Exports. 

1.  Alimentary  substances $378                     231  Total  of  Imports,    £1,15(1 

2.  Articles  essential  to  industry..       ,502                     200  "         Exports,         'J19 

3.  Manufactures 269  497  

Total  Foreign  Trade,  $3,000 

189.  Fcance,  as  Discussed  by  Smith. — Adam  Smith*  dis- 
cusses a  class  of  retaliating  duties  levied  by  England  and  Fi'ance, 
each  on  importations  from  the  other  only,  at  a  different  rate  from 
the  duties  levied  by  the  same  countries  on  the  like  goods  coming 
from  Spain,  Portugal,  or  Germany.  He  seems  to  discuss  these  as 
if  they  vpere  illustrations  of  the  principle  of  protection.  The 
desire  to  injure  another  nation,  however,  is  a  wholly  unlike 
motive  to  the  wish  to  benefit  home  industries. 

It  must  not  be  supposed  that  such  duties  bear  any  resemblance 
in  principle  to  modern  protective  duties.  We  are  not  aware  that 
they  have  had  any  existence  in  the  legislation  of  the  present  cen- 
tury. Excessive  duties  laid  by  England  on  French  wines,  while 
admitting  similar  wines  free,  or  at  low  rates  of  duty,  from  Portu- 
gal or  Germany,  when  England  was  not  seeking  to  cultivate  wines, 
and  had  no  interest  in  their  cultivation  in  France  or  Germany, 
would  draw  as  indignant  comment  from  any  modern  i^rotection- 
ist,  as  from  any  free  trader.  Duties  levied  from  motives  of  mal- 
ice toward  a  particular  country,  and  from  which  other  countries 

*  "  Wealth  of  Nations,  book  iv.,  ch.  iii.  p,  208,"  says  :  "To  lay  extraordinary  re- 
straints upon  the  importation  of  goods  of  almost  all  kinds,  from  those  particular  coun- 
tries with  which  the  balance  of  trade  is  supposed  to  be  disadvantageous,  is  the  second 
expedient  by  which  the  commercial  system  proposes  to  increase  the  quantity  of  gold 
and  silver.  Thus  in  Great  Britain,  Silesia  lawns  may  be  imported  for  home  consump- 
tion, upon  paying  certain  duties  ;  but  French  cambrics  and  lawns  sre  prohibited  to  be 
imported,  except  into  the  port  of  London,  there  to  be  warehoused  for  exportation. 
Higher  duties  are  imposed  upon  the  wines  of  France  than  upon  those  of  Portugal,  or 
indeed  of  any  other  country.  By  what  is  called  the  impost  of  1093,  a  duty  of  five-and 
twenty  per  cent.,  of  the  rate  or  value,  was  laid  upon  all  French  goods,  while  the  goods 
of  other  nations  were,  the  greater  part  of  them,  subjected  to  much  lighter  duties,  sel- 
dom exceeding  five  per  cent.  The  wine,  brandy,  salt,  and  vinegar  of  France  were  in- 
deed excepted  ;  these  commodities  being  subjected  to  other  heavy  duties,  either  by 
other  laws,  or  by  particular  clauses  of  the  same  law.  In  1096,  a  second  duty  of  twenty- 
five  per  cent.,  the  first  not  having  been  thought  a  sufficient  discouragement,  was  im- 
posed upon  all  French  goods,  except  brandy  ;  together  with  a  new  duty  of  five-and- 
twenty  pounds  upon  the  tun  of  French  wine,  and  another  of  fifteen  pounds  upon  the 
tun  of  French  vinegar. 

"  The  French  in  their  turn  have,  I  believe,  treated  our  goods  and  manufactures  just  as 
hardly  ;  though  I  am  not  so  well  acquainted  with  the  particular  hardships  which  they 
have  imposed  upon  them.  Those  mutual  restraints  have  put  an  end  to  almost  all  fair 
commerce  between  the  two  nations,  and  smugglers  are  now  the  principal  importers, 
either  of  British  gooda  into  France,  or  of  French  goods  into  Great  Britain."' 


TUTOR  VS.  PREMIER.  501 

are  exempted,  and  levied  on  commodities  in  wliose  production  the 
country  imposing  them  has  not,  nor  seeks  to  have,  any  interest,  are 
not  laid  from  an  economic,  nor  eveii  from  a  selfish,  motive,  but 
from  the  blind  fatuity  of  passionate  liatred. 

Dr.  Smith,  however,  dates  the  protective  policj^  in  France  from 
Colbert,  who,  in  1667,  "  imposed  very  high  duties  *  upon  a  great 
number  of  foreign  manufactures."  Upon  his  refusing  to  mode- 
rate them  in  favor  of  the  Dutch,  they,  in  1671,  prohibited  the 
importation  of  the  wines,  brandies,  and  manufactures  of  France. 
Smith  attributes  to  Colbert  also  t  a  prohibition  of  the  export  of 
corn,  in  order  to  favor  domestic  manufacturers  who  needed 
cheap  breadstuffs. 

Dr.  Smith's  complaint  against  the  diflPei^ent  systems,  both  of 
customs  duties  and  excise,  prevailing  in  different  parts  of  France,  \ 
was  timely  in  its  time,  and  doubtless  had  much  to  do  with  in- 
ducing the  United  States,  in  the  subsequent  adoption  of  their  con- 
stitution, to  guard  against  any  similar  restrictions  upon  the  inter- 
state trade  of  our  various  states.  Dr.  Smith  boasted  of  the  greater 
freedom  of  internal  trade  at  that  date  in  England,  as  compared 
with  France,  and  with  justice.  It  does  not  abate,  however,  the 
ground  of  complaint  heretofore  made  against  Great  Britain,  that  in 
her  tariff  system,  she  never  recognized  Ireland,  as  having  like  title 
with  England,  to  the  benefits  of  protective  legislation.  The  re. 
strictions  on  the  internal  trade  of  France,  against  which  Dr. 
Smith  complained,  disappeared  in  the  French  Revolution  in 
1789. 

Dr.  Smith  acknowledges  the  great  patriotism,  abilities,  and 
genius  for  detail,  of  both  Colbert  and  Turgot,  who  founded  the 
pi'otectionist  system  in  France.  He  says  the  most  intelligent  men 
in  France  think  they  were  mistaken.  Dr.  Smith  should  not  have 
dodged  behind  "  the  most  intelligent  men  in  France,"  to  state  his 
own  opinion,  for  three  reasons  :  1.  There  are  no  means  of  deter- 
mining who  ai-e  the  most  intelligent  men  in  France  ;  2.  When 
they  are  discovered,  there  is  no  means  of  determining  whether 
they  think  Colbert  and  Turgot  were  mistaken ;  3.  If  it  were  deter- 
mined that  they  thought  so,  it  is  still  evident  that  they  might  be 
mistaken,  since  to  affirm  that  Colbert  and  Turgot  were  them- 
selves mistaken,  they  being  confessedly  two  of  the  most  intelligent 
men  in  France  in  their  day,  is  to  affirm  that  the  very  authority  to 


•  "  We^th  of  Nations,"  p-  206.  +  "  Wealth  of  Nations,"  McCulloch'sed.,  p.  299. 

X  "  Wealth  of  Nations,"  p.  408. 


502  ECONOMIC  PHILOSOPHT. 

which  Dr.  Smith  appeals,  viz.,  the  most  intelligent  men  in 
France,  might  err. 

Dr.  Smith,  moreover,  does  not  analyze  impartially,  or  at  all,  the 
actual  protective  measures  adopted  first  by  Colbert  and  afterward 
by  Turgot,  in  the  century  following  1667,  nor  compare  them  with 
their  effects.  The  system  of  duties  then  levied  aimed  to  draw 
into  France  the  manufacture  of  porcelains,  glass,  earthenware, 
and  china,  silks,  satins,  velvets,  and  plushes,  fine  woolens,  iron 
and  steel,  wooden  ware,  soaps,  candles,  oils,  cosmetics,  perfumes, 
watches  and  jewelry,  leather,  boots,  shoes,  gloves,  and  the  like. 
Did  the  measures  succeed  ?  is  the  simple  question  of  history,  to 
which  Adam  Smith,  wath  the  ample  learning  at  his  command, 
and  with  his  experience  as  a  traveler  through  France,  in  the 
capacity  of  intellectual  valet  de  chamhre  to  a  nobleman's  son, 
should  have  addressed  himself.  He  certainly  knew  whether 
these  manufactures  had  grown  or  declined,  under  the  influence  of 
these  "  masters  of  detail,"  whom  tlie  "  most  intelligent  men  in 
Fx'ance"  thought  to  be  mistaken.  But  Dr.  Smith  neither  names 
these  "  most  intelligent  men  in  France,"  nor  adduces  the  data  to 
show  that  manufactures  in  France  did  not  grow,  in  spite  of  the 
untoward  effect  of  religious  persecutions  against  the  Protestants, 
driving  out  by  thousands  the  very  artisans  whom  Colbert  and 
Turgot  were  trying  to  invite  into  the  country  by  the  protective 
system. 

On  the  contrary,  Dr.  Smith  mixes  up  his  discussion  of  the  pro- 
tective system,  as  adopted  in  France,  with  statements  of  the 
merely  spiteful  systems  of  retaliation  against  France  only, 
adopted  by  England  and  Holland,  as  if  the  two  notions  of  trying 
to  injure  another  nation's  trade,  and  to  build  up  a  nation's  own 
internal  trade,  were  identical.  He  discusses,  in  the  same  connec- 
tion, the  interior  revenues  collected  on  goods  passing  from  one 
French  province  to  another,  as  if  these  were  protective  duties, 
when  he  must  have  known  that  they  were  what  Colbert  and 
Turgot  labored  to  remove,  as  the  chief  obstacles  to  a  protective 
policy. 

In  the  same  connection  he  derides  the  French  owners  of 
vineyards,  in  1731,  for  inducing  the  government  to  order  that  no 
more  vineyards  should  be  planted,  and  that  vineyards  which  had 
been  idle  tw^o  years  should  only  be  planted  by  special  leave  of  the 
king,  on  showing  that  the  land  was  good  for  no  other  use.  Per- 
haps some  analogy  might  be  found  between  even  this  order  and 
the  action  of  the  British  government,  in  limiting  the  circulation 


EXPERIENCE  WITH  SUGAR.  503 

of  bank  notes  to  the  volume  of  notes  existing  at  a  given  date. 
But,  whether  so  or  not,  it  has  no  bearing  on  the  question  whether 
the  systems  of  protective  duties,  inaugurated  in  France  by  Col- 
bert and  Turgot,  aided  largely  in  giving  France  her  national  pres- 
tige in  Europe,  in  uniting  her  people,  and  in  preventing  their 
dispersion  by  immigration,  in  the  manner  that  characterizes  the 
populations  of  Great  Britain. 

French  statesmen,  from  Napoleon  to  Guizot,  Chevalier,  Thiers, 
and  Gambetta,  have  with  great  unanimity  manitained  the  pro- 
tective system.  J.  B.  Say,  Leon  Say,  and  Bastiat  among  French- 
men have  written  against  it.  Protection  in  Fi-ance,  therefore, 
has  a  record  of  experience.  To  it,  France  owes  the  introduction 
of  her  glass,  porcelain,  silks,  raw  silk,  leather,  including  moroc- 
co, woolens,  hosiery,  jewelry,  iron,  and  steel,  sugar,  and  perhaps- 
the  maintenance  even  of  her  grape,  wine,  and  cosmetic  indus- 
tries. To  detail  the  rise  of  each  of  these  would  be  to  write  a  his- 
tory of  the  pi'otective  policy  in  France,  which  would  be  a  history 
of  France  itself.  We  confine  ourselves  to  a  single  example, 
that  of  beet  sugar. 

190.  Taxation  as  a  Cause  of  Production— Beet  Sugar. 
— Though  the  cane  was  grown  in  China,  Japan,  and  India  from 
the  earliest  times,  honey  was  the  only  form  of  sweet  known  in 
Western  Asia,  Europe,  or  Northern  Africa,  until  the  conquests 
of  the  Saracens.  Cane  sugar  orily  became  a  staple  of  commerce 
after  the  introduction  of  the  cane  into  the  West  Indies.  The  fact 
that  sugar  could  be  abstracted  from  the  beet  was  first  made  known 
by  Margraff,  a  Prussian  chemist,  in  1747,  and  Achard,  another 
Prussian  chemist,  first  attempted,  under  the  patronage  of  Fred- 
erick the  Great,  to  enter  upon  the  culture  of  the  beet  and  manu- 
facture of  beet  sugar  at  Caulsdorff,  near  Berlin,  He  published 
an  account  of  his  work  in  ihaAnnales  de  Chimie  (Paris),  calcu- 
lating that  sugar  could  be  produced  at  5i  cents  per  pound  in  1799, 
and  predicting  that  the  industry  would  become  profitable.  The 
first  two  sugar-beet  factories  established  near  Paris,  on  the  basis 
of  Achard's  statements,  failed  with  heavy  loss  to  the  inv^estoi-s. 
The  French  Institute  reported  that  beet  sugar  could  only  then 
be  made  at  a  cost  of  sixteen  cents  per  pound.  Such  was  tlie  sus- 
pension of  intercourse  between  France  and  the  West  Indies,  and 
tbe  general  high  prices,  that  sugar  in  Paris  reached  fifty  cents  per 
pound.*    Napoleon  appreciated  the  great  importance  of  making 

*  Greeley's  "  Political  Economy,"  p.  189. 


504  ECONOMIC  PHILOSOPHY. 

the  manufacture  of  sugar  a  success  in  France,  and  appeared  to 
have  a  prescience  of  the  magnitude  it  attained.  He  first 
encouraged  chemists,  agriculturists,  and  manufacturers  per- 
sonally to  resume  their  work.  In  1810  these  efforts  I'esulted  in 
two  loaves  of  excellent  home-made  sugar  being  presented  to  the 
emperor.  He  caused  80,000  acres  of  land  to  be  set  apart  for  the 
culture  of  beets,  confided  a  considerable  sum  to  the  minister  of 
agriculture  to  encourage  the  work,  instructed  the  prefects  of  the 
sevei'al  departments  to  cause  similar  experiments  to  be  concur- 
rently made  in  every  department,  established  five  schools  of 
chemistry  in  aid  of  the  manufacture,  and  provided  four  impei'ial 
factories,  calculated  to  pi'oduce,  from  the  crop  of  1812,  nearly 
5,000,000  pounds  of  beet  sugar.  The  overthrow  of  Napoleon  con- 
verted the  factory  into  the  quarters  of  a  pulk  of  Cossacks.  From 
1816  to  1837,  the  English  never  tired  of  pointing  out  to  the  French 
the  magnitude  of  the  loss  they  were  sustaining,  in  paying  two  or 
three  cents  per  pound  more  for  their  sugar  than  the  English. 
Dr.  Wayland  once  made  up  a  calculation,  based  upon  supposi- 
titious and  hypothetical  assumptions,  which  Mr.  Greeley  shows  * 
to  be  very  wide  of  the  truth,  in  which  he  figured  that  the  annual 
interest  on  the  increased  cost  of  their  sugar  to  the  French  people 
would  pay  for  all  the  sugar  they  would  ever  need  to  consume. 
The  same  formula  has  since  been  adopted  by  others,  as  a  means 
of  showing  that  the  United  States  could  more  cheaply  obtain  all 
its  iron  and  steel  by  importation  than  by  manufacture.  Dr. 
Wayland  made  up  his  case  by  assuming  that  the  English  price 
for  sugar  was  2\d.  when  it  was  Sj^jCZ.,  that  England  with  half 
the  number  of  inhabitants  consumed  two  and  a  half  times  as 
much  sugar  as  France,  that  France  was  consixming  less  by  one- 
third  than  it  would  if  it  relied  on  importation  for  its  supply,  and 
was  paying  £1,400,000  per  annum  moi'e  for  it,  and  that  its  beet 
sugar  would  not  come  down  to  the  price  of  cane  sugar  in  twenty 
years,  t 

*  Greeley'8  "  Political  Economy,"  p.  193. 

t  Mr.  Greeley's  reply  is  a  terse  ."ind  vigorous  argument,  demolishing  a  pompous  pre- 
tence. He  said  :  "  Dr.  Wayland  is  all  wrong  in  his  facts.  The  actual  average  price 
of  sugar  in  bond  (that  is,  duty  nnpaid)  in  London  in  that  year,  1837,  was  not  2%d.  per 
pound,  as  he  asserts,  but£I  145.  "id.  per  cwt.,  equal  to  ZH-Wd.  per  pound.  Then,  in 
regard  to  the  consumption  of  sugar  in  France  and  England,  I  find  that,  in  1837,  the 
quantity  consumed  in  France  was  249,058,832  pounds,  and  in  England  442,838,720  pounds, 
which  is  not  double— not  75  per  cent,  greater.  The  duty  in  France  on  sugar  from  her 
own  colonies  was  37«.  6^.  ;  in  England,  the  average  duty  was  24,'!.  In  reference  to 
the  price,  the  present  Emperor  of  the  French,  writing  in  1842  on  the  sugar  question, 
said : 


BEET  SUGAR  WIXS.  505 

Mr.  Greeley  showed  that,  in  1865,  France  was  makhag  678,287,- 
040  pounds  of  beet  sugar,  or  more  than  five  times  the  quantity 
which  Dr.  Wayland  had  estimated,  thirty  years  eai'her,  woukl 
be  required  for  the  consumption  of  France.  From  the  year 
1837  onward,  the  beet  cultui'e  and  sugar  manufacture  became 
strong  enough  to  bear  a  heavy  excise  tax.  From  1840  to 
1860  the  protection  afforded  to  home-grown  sugar  was  only 
from  one  to  three  cents  per  pound.  Since  1860  the  home- 
grown beet  sugar  has  borne  rather  more  tax  than  the  colonial. 
In  1875,  the  jjroduction  of  beet  sugar  in  France  reached 
9,397,584  cwt.,  and  paid  in  excise  taxes  to  the  government 
£4,698,680  revenue.  This  was  the  product  of  508  factories. 
In  Germany,  Holland,  Belgium,  Austi'ia,  and  Russia,  the  beet 
culture  has  also  risen  to  formidable  dimensions — Germany  alone 
in  1878  exporting,  chiefly  to  England,  2,363,000  cwt. 

To-day,  more  than  one-lialf  the  sugar  sold  in  British  and  colo- 
nial markets,  is  beet  sugar  exported  to  these  markets  from  Bel- 
gium, Germany,  and  France.*  The  British  government  has  been 
besieged,  both  by  its  British  sugar-refiners  and  its  sugar-growers 
in  Jamaica  and  the  Mauritius,  to  do  something  to  check  the 
increasing  cheapness  of  beet  sugar,  as  it  is  rendering  it  absolutely 
impossible  to  grow  cane,  or  refine  sugai',  at  a  profit.  The  Jamaica 
colonists  have  authoritatively  expressed  a  desire  for  union,  either 
with  Canada  or  with  the  United  States,  and  have  iiidicated  that 
unless  cane  sugar  can  be  granted  the  boon  of  a  protected  market 
it  must  soon  become  extinct  as  an  industry. 

The  fashionable  style,  among  the  English  economists,  is  to  com- 


"  'The  price  of  sugar,  which,  under  tlie  Empire,  was  9  francs  per  kilogramme,  has  since 
fallen  to  1  franc  10  centimes  ;  and  though  then  protected  and  encouraged,  it  has  now 
to  support  a  tax  of  27  francs  per  100  kilogrammes  ;  or,  together,  a  difference,  to  the 
detriment  of  the  manufacturers,  of  817  francs,  per  lOOkiloorrammes.' 

"  Deducting  from  110  francs,  the  price  of  100  kilogrammes  of  sugar  at  1  franc  10  cen- 
times per  pound,  the  duty  of  ^7  francs,  leaves  83  francs  as  the  price  of  the  sugar  ex- 
clusive of  duty.  According  to  Reed's  '  History  of  Sugar,' the  price  of  sugar  in  bond 
in  London  was  then  .36s.  11  i-i.  per  cwt.,  or  80  francs  9  centimes  per  100  kilogrammes. 
So  that,  only  fire  years  later  than  when  Dr.  Wayland  wrote,  beet  sugar  was  cheaper  in 
France  than  cane  hugar  in  its  cheapest  European  market  !  " 

*  In  1812  to  1816  one  of  the  English  doggerels  or  gongs  ran  : 

"  Says  John  Bull  to  Bony,  While  I  use  the  cane 
You  are  welcome  each  year  to  get  beat." 

To  this  the  modern  reply  m  ight  be  : 

When  Bony  begun  on  his  cheap-sugar  plan, 

With  your  cane  you  led  us  a  dance. 
But  my  1  what  a  go  !   to  sweeten,  you  know, 

All  your  toddies  with  three  lumps  from  France. 


506  EGONOMIV  nilLOSOPHY. 

plain  of  what  they  are  pleased  to  term  the  "bounties  on  the  ex- 
port "  of  French  and  German  sugar.  Tliere  is  no  such  bounty 
either  in  France  or  Germany.  All  that  either  government  intends 
to  do,  in  favor  of  exported  beet  sugar,  is  to  remit  whatever  internal 
taxes  it  has  paid.  This,  it  is  believed,  most  governments  do,  in  be- 
half of  their  exports,  English  economists  and  petitioners  protest 
that  rebate  is  paid  on  the  export,  in  excess  of  what  the  sugar  has 
paid  the  government,  not  indeed  by  legislative  design,  but  by 
oversight.  If  the  French  government  does  more  than  repay  the 
duty,  it  is  probably  done  in  the  same  way  as  in  Germany,  where 
the  method  of  paying  an  alleged  duty  on  the  export  is  thus  ex- 
plained by  our  Consul-Gen eral  Vogeler  in  1885.*  He  says  :  "The 
government  assumes  that  it  requires  eleven  hundredweight  of 
beets  to  produce  one  hundi-ed weight  of  sugar.  At  this  rate  the 
tax  is  levied.  But  by  improved  methods  and  machinery,  the 
manufacturer  gets  one  hundredweight  of  sugar  from  nme  hun- 
dredweight of  beets,  and  being  refunded  at  the  rate  mentioned 
above,  he  would  get  back  xt  more  tax  than  he  has  paid.  This 
premium  being  paid  out  of  the  general  fund  obtained  by  taxing 
the  beets  consumed,  it  follows  that  the  greater  the  quantity  of 
sugar  exported,  the  less  must  be  the  revenue  derived  from  the 
sugar-beet  tax."  Consul  Vogeler  says  that  sugar  factories  have 
sprung  up  all  over  Germany.  They  are  built  at  a  cost  of  $50,000 
to  $300,000,  In  the  fall  of  1881  there  were  338;  in  1884,  390  ;  and 
he  thinks  the  number  in  Germany  now  approaches  500.  Up  to  the 
year  1843  the  dividends  paid  by  these  factories  had  in  many  cases 
reached  40  per  cent,  per  annum,  and  15  to  25  per  cent,  was  very 
common.  The  price  of  raw  sugar  had  fallen  from  $6.84  ])er  hun- 
dredweight in  October,  1881,  to  $4.42  in  October  1884.  The  price 
of  beets  has  in  consequence  fallen,  from  about  28  to  30  cents  per 
hundredweight,  to  15  to  18  cents.  The  quantity  of  sugar  beets 
produced  in  Germany  in  1884  was  1,200,000  tons,  and  the  export 
of  sugar  was  600,000  tons  from  Germany,  France,  and  Belgium. 
191.  The  Sopliisms  ofBastiat. — While  the  history,  experi- 
ence, and  statesmanship  of  France  have  all  vigorously  argued 
for  protection  to  domestic  industry,  as  one  of  the  first  and  most 
important  functions  of  government,  many  persons  in  America, 
who  have  had  no  time  to  become  familiar  with  either  of  these, 
have  been  amused,  and  in  some  cases  misled,  by  the  light,  chirrupy, 
and  frisky  ingenuities  of  Bastiat,  some  of  which  almost  rise  to  the 

♦U.S.  Consular  Reports,  No.  51. 


BASTIAT'S  SOPHISMS.  5U7 

dignity  of  humor.     "Of  Bastiat's  ' '  Hai*monies  Econoniiques, "  the 
condensed  truth  is  that,    if  Mr.   Carey  had  not  previously  ex- 
pressed the  same  ideas,  there  is  no  reason  to  suppose  they  would 
have  occurred  to  Bastiat.    His  plagiarism  stands  conceded.    The 
work,  however,  with  which  Americans  are  most  familiar  is  his 
"Sophisms  of  Protection. "      The  title  ' '  sophisms  of  protection  "  is 
a  misnomer.     Protection  is  an  active,  practical  policy,  which  has 
been  followed  more  completely   by  France,  Great  Britain,  Ger- 
many, Russia,  the  United  States,  Italy,  and  Austria,  and  less  per- 
fectly by  the  minor  nations,  ever  since  taxation  has  come  to  be 
studied  in  connection  with  international  commerce.    It  is  not  a 
speculation  of  the  schools,  does  not  rest  on  a  priori  reasoning, 
any  more  than  military  tactics  or  reiiublicanism,  and  can  not  be 
overthrown  by  it.     As  it  would  be  idle  to  talk  of  the  sophisms  of 
steam   railways,  or  of  rifled  cannon,  or  iron-clads,  or  of  army 
corps,   or  the  electric  battery,   or  the  dykes  of  Holland,   so  it 
is  idle  to  speak  of  the  "sophisms"  of  a  practice  of  all  the  leading 
governments  of  the  world,  which  has  been  tested  for  centuries. 
Since  no  first-class  government  has  ever  entirely  departed  from 
it,  it  therefore  may  be  a  success  or  a  failure,  a  cause  of  wealth 
or  of  poverty,  of  progress  or  decline,  among  nations,  but  it  can 
not,  by  any  process  of  thought,  be  made  a  mere  "  sophism  "  or 
mistake  of  reasoning.     On  the  contrary,  "free  trade"  has  never 
in   fact  been  reduced  to  practice  by  any  natio2i,  still  less  by 
any  two  nations.     It  has  been  used  as  a  party  cry  to  cover  various 
forms  and  modes  of  intended  protection  to  the  uidustries  of  the 
country  adopting  it.     It  would  be  much  more  natural  to  look  for 
sophisms  in  this  speculative  theory,  so  foreign  from  the  practice 
of  governments,  and  so  much  in  favor  with  visionary  dreamers 
who  have  never  had  aught  to  do  with  the  ])ractical  work  of  leg- 
islating, either  to  obtain  a  revenue  with  the  least  possible  injury 
to  industry,  or  to  satisfy  a  constituency,  whether  of  producers 
or  of  consumers. 

Bastiat  begins  by  attributing  to  protectionists  the  sophism 
that  the  "  scarcity  ''  which  is  obtained  by  checking  the  importa- 
tion of  an  article,  as  a  means  of  promoting  its  domestic  produc- 
tion, is  better  than  the  abundance  of  the  article  which  would  re- 
sult from  its  unrestricted  importation.  This  he  generalizes  into 
the  supposed  protectionist  sophism  that  "scarcity  is  better  than 
abundance,"  and  by  attributing  to  them  this  belief  he  is  able  to 
argue,  with  very  plain  sailing,  the  general  proposition  that 
abundance  is  better  than  scarcity. 


508  ECONOMIG  PHILOSOPHT. 

Let  us  weigh  this  perversion  in  the  light  of  tlie  actual  exigencies 
of  govei'nmeut.  A  government  must  either  tax  its  domestic  pro- 
ductions, or  its  importations,  or  both.  It  has  no  other  choice.  If 
it  taxes  the  domestic  production  it  promotes  scarcity  by  diminish- 
ing that  production,  just  as  clearly  as  if  it  taxes  the  foreign.  The 
tendency  of  all  taxation,  to  promote  scarcity  of  the  thing  on  which 
the  tax  is  collected,  is  unavoidable,  except  in  a  few  instances,  and 
those  occur  solely  among  protective  duties.  The  practical  ques- 
tion is  whether  the  tax  shall  be  so  laid  as  to  cause  scarcity  of  the 
domestic  production  and  an  increase  of  the  importation,  or  a 
scarcity  of  the  importation  and  inci'ease  of  the  domestic  produc- 
tion. The  free-trader  puts  the  tax  where  it  will  stimulate  the 
foreign  production  of  the  thing  taxed  ;  tlie  pi'otectionist  where  it 
will  stimulate  the  home  production.  For  instance,  as  to  iron  : 
The  free-trader  would  tax  the  tea,  coffee,  sugar,  liquors,  tobacco, 
clothing,  and  income  of  the  domestic  iron-worker,  so  as  to  raise 
his  cost  of  living,  and  hence  his  wages.  He  would  place  stamp, 
license,  transportation,  and  manifold  other  taxes  on  every  process 
of  industry  incident  to  the  manufacture  of  American  iron,  so 
as  to  increase,  by  20  or  30  per  cent.,  its  cost  of  manufacture. 
Then  he  would  admit  foreign  iron  untaxed,  in  order  to  get  it 
cheap.  Of  coux'se  the  American  manufacture,  on  which,  owing 
to  the  bulk  and  weight  of  the  article,  we  must  largely  depend  for 
supply,  would  shut  down,  at  least  for  a  time.  For  it  is  natural 
that  a  very  large  source  of  supply,  capable  of  turning  out  millions 
of  tons  a  year,  should  be  stopped  by  the  presence  of  a  very  small 
actual  surplus,  say  of  a  few  tons,  which  are  held  low  enough  to 
place  the  large  product  at  a  loss.  But  the  shutting-down  of  a  large 
American  source  of  supply,  equal,  say,  to  nine-tenths  of  our  whole 
demand,  would  speedily  produce  a  greater  scarcity,  and  therefore 
deainiess,  than  the  free  admission  of  a  small  foreign  supply  had 
produced,  of  abundance  and  cheapness.  This  would  stimu- 
late the  foreign  manufacture,  and  cause  a  rise  in  the  foreign 
price,  proportionate  to  the  scarcity  caused  by  the  cessation  in  our 
domestic  production.  Of  what  avail,  then,  is  Bastiat's  "scarcity 
and  abundance "  theory  ?  His  free  trade  promotes  scarcity  of 
domestic  iron.  Protection  promotes  scarcity  of  foreign  iron. 
Free  trade  would  prolong  the  "scarcity  "of  iron  forever,  because 
no  country  can  ever  have  iron  plenty,  unless  it  produces  it  plenti- 
fully. Protection  would  render  iron  ultimately  abundant  and 
cheap,  by  causing  its  abundant  j^roduction.  Our  product  of  iron,* 
which,  in  1840,  had  been  a  hundred  years  growing  up  to  347,000 

"  *Pig. 


EXPERIENCE  IN  IRON.  5U9 

tons,  under  the  protective  tarifip  of  1842,  doubled  up  to  765,000 
tons  in  1846.     Did  this  increased  production  make  iron  dear  ?   Its 
average  from  1842  to  '46  was  from  |24  to|36  per  ton,  while  in  the 
ten  years  of  preceding  free  trade  it  had  ranged  at  from  $35  to 
$52.50  per  ton.     The  i-epeal  of  that  tariff  reduced  the  production 
to  564,755  tons  in  1850,  while  the  importation  of  rails  rose  from 
15,161  tons  in  1847  to  334,874  tons  in  1853.     Did  our  cessation  in 
the  production  of  iron  and  this  flood  of  importation  make  it  i)er- 
manently  cheaper  ?    Not  so.     The  price,  which  was  $71  i^er  ton  * 
in  1847,  fell  at  first  to  $61  in  1849,  and  touched  as  low  as  $47  iu 
1851,  and  then,  having  utterly  routed  and  destroyed  the  Ameri- 
can producers,  it  rose  to  $77  in  1853,  and  to  $81  in  1854,  under  the 
full  influences  of  foreign  free  trade.    For  ten  years  the  iron  busi- 
ness, notwithstanding  the  frequent  high   prices,    had  a  weary 
struggle  for  life,  because  of  its  liability  to  be  dashed  by  the  sud- 
den fluctuations  of  the  foreign  markets — railroad  bars  fluctuat- 
ing from  $81  per  ton  in  November,  1854,  to  $58.30  in  June,  1855, 
then  up  to  $67  in  the  summer  of  1857,  and  down  to  $50  in  1858, 
and  $36  during  our  stringency  of  the  winter  of  1861-2.     In  1860, 
during  these  fluctuations,  our  product  of  pig-ii^on  was  only  804,- 
000  gross  tons,  or,  notwithstanding  our  great  increase  m  popula- 
tion and  in  the  need  of  iron,  only  39,000  tons  more  than  we  were 
producing  fourteen  years  before — our  production  during  most  of 
the  intervening  period  being  less  than  it  was  in  '42-46.   We  have 
seen  that,  under  free  trade,  prices  were  more  fluctuating,  but  not, 
on  the  whole,  as  low  as  under  pi'otection,  and  that  our  production 
of  iron    was   less.     Did   the   importation  continue   to  supply  us 
abundantly  ?     Not  so.     In  the  first  five  years  of  free  trade  the 
importations  swelled  from  15,161  tons  to  334,874  tons  a  year  (in 
1851),  but  having  by  this   time  obtained  the  monopoly  of  our 
markets,  the  importers  had  been  gradually  raising  the  price  on  us 
until   it  stood  at  $78  all   through  1853,  and  rose  to  $81  in  1854. 
This  is  the  result  of  the  boasted  cheapness  obtained  by  importa- 
tion.    At  this  high  price  domestic  production  again  came  to  the 
relief  of  consumers,    and   the   production   of  anthracite  pig  in- 
creased from  339,285  tons  in  1854,  to  441,110  tons  in  1856,  to  524,- 
531  tons  in  1860,  and  to  684,018  tons  in  1864.     Under  the  protec- 
tive tariff  enactments  of  1862-G4  and  1867  our  j)roduct  of  pig 
metal,  which  had  risen  to  only  607,000  gross  tons  in  1860,  had 
risen   to  1,865,000  tons  in  1870,  and  to  4,500,000  tons  in  1880,  a 
clear  increase  in  the  first  iiine  years  of  1,130,000  tons,  or  170  per 
cent,  on  the  amount  which  the  ])roduction  hud  attained  in  the  jjre- 

*Uur. 


510  ECONOMIC  PHILOSOPHY. 

vious  century  of  progress,  and  in  the  second  decade  of  about 
150  per  cent,  on  the  product  of  1870.  Facts  and  figures  like 
these  recur  abundantly  in  the  history  of  France.  Her  states- 
men, from  Colbert  to  Napoleon,  and  from  Napoleon  to  Chevalier 
and  Thiers,  liave  seldom  swerved  from  the  policy  of  protection  to 
French  industry,  or  to  that  which  they  conceived  to  be  its  de- 
mands. The  scarcity,  which  results  in  checking  an  importation, 
may  develop  a  domestic  production,  whose  result  will  be  a  greater 
permanent  abundance,  and  cheapness,  than  importation  could  ever 
have  caused.  The  temporary  abundance  and  cheapness  which 
result  from  an  untaxed  importation,coming  into  competition  with 
a  variously  and  heavily  taxed  domestic  production,  may,  by  par- 
alyzing the  production,  create  an  ultimate  scarcity  and  dearness 
greater  than  could  ever  be  attained  were  the  domestic  production 
encouraged,  and  the  px*ice  left  solely  to  be  determined  by  home 
competition.  The  pi'otective  policy  makes  scarcity,  only  as  the 
sowing  of  the  seed  in  spring  makes  scarcity,  in  order  that  at  the 
harvest  there  may  be  a  greater  abundance.  Indeed,  in  all  the 
phenomena  of  production,  the  first  employment  of  the  capital  in- 
volved creates  scarcity,  i.e.,  lessens  the  capital  available  for  con- 
sumption. The  workiugman  imposes  scarcity  upon  himself  vol- 
untarily, in  order  to  save  enough  of  his  money,  which  he  might 
expend  for  daily  consumption,  to  form  a  capital  with  which  to 
engage  in  business.  The  capitalist  sees  before  him  always  two 
purposes  to  which  he  can  devote  his  means — the  first  in  procur- 
ing an  abundance  of  all  the  means  of  enjoyment,  the  second  in 
productive  industry.  Every  employment  of  his  capital  for  pro- 
ductive industry  is  a  withdrawal  of  some  portion  of  what  he 
might  expend  for  consumable  comforts — in  short,  is  a  cause  of 
relative  scarcity,  in  the  sense  referred  to  by  Bastiat.  But  the  tem- 
porary scarcity  of  wheat  occasioned  by  the  necessity  of  sowing 
the  seed  for  future  harvests,  the  temporary  scarcity  of  consumable 
capital,  occasioned  by  efforts  to  increase  the  amount  of  capital 
employed  in  productive  industry,  and  the  temjiorary  scarcity 
caused  by  checking  the  importation  of  an  article,  which  a  country 
has  all  the  unemployed  resources  to  produce  with  as  great  ease, 
and  in  as  great  abundance,  as  any  other  country,  are  all  alike  in- 
stances in  which  the  temporary  scarcity  and  dearness  are  the 
inseparable  conditions  precedent  to  permanent  abundance  and 
cheapness. 

In  his  second   chapter,  Bastiat    assumes    that    protectionists 
aim  to  increase  the  obstacles  to  production,  under  the  false  notion 


EFFORT  AND  MONEY.  511 

that  the  obstacles  to  production  ai'e  the  cause  ;  tliat,  for  instance, 
as  labor  is  the  cause  of  production,  protectionists  think  that  mode 
of  production  the  best  which  requires  the  most  labor.  No  protec- 
tionist had  any  such  notion.  In  this  chapter  he  italicises  the  as- 
sertion that  labor  is  never  without  employment.  This  is  a  bald 
economic  untruth.  There  have  been  periods  in  Ireland,  alone, 
when  two  millions  of  people  offered  to  work  sixteen  hours  in 
the  day  for  bread,  and  could  not  get  work  there,  nor  could  they 
get  where  work  was  to  be  had.  Had  the  labor  of  Babylon  and 
Nineveh  never  been  without  employment,  would  those  cities 
have  been  given  over  to  the  waste  deserts  ?  Both  labor  and 
capital  may  fail  of  employment  for  long  periods.  The  world's 
history  nearly  consists  of  the  migrations  of  both  to  new  fields  of 
employment,  and  their  adventures  and  sufferings  by  the  way. 

In  his  third  chapter,  Bastiat  argues  that  progress  consists  in  the 
increase  in  the  proportion  of  the  result  to  the  effort,  and  charges 
protectionists  with  aiming  to  bring  about  that  system  of  industry 
in  which  til?  effort  is  greatest  and  the  results  least.  Let  us  see. 
Mr.  Abram  S.  Hewitt,  our  commissioner  on  iron  to  the  Paris  Ex- 
position in  1867,  reported  facts  showing  that  one  day's  work  in 
Pennsylvania,  Wisconsin,  or  Missouri  would  make  as  much  iron  as 
two  days'  work  in  England  or  Belgium,  or  about  two  and  a  quar- 
ter in  France.  On  Bastiat's  basis,  the  proportion  of  the  effort  to 
the  result,  the  men  tiien  engaged  in  making  iron  in  England, 
Belgium,  and  France  should  have  been  induced  to  remove  as  fast 
as  possible  to  the  United  States,  because  here  the  result  in  iron 
was  from  two  to  two  and  a  half  times  greater  for  the  effort  in 
labor.  The  protectionist  policy  encouraged  this  transfer  of  iron 
production,  and  so  increased  the  proportion  of  the  result  to  the 
effort  put  forth,  in  accordance  with  Bastiat's  desideratum.  His 
error  arises  in  supposing  that  the  money  price  of  labor  is  a  meas- 
ure of  the  effort  put  forth.  It  is  only  a  measui-e  of  the  competi- 
tion between  laborers.  Blacksmitlis  put  forth  as  much  effort  in 
one  country  a-s  another,  and  attain  about  the  same  result,  so  far  as 
the  amount  of  work  done  is  concerned.  But  in  the  United  States, 
at  the  period  referred  to,  they  received  $13. 10  per  week,  in  gold ;  in 
Great  Britain,  $6.33  ;  in  Prussia,  from  $2.52  to  $4.32  ;  in  Saxony, 
from  $2.52  to  $3.60;  and  in  Switzerland  $5.40,  according  to  an  offi- 
cial report  of  our  bureau  of  statistics  at  Washington.  Iron  pud- 
dlers  received  $16.54  i)er  week  in  the  United  States,  $8.75  in  Great 
Britain,  $3.60  to  $4.32  in  Prussia,  $3.12  to  $4.32  in  Saxony,  and 
f    92  to  $4.20  in  Belgium.     Now,  if  no  greatei'  elfort  were  required 


512  ECONOMIC  PIIILOSOyilY. 

to  make  the  same  amount  of  iron  in  those  countries  than  in  our 
own,  Great  Britain  could  sell  iron  for  half  what  we  could  make  it 
for,  Prussia  and  Saxony  for  one-fourth,  and  Belgium  for  one-fifth. 
But  they  did  not.  Removing  all  duties,  they  would,  at  first, 
have  sold  iron  to  us  for  one-fourth  less,  until  they  had  stopped  our 
manufacture,  and  then  the  magnitude  of  our  demand  would  have 
compelled  them  to  ask  more,  under  free  trade,  than  the  previous 
price  with  duty  added.  But  the  fact  that  Prussians  can  only 
produce  iron  at  three-fourths  of  the  American  price,  when  they 
pay  one-fourth  of  the  American  wages,  shows  that  their  iron 
costs  three  times  as  much  effort  in  days'  work  as  ours,  and 
hence  that  the  world  would  be  the  gainer  by  66  per  cent.,  in 
the  proportion  of  the  result  to  the  effort,  if  we  should  forbid 
the  importation  of  a  ton  of  Prussian  iron,  and  compel  German 
laborers,  if  they  propose  to  make  iron  for  our  markets,  to  make 
it  in  this  country.  American  protectionists  generally  would 
be  satisfied  if  our  tariff  lav\rs  secured  the  jiroduction  of  tliose  arti- 
cles in  this  country  which  we  can  px'oduce  with  a  larger  propor- 
tion of  result  to  effort  than  the  people  of  any  other  country. 

M.  Bastiat's  third  "Sophism  of  the  Protectionists  "  is  that  they 
aim  to  equalize  the  facilities  of  all  countries  for  pi'oduction,  and 
that  it  is  from  the  differences  between  various  countries  in  their 
facilities  for  i^roduction  that  trade  arises,  each  country  being  able 
to  expoi't  only  that  which  it  can  produce  more  cheaply  than  any 
other  country  ;  consequently  that  the  adoption  of  the  protection- 
ist policy  would  destroy  ti'ade. 

We  answer,  that  it  is  also  from  the  same  differences  of  facil- 
ities for  production,  as  between  different  individuals,  in  any  one 
country,  that  domestic  trade  arises,  and  that  the  international 
trade  is  always  of  far  less  importance  than  the  domestic  commerce 
of  every  country.  Protection,  by  increasing  the  domestic  pi'oduc- 
tion,  increases  the  extent  to  which  a  people  can  exchange  with 
each  other  at  home,  and  diminishes  the  necessity  only  for  going 
abroad.  It  lessens  not  the  number  of  exchanges  made,  but  only 
the  distance  to  be  traveled,  and  the  transportation  to  be  paid  for, 
in  making  them.  The  ability  of  a  people  to  make  exchanges  de- 
pends, ultimately,  wholly  on  the  amount  of  their  production, 
which,  in  turn,  depends  primarily  on  their  natural  resoui^ces,  sec- 
ondly on  their  advancement  in  mechanical  invention,  and  thirdly 
and  through  the  two  first,  on  the  diversification  of  their  industry. 

There  are  1,200,000  farmers  in  the  Mississippi  Valley,  none  of 
whom  can  rnake  any  exchanges  with   each  other,   because  their 


HOME  TRADE  NEEDS.  513 

products  are  the  same.  There  are  a  similar  number  of  spinners 
and  weavers  in  England  who  can  make  no  exchanges  with  each 
other,  because  they  are  all  producing  the  same  thing.  Bastiat 
thinks  the  continuance  of  this  state  of  things  increases  the 
amount  of  commerce  between  these  two  classes  of  producers.  We 
say  it  diminishes  the  amount  of  the  commerce  between  the 
farmers  and  spinners  to  the  lowest  point  ;  that  if  one-half  the 
spinners  were  in  the  Mississippi  Valley  it  would  quadruple  the 
value  of  the  present  products  of  that  region  and  of  its  land,  and 
also  largely  increase  the  value  of  the  product  of  their  spindles.  Is 
there  any  doubt  that  in  this  respect  we  are  looking  at  the  aggre- 
gate of  commerce,  domestic  as  well  as  foreign,  while  Bastiat  is 
looking  only  to  the  commerce  that  crosses  the  ocean,  or  some 
strait  or  channel  of  it  ?  So  long  as  the  whole  people  of  the  Mis- 
sissip])i  Vallej^  are  farmers,  while  their  weavers  and  cutlei's  ai*e  in 
Lowell  aud  Sheffield,  is  not  the  commerce  of  the  people  of  Illinois 
with  each  other  paralyzed  by  the  fact  that  their  industries  are 
homogeneous  ?  But  if,  of  the  people  of  Illinois,  3,000,000  were 
farmers,  and  2,000,000  were  mechanics  and  manufacturei'S,  would 
not  the  exchanges  of  products  then  possible  to  them  be  infinitely 
greater  than  the  exchange  could  be,  so  long  as  the  two  classes  of 
industries  are  separated  by  thousands  of  miles  ?  Commerce 
grows,  not  out  of  the  unequal  powers  of  various  peoples  to  pro- 
duce the  same  things,  but  out  of  their  equal  powers  to  produce 
different  things.  It  is  not  inequality,  but  diversity  of  production, 
that  promotes  exchange.  If  a  farmer  in  England  raises  sixty 
bushels  of  wheat  to  the  acre,  and  another  in  France  raises  ten 
bushels,  their  inequality  of  production  forms  no  inducement  to 
them  to  trade  with  each  other.  But  the  farmer  trades  with  the 
spinner,  weaver,  cutler,  blacksmith,  and  carpenter,  without  re- 
gard to  their  equality  or  inequality  of  productive  power.  His 
trade  is  as  profitable  if  they  earn  $5  a  day  and  he  earns  $3,  as  if 
he  earns  $5  a  day  and  they  earn  $3.  Yet  protectionists  do  not  de- 
sire to  ci'eate  equality  of  production  in  competing  branches,  ex- 
cept as  preferable  to  inferiority  of  production  on  our  own  part. 
They  prefer  equality  to  inferiority,  superiority  to  equality,  and 
supremacy  to  superiority.  But  tliey  deny  Bastiat's  "  sophism," 
that  our  inferiority  to  Englishmen  in  any  branch  of  production 
helps  us  to  trade  with  them.  It  must  be  our  production  of  un- 
like products,  not  of  unlike  values,  and  as  the  soil  and  climate  of 
Europe  present  no  natural  differences  from  those  of  the  United 
States,  a  given  population  transferred   from  Europe  to  America 


614  ECONOMIC  PHILOSOPHY. 

can  produce  here  every  product  in  kind  which  they  can  there,  but 
at  a  more  rapid  rate  and  with  less  effort. 

192.  Modern  Germany— Protective  Taxation  a  Source 
of  National  Unity. — The  power  of  Germany,  whicli  is  now  at- 
tracting the  attention  and  admiration  of  the  civilized  world,  has 
grown  up  in  the  brief  space  of  sixty  years,  as  the  result  of  two 
intimately  related  policies,  viz. :  the  general  diffusion  of  literary 
and  industrial  education,  and  the  protection  of  German  manu- 
factures, agriculture,  and  mining,  against  foi-eign  competition, 
through  the  Zollverein.  Americans  have  special  reason  to  be 
proud  of  German  progress,  since  the  efficient  agent  in  effecting 
the  Zollverein  was  Frederick  List,  author  of  a  work  entitled 
"The  National  System  of  Political  Economy,"  and  who,  though 
German  by  birth,  became  imbued  with  the  principles  of  protec- 
tion, during  his  residence  in  Pennsylvania.  Prof.  List  was  invited 
by  Lafayette  to  accompany  him  in  his  tour  of  this  couiitry,  and 
came  only  as  a  visitor  and  observer.  He  had  previously  edited 
an  edition  of  J.  B.  Say's  treatise  on  political  economy,  and  his 
leanings  wei'e  toward  free  trade.  During  his  stay  in  this  coun- 
try he  became  familiar  with  its  economical  history,  and  reversed 
his  opinions  as  to  the  effects  of  unrestricted  foreign  trade  on  do- 
mestic manufactures.  He  learned  that  our  Federal  Union  grew 
out  of  an  attempt  to  form  a  customs  or  commercial  union,  with 
free  trade  between  the  various  states,  and  protection  against 
foreign  competition,  as  its  guiding  principle.  He  became  familiar 
with  the  unitizing  effects  of  such  a  union,  and  with  the  gratify- 
ing results  to  our  manufactures  and  general  industry,  during  the 
years  from  1806  to  1815,  in  which  commerce  with  England  was 
interrupted  or  nearly  destroyed,  and  the  disastrous  effects  of  the 
free  trade  treaty  of  1816,  which  flooded  American  markets  wnth 
English  goods,  swamped  our  manufactures,  and  in  three  years 
brought  every  branch  of  industry  to  the  lowest  stage  of  suffering 
and  ruin.  Thoroughly  indoctrinated  in  the  Pennsylvania  school 
of  political  economy,  of  which  Matthew  Carey  was  then  a  lead- 
ing expounder.  Prof.  List  returned  to  Germany  filled  with  the 
purpose  of  agitating  for  the  adoption  of  the  principle  of  protection 
to  German  industry,  through  a  Zollverein,  of  which  Prussia  had, 
since  1818,  been  the  px'oposer  and  exponent,  while  Hanover  and 
otlier  German  states,  largely  influenced  by  England,  had  formed 
an  opposing  combination  in  favor  of  free  trade.  The  dream  of 
List  was  of  a  united  Germany,  bound  together  by  a  network  of 
railroads  centering  in  Bex'lin  and  Frankfort,  collecting  its  whole 


RISE  OF  GERMANY.  515 

revenues  in  an  exterior  line  of  custom  houses,  under  laws  so 
framed  as  to  secure  the  freest  possible  intercourse  within  the  bund, 
and  permanent  protection  to  every  needed  industry  against  for- 
eign encroachment.  He  had  written  a  work  expounding  these 
views,  while  in  America,  and  his  ability,  in  advocating  tliem  in  the 
public  journals  of  Germany,  caused  him  to  be  selected  as  the  ex- 
ecutive agent  in  negotiating  such  a  union. 

Prussia,  since  1818,  had  been  vainly  endeavoring  to  draw  the 
other  German  states  into  a  Zollverein.  In  1819,  Saxe-Weimar 
and  Mecklenburg  had  entered  it,  and  in  1827  Wurtemburg  and 
Bavaria  made  a  treaty  of  commerce  with  it,  but  would  not  join  it. 
Hanover,  Saxony,  and  Hesse  stoutly  opposed  it,  and  favored  an 
anti-Prussian  free  trade  coalition.  Prior  to  this  period  the  trade 
between  Germany  and  Great  Britain  had  consisted  in  the  exjiort  of 
raw  wool  from  Germany  and  the  import  of  woolen  cloths  from 
England  ;  an  export  of  rags  and  an  import  of  paper;  an  import 
of  cotton  goods  and  an  export  of  food.  Under  these  industries, 
Germany  had  been  the  granary  of  Europe,  but  her  people  so  poor 
that  throughout  the  eighteenth  century,  they  were  sold  by  their 
princes  to  foreign  service  as  mercenary  soldiers,  and  so  weak,  that 
in  1805  to  1815,  it  was  but  sport  for  France,  which  had  pursued 
protective  policies  for  two  centuries,  to  march  her  armies  through 
Germany,  and  make  it  the  battle-ground  of  Europe. 

In  1831,  however,  Hesse  abandoned  the  free  trade  coalition  and 
joined  Prussia,  the  results  of  whose  steady  maintenance  of  the 
protective  policy  were  beginning  to  impress  the  other  German 
powers.  Several  of  the  smaller  states  followed  in  quick  succes- 
sion. In  1833,  Bavaria,  Wurtemburg,  and  Saxony,  did  the  same. 
In  December  of  that  year,  the  union  counted  14,800,000  people. 
In  1834  they  had  increased  to  23,500,000.  In  1835,  Baden,  Nassau, 
and  Frankfort  joined  their  number.  In  the  next  year  the  inde- 
fatigable List — through  whose  labors  Germany  was  thus  laying 
the  foundation  of  its  present  prosperity — was  ruined,  pecu)iiarily, 
by  the  decline  in  the  value  of  his  extensive  mining  investment  in 
Pennsylvania,  in  consequence  of  the  adoption  of  a  "  free  trade" 
tariif  by  the  United  States  in  1833.  This  spur  did  not  retard  his 
labors.  In  1839  the  federation  extended  over  200,000  square  inilps 
and  a  population  of  27,000,000  of  people.  In  1852  it  had  reached 
33,000,000,  and  now  it  includes  40,000,000  of  people,  and  from  a 
mere  customs  union  has  welded  the  discordant  ])i-ii)cipalities  of 
the  North  German  Confederation  into  tlie  modern  Illnipire  of  Ger- 
many.    It  is  often  claimed,  by  free  traders,  that  the  rates  of  the 


.516  ECONOMIC  pniLOsopnr. 

Zollverein  were,  and  that  those  of  the  present  Gei'man  empire 
are,  low.  They  have  been,  and  are  indeed,  lower  than  the  rates 
of  most  other  countries,  for  the  reason  that  the  debt  of  Prussia  was 
at  all  times  nearly  nominal,  and  the  present  German  empire  owes 
no  debt.  Its  war  with  Austria  in  1866-7  resulted  in  the  virtual 
annexation  of  kingdoms  and  duchies  containing  10,000,000  of 
people,  without  bon^owing  a  dollar,  compelling  the  army  it 
defeated,  and  the  provinces  it  annexed,  to  pay  nearly  the  whole 
cost  of  the  war,  and  disbursing  the  remainder  itself  out  of  the 
revenue  for  the  year. 

The  similar  display  of  military  strategy,  and  financial  power,  in 
her  war  with  France,  in  1870,  resulted  in  the  crowning  of  the  Prus- 
sian king  as  Emperor  of  Germany  in  the  French  capitol,  and  the 
payment  by  France  of  a  penalty  of  $1, 000, 000, 000  for  venturing  in- 
to the  war.  The  astuteness  of  Bismarck,  and  the  iron  will  of  Will- 
iam, could  not  have  been  so  brilliantly  exhibited  within  the  last 
twenty  years,  but  for  the  unpretentious  labors  of  Frederick  List 
forty  years  earlier. 

The  supply  of  capital  is  so  considerable,  and  the  rates  of  labor 
are  so  low,  in  Germany,  that  the  country  has  marked  facilities  for 
cheap  production.  Being  wholly  without  colonies,  and  never 
having  used  her  armies  to  extend  her  trade  in  foreign  countries, 
she  has  no  means  of  "  corralling  "  foi'eign  trade,  so  as  to  compel 
it  to  pass  through  her  territory,  or  enrich  her  people.  Her  manu- 
facturers and  merchants  are  compelled  to  obtain  all  their  means 
of  profit  out  of  a  little  country,  smaller  than  Texas,  poorer  than 
Arizona,  by  honest,  hard,  tough  toil  without  a  cent  of  coerced 
trade  from  any  source.  This  is  why  both  profits  and  wages  are 
lower  in  Germany,  than  in  England. 

England  is  an  empire  of  260,000,000  of  people,  shaped  in  a 
pyramid,  with  5,000  nobility  and  gentry  at  the  apex,  980,000  land- 
holders, rural  and  urban,  next  to  the  apex,  10,000,000  of  traders, 
bankers  and  manufacturers  next,  who,  with  the  landholders,  boss 
the  empire;  20,000,000  of  disinherited  laborers  who  have  no  stake 
in  the  country  but  to  pay  the  taxes  on  whisky  and  tobacco  and 
do  the  fighting,  and  220,000,000  of  Mohammedan,  Pagan  and 
other  Hindoo  subjects,  who  are  skinned  and  peeled  through  en- 
forced trade,  for  the  benefit  of  British  mills  and  landlords.  Be- 
sides these,  througli  her  coerced  treaties  with  Japan  and  China, 
Turkey  and  Egypt,  and  her  purchased  treaties  with  Portugal 
prior  to  the  sovereignty  of  Brazil,  England  has  come  into  the  con- 
trol, not  thx'ough  present  cheapness,  but  through  past  coerciQjj 


PRO  TECTINO  RA  W  31  A  TERIALS.  5 1 7 

and  finesse,  of  the  privilege,  which  in  effect  is  an  exclusive  one, 
of  supplying  barbarian  goods  to  about  400,000,000  more. 

The  nominal  privilege,  which  other  nations  have,  of  sending 
manufactured  goods  into  these  countries  at  the  same  rate  of  duties, 
if  any,  as  the  English  pay,  is  of  the  same  practical  value  as  the 
theoretical  privilege  vrhich  the  whole  world  has  of  buying  out 
the  British  nobility,  by  paying  more  for  their  estates  than  they 
are  willing  to  forego  to  keep  them. 

Germany  can  not,  therefore,  by  any  protection  she  can  afford 
to  producers  in  her  home  markets,  attain  a  rate  of  profits  and 
wages  equal  to  that  which  the  British  Empire  has  attained  as 
the  result  of  a  perfection  in  machinery  and  an  accumulation  of 
capital  which  are  due  to  three  hundred  years  of  protection  to  her 
home  markets,  and  two  centuries  of  foreign  conquest,  whereby 
she  has  enforced  her  ascendancy  in  the  trade  of  700,000,000  of 
people.  No  such  prize  was  open  to  the  German  i^eople  of  this 
century.  But  Prussia,  and  her  associated  powers  in  the  Zollverein, 
adjusted  the  duties  with  an  eye  to  the  development,  within  the 
Zollverein,  of  every  industry  it  had  the  power  to  foster.  Their 
tariff  contained  hardly  an  ad  valorem  duty.  It  laid  duties,  not 
according  to  the  values  of  goods,  but  their  kinds.  It  threw  every 
quality  of  goods,  of  the  same  general  description,  into  a  single 
class,  without  regard  to  their  difference  of  cost,  and  levied  one 
rate  of  duty  upon  the  Prussian  hundredweight,  whether  the  fabric 
were  muslin  or  canvas.  This  was  to  ensure  that  Germans  should, 
first  of  all,  be  the  exclusive  producers  of  those  raw  materials  (if 
they  had  the  natural  facilities  for  producing  them),  on  whose 
abundance  more  advanced  industries  depended.  If  protection  was 
the  true  road  to  cheapness  it  would  prove  the  cheapest  route  to 
cheap  raw  materials.  It  threw  together,  under  a  common  tariff" 
of  $36.40  per  centner  (llO^^  lbs.),  such  diverse  objects  as  hai-d- 
ware,  perfumery,  sewing-needles,  wigs,  clocks,  and  umbrellas, 
and  all  admixtures  of  them.  Such  a  tariff,  among  demagogues, 
would  have  afforded  a  specious  chance  for  cheap  denunciation,  as 
burdening  the  coarse  goods  of  the  poor,  and  exempting  the  fine 
goods  of  the  rich,  etc.  But  when  these  rates  were  first  adjusted, 
in  1820-30,  German  manufactures  were  in  their  infancy,  and  the 
Germans  saw  that  the  coarser  the  manufactures  the  more  cer- 
tainly the  Germans  ought  to  be  able  to  produce  them  themselves. 
The  revolution  in  the  character  of  German  commerce  is  seen  in 
the  fact  that  forty  years  ago  the  German  exports  were  double  the 
weight  of  the  imports,  though  of  less  value.      In  1825  the  com- 


5 1 8  ECONOMIC  PHIL  0 SOPH  7. 

merce  down  the  Elbe  was  110,600  tons,  while  that  going  upwards 
Avas  only  66,000  tons,  Germany  being  constantly  in  debt  to  the 
money-lending  powers.  In  1868  the  exports  were  but  half  the 
weight  of  the  imports,  though  exceeding  them  in  value.  In  1850 
the  transportation  of  raw  products  up  the  Elbe  was  315,000  tons, 
while  the  retuini  of  finished  commodities  down  the  Elbe  weighed 
only  174,000  tons.  Yet  so  greatly  did  her  exports  of  commodities 
exceed  her  imports,  in  value,  that  the  difference  was  constantly 
adjusted  by  an  importation  of  bonds,  or  liens  on  the  industry  of 
other  nations,  the  United  States  of  America  being  a  borrower  of 
fully  one  thousand  millions  of  dollars  of  German  surplus  capi- 
tal between  1865  and  1873.  Once  they  were  selling  raw  products 
and  cheap  labor  to  the  outside  world,  in  exchange  for  cloths,  silks, 
machinery,  and  finished  wares.  Now  they  are  selling  finished 
commodities,  and  skilled  labor,  at  high  prices,  in  exchange  for  the 
raw  products  of  unskilled  and  agricultural  toilers.  For  in- 
stance, in  1825  Germany  exported  to  England  28,000,000  pounds 
of  raw  wool,  receiving  her  pay  in  English  cloth,  thus 
showing  that  wool  was  cheaper  in  Germany  than  in  En- 
gland, while  cloth  was  dearer.  But  in  1851,  after  twenty 
years  of  the  Zollverein,  Germany  imported  25,000,000  pounds 
more  wool  than  she  exported,  and  exported  12,000,000  pounds  of 
woolen  cloths — proving  that  woolen  cloths  had  become  cheaper, 
and  the  raw  wool  dearer,  in  Germany  than  in  other  countries, 
the  price  of  the  raw  material  and  the  finished  article  approaching 
each  other  in  consequence  of  the  extensive  development  of  Ger- 
man manufactures.  Can  it  be  contended  that  the  Prussian 
farmers,  as  growers  of  wool  and  wearers  of  cloth,  were  not  en- 
riched by  the  higher  prices  they  received  for  their  wool,  and  the 
reduced  prices  they  paid  for  their  cloth  ?  Or  that  as  tax-payers 
the  Germans  were  not  profited  by  the  fact  that,  while  their  manu- 
factures were. struggling  into  equality  with  those  of  England  and 
France,  the  latter,  in  lai'ge  measure,  paid  the  German  duties  out 
of  their  own  jjockets  for  the  privilege  of  selling  their  goods  in 
German  markets,  thus  relieving  the  German  tax-payer  of  so  much 
of  his  burden  ?  That  the  Germans,  as  consumers,  wei'e  enriched  is 
shown  by  the  fact  that  they  consume  more  woolen  goods,  by 
50,000  pounds  annually,  than  they  did  under  lower  duties,  and 
when  they  imported  their  cloths  from  England. 

Again,  in  1825,  Prussia  imported  only  5,000  cwt.  of  cotton  and 
cotton  yarn,  and  in  the  twelve  years  ending  in  1836  the  amount 
had  increased  only  to  8,000  cwt.,  or  6,000,000  pounds,  which  was 


FINER  WORK.  519 

about  one  pound  per  capita  per  year  for  the  whole  Prussian  popu- 
lation. After  that  period  the  importation  into  the  states  of  the 
Zollverein  of  cotton  and  cotton  twist  was  as  follows  :  In 
1836,397,233  cwt. ;  in  1845,  1,018,150  cwt. ;  and  in  1851,  1,362,- 
796  cwt.  In  the  last  year  the  export  amounted  to  159,241  cwt. 
— leaving  for  domestic  consumption  more  than  1,200,000  cwt., 
or  130,000,000  of  pounds,  or  not  less  than  four  pounds  per  capita 
for  the  whole  population.  Says  Mr.  Carey  in  his  chapter  on 
Prussia,  in  "  The  Principles  of  Social  Science":  "  The  weight  of 
cotton  goods  exported  was  less  than  an  eighth  of  that  of  the  wool 
and  yarn  imported;  and  yet  the  value  of  that  small  quantity  was 
20,000,000  of  thalers— $14,000,000— being  almost  enough  to  pay 
for  the  whole  import.  At  least  three-fourths  of  this  large  sum 
consisted  of  labor  representing  German  food,  thus  readily  enabled 
to  go  to  distant  countries."  In  1826  "Germany  supplied  the 
■world  with  rags  and  imported  paper,  of  which  her  consumption 
was  then  but  small.  In  1851  all  had  changed,  the  net  import 
of  the  first  having  been  37,000,000  pounds,  the  net  export 
of  the  last  having  risen  to  3,500,000.  In  the  first  period  rags 
were  cheaper  than  in  other  countries,  while  paper  was  dearer. 
In  the  second  rags  were  dearer,  while  paper  was  cheaper.  The 
prices  of  the  two  had  greatly  approximated,  and,  therefore, 
had  the  consumption  of  paper  so  much  increased  as  to  absorb 
not  only  the  whole  quantity  (of  rags)  produced  at  home,  but 

in  addition  thereto  more  than  30,000,000  pounds  produced 
abroad." 

In  1883  *  the  import  of  raw  cotton  had  increased  to  44,000,000 
pounds  per  month,  quite  four  times  the  importation  of  1851 ;  the 
exports  of  cotton  cloths  were  twenty  times,  in  weight  and  value, 
that  of  the  imports.  The  imports  of  lead  and  copper  ore  were 
twenty  times  greater  than  the  exports,  but  the  exports  of  the 
metals  were  twenty  times  greater  than  the  imports.  The  imports 
of  wheat,  in  1883,  were  twelve  times  greater  than  the  exports,  of 
oats  six  times  greater,  and  of  rye  and  buckwheat  sixty  times 
greater.  Of  glass  the  exports  were  sixteen  times  greater  than  the 
imports,  but  of  hides  and  skins  the  imports  were  3i  times  greater 
than  the  exports.  Of  wood  the  imports  were  three  times  great- 
er than  the  exports,  but  of  musical  instruments  the  exports  were 
thirty- five  times  greater  than  the  imports.  Of  locomotives  the 
exports  were  seventy  times  in  excess  of  the  imports.      Of  made 

♦  "  U.  S.  Consular  Reports,"  No.  32,  for  Aug.  1883,  p.  359. 


520  ECONOMIV  PHILOSOPHY. 

clothes  the  exports  were  seventeen  times  greater  than  the  imports. 
Of  leather  and  leather  goods  the  imports  were  but  half  the  weight 
of  the  exports.  Of  wine  the  imports  were  seven  times  the  ex- 
ports ;  but  of  brandy  the  exports  were  250  times  the  imports.  Of 
flesh  the  imports  were  three  times  the  exports,  but  of  starch  the 
exports  were  nearly  six  times  the  imports.  Of  molasses  the  im- 
ports were  one-sixth  the  exports,  but  of  sugar  the  exports  were  91 
times  the  imports.  Of  woolen  yarn  the  imports  were  three  times 
the  exports,  but  of  woolen  goods  the  exports  were  nearly  eighteen 
times  the  imports.  Of  tar  the  imports  were  twice  the  exports, 
while  of  pitch  the  exports  were  ten  times  the  imports. 

From  1830  to  1854  the  quantity  of  coal  mined — a  sure  test  of 
the  growth  of  modern  manufactures — increased  from  7,000,000 
tonnes  (of  391  lbs.  each)  to  46,000,000  tonnes.  In  1834  Germany 
produced  76,000  tons  of  bar  iron;  in  1850,  200,000  tons  of  bar  and 
600,000  tons  of  pig  iron.  The  value  of  cotton  and  woolen  goods 
exported,  rose  in  1851  to  $25,000,000,  the  chief  part  of  which  con- 
sisted of  the  food  that  had  been  combined  with  the  wool,  in  the 
process  of  converting  it  into  cloth.  As  a  consequence,  the  neces- 
sity for  going  abroad  to  find  a  market  for  food,  had  so  gi'eatly 
decreased  that  the  net  export  from  the  country,  that  in  1825  was 
the  granary  of  Europe,  was  but  10,000,000  bushels.  Simultane- 
ously with  this  development  of  manufactures,  and  especially  of 
cheap  iron,  Prussia  became  able  to  build  railroads,  until  she  had 
one  mile  of  road  for  every  five  miles  of  her  land,  besides  loaning 
hundreds  of  millions  of  capital  to  other  countries  to  build  roads 
with,  or — which  is  the  same  thing — buying  their  stocks  when 
built.  Travel  became  so  common  that  but  few  of  the  people 
of  Prussia  failed  to  visit  their  chief  cities,  and  thus  a  higher 
standard  of  taste  in  art,  architecture,  and  music  was  diffused 
over  all  Germany.  A.S  the  price  of  the  famiers'  products  in- 
creased, and  local  markets  near  at  hand  sprang  up  at  thousands 
of  local  centers,  the  farmers  advanced  from  the  early  three-field 
system  of  agriculture,  first  to  improving  their  land  by  rotation 
of  crops,  so  as  to  keep  it  all  in  cultivation  at  once,  and  then 
to  a  rotation  of  manures,  the  highest  development  of  skill  in  the 
preservation  and  improvement  of  the  fertility  of  the  soil.  So 
great  has  the  necessity  become  for  a  perfect  system  of  tillage, 
to  meet  the  demands  of  the  German  consumers,  that  the  pro- 
prietors of  land  feel  that  tliey  cannot  afford  to  hold  and  culti- 
vate it  in  large  quantities,  and  hence  the  division  of  land,  among 
a  constantly  increasing  number  of  proprietors,  is  going  on  in  Ger- 


GERMAN  CULTURE.  521 

many,  under  protection,  from  a  law  of  profit  as  natural  as  that 
which  causes  the  increasing  concentration  of  the  land  in  England 
into  the  hands  of  a  few,  under  free  trade.  In  Germany  the  land 
is  a  means  of  producing  wealth,  in  accordance  with  the  principles 
of  the  highest  of  all  arts,  that  of  agriculture.  In  England  it  is 
a  means,  chiefly,  of  the  ostentatious  display  of  the  fruits  of  a 
monopoly  acquired  by  ci'ushing  out  the  industries  of  nations  hav- 
ing a  weaker  military  arm,  or  a  purchasable  tariff  policy.  Lands 
which  would  have  been  tilled  by  English  farmers,  had  they  been 
protected  in  their  home  market,  have  been  turned  into  parks,  pas- 
tures, and  waste,  with  the  profits  of  a  trade  in  cottons,  between 
the  cultivators  and  spinners  of  Hindostan,  the  loss  of  which  to 
the  Hindoos  has  been  made  visible  in  the  periodical  famines  in 
that  country.  Thus  a  grinding  spirit  marks  the  success  of  trade, 
as  the  spirit  of  reciprocity  characterizes  production. 

By  means  of  this  minute  division  of  land,  in  Germany,  great 
diversification  of  employments,  steady  increase  in  wealth  by  pro- 
duction rather  than  by  trade,  a  competency  is  brought  within  the 
reach  of  every  German.  The  government  has  wisely  cared  for 
the  education  of  the  people  as  well  as  their  productive  industries. 
As  a  consequence,  there  is  a  strong,  active,  intelligent  love  of 
fatherland,  an  intelligence  in  the  German  armies  which  fulfills  the 
adage  that ' '  bayonets  think, "  and  a  capacity  on  the  part  of  the  peo- 
ple during  war  or  peace  to  do  any  thing  that  man  can  do,  and  do  it 
well.  German  literature  and  art  are  rapidly  taking  the  lead  in 
the  world  of  ideas,  as  Prussian  arms  and  di^^lomacy  are  in  that  of 
politics  and  nations.  In  theology,  history,  j)oetry,  science,  art,  in 
universities  and  galleries,  in  books  and  paintings,  in  the  stage  and 
the  church,  Germany  has  achieved  her  greatest  strides  within 
the  last  half  century.  Neai'ly  all  of  this  accession  of  power  in 
Germany  is  due  immediately  to  the  adoption  in  1820  to  1834  of  a 
protective  policy.  Without  this  she  might  have  been  industrious, 
but  she  would  have  been  disorganized,  poor,  and  a  borrower.  With 
it  she  has  become  united,  powerful,  and  rich,  indeed  the  strong- 
est power  in  Europe.  This  period  has  placed  her  in  the  lead  in 
learning,  art,  diplomacy,  science,  and  war,  as  distinctly  as  the 
United  States  of  America  have  within  thirty  years  past  taken  and 
held  the  lead  in  political  freedom,  material  and  inventive  energy, 
and  the  production  of  wealth. 

11>3.  Germany's  Present  System  of  Taxation. — The  Ger- 
man Empire  of  1786  included  28U  states,  among  which  weresixty- 
pne  free  cities.    In  1813  the  Confederacy  of  the  Ehine  comprised 


522  ECONOMIC  PHILOSOPHY. 

about  half  the  German  E:npire,  the  other  half  being  parcelled  out 
between  France,  Italy,  Austria,  Prussia,  and  the  Danish  States. 
The  German  Confederacy  of  1815-66  was  formed  with  the  Austrian 
Confederate  States,  tlie  Prussian  Confederate  States,  the  Bavarian 
Kingdom,  and  Hanover  as  its  leading  powers,  each  of  which  were 
agglomerations,  and  twenty-nine  other  states,  most  of  which  were 
in  part  agglomerated  states,  containing  in  all  243,556  square  miles 
and;  in  1815,  51,300,000  population,  and  in  1865,  73,410,767  popu- 
lation. As  the  issue  of  the  war  of  1866,  Austria  withdrew  from 
Germany,  and,  at  the  close  of  the  campaign  of  1870  against 
France,  Germany  underwent  an  internal  change  resulting  in  the 
constitution  of  16th  April,  1871,  of  the  present  empire.  Into  this 
empire  are  merged  by  force  of  conquest  twenty-six  sovereignties.* 
The  laws  relating  to  customs  and  commerce  are  wholly  under 
conti'ol  of  the  empire.  Notwithstanding  the  large  standing  army 
the  annual  expenses  of  the  government  are  small  compared  with 
those  of  England,  France,  or  the  United  States,  being  only  a 
third  or  fourth  of  either.  The  entire  revenue  for  1877-8  was  only 
£25,530,403,  of  which  taxes  and  duties,  on  pi'ovisions,  were  £12, 
652,690.  Extraordinary  revenue  was  £5,157,397,  matricular  con- 
tributions were  £4,052,208,  and  the  rest  were  minor  taxes.  This 
leaves  to  the  several  states  of  the  empire  their  land  tax,  house 
tax,  income  tax,  class  tax,  tax  on  trades,  railway  duty,  and  other 
direct  taxes  t — the  total  estimated  revenue  and  expenditure  of 
Prussia  alone  being  £35,125,034,  or  considerably  greater  than  that 
of  the  empire,  of  which  it  is  the  chief  part.  The  class  tax  is  vir- 
tually an  income  tax  on  all  persons,  subject  to  certain  exceptions, 
who  receive  more  than  420  marks  and  less  than  3,000  marks, 
while  the  term  income  tax  is  reserved  for  the  tax  on  incomes  ex- 
ceeding 3,000  marks,  derived  from  either  real  estate,  capital,  or 
any  trade,  business,  or  paying  profession.  The  trade  tax  is  lev- 
ied on  commerce,  hotels,  restaurants,  and  innkeepers,  manufac- 
tures and  trades  employing  a  number  of  persons,  mills,  naviga- 
tion, warehouses,  livery  stables,  and  peddlers.    The  table  (in  mil- 

*  Prussia,  Lunenburg,  Bavaria,  Saxony.  Wurtemberg,  Baden,  Heese,  Mecklenburg 
Schwerin,  Saxe- Weimar,  Mecklenburg-Strelitz,  Oldenburg,  Brunswick,  Saxe-Meiningen, 
Saxe-Altenburg,  Saxe-Coburg-Gotha,  Anhalt,  Scliwarzburg  Rudolphstadt,  Schwarz- 
biirg  Sonderhausen,  Waldecli  Reuss,  Schomhurg  Lippe,  Lippe,  Lubeck,  Bremen,  Ham- 
burg, Alsace-Lorraine.  Area,  210,493  English  square  milua  ;  population  in  1877, 
42,727,360. 

t  For  a  minute  analysis  of  German  taxes,  imperial  and  Prussian,  see  U.  S.  Consular 
Reports,  No.  32,  August,  1883,  pp.  395405. 


ADVAyCIKG  WAGES. 


523 


lions  and  tenths  of  millions)  shows  the  relative  productiveness  of 
these  taxes,  in  Prussia,  in  1876,  in  marks  (23.8  cents). 


o 

Communal  Taxes,  1876. 

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317 

161.5 

73.9 

From  this  it  appears  that  nearly  one-third  of  Prussian  state  and 
local  (communal)  taxation  is  expended  upon  public  schools.  The 
cities  of  Hamburg  and  Bremen  remain  at  present,  by  stipulation, 
free  from  the  customs-imposts  of  the  empire,  an  exception  which 
will  expire  in  a  few  years.  Bavaria,  Wurtemberg,  and  Baden 
also  retain  their  taxes  on  beer,  while  the  like  taxes  in  the  other 
states  go  into  the  imperial  treasury.* 

The  German  system,  of  adjusting  duties  largely  by  weight,  ren- 
ders it  difficult  to  translate  their  tariff  terms  into  ours,  but  all 
who  investigate  their  system  see  in  it  a  very  determined  effort  to 
protect  all  German  industries. 

After  the  enactment  of  the  new  duties  in  1879,  designed  to  give 
a  more  emphatic  protection  to  the  iron  and  steel  manufacture, 
the  German  Steel  and  Ii-on  Industry  Association  published  statis- 
tics received  from  320  iron  works,  foundries,  and  machine  works 
in  various  parts  of  Germany,  showing  that  in  January,  1879,  just 
before  the  enactment,  they  had  employed  in  these  works  151,583 
workmen,  whose  monthly  wages  wei'e  $2,280,375,  while  in  Janu- 
ary, 1884,  the  same  works  employed  202,888  workmen,  to  whom 
they  paid  $3,468,024  wages  per  month.  The  number  of  workmen 
had  increased  by  33.2  per  cent.,  and  the  aggregate  of  wages  by 
52.1  per  cent,  per  month.  The  average  rate  of  wage  per  month 
on  all  the  workmen  had  risen  from  $15.04  in  the  first  period  to 
$17.17  in  the  second,  being  $2. 13  per  month  in  favor  of  the  laborer. 
From  1879  to  1882  the  number  of  workmen  em])loyed  in  the 
machine  works  increased  by  29.3  per  cent. ,  from  1879  to  1883  by 
50.9  per  cent.,  and  from  1879  to  1884  by  52.9  per  cent.f 


*  U.  S.  Consular  Reports,  No.  51,  March,  1885. 

t  Consul  Warner  (CoiiBulur  Keports,  No.  42,  June,  1884,  p.  15)  adds  :    "  This  gives  an 


524  ECONOMIC  PHILOSOPHY. 

While  every  thing  has  been  done,  that  wise  and  economic  gov- 
ernment could  do,  to  enhance  the  growth  of  the  German  people  in 
wealth,  yet  in  their  competitions  with  other  nations  they  work 
against  many  relatively  greater  advantages  in  their  competitors, 
which  no  wisdom  could  overcome.  Their  country  is  not  naturally 
a  garden  in  fertility,  but  on  the  whole  its  soil  is  in  the  main  nig- 
gardly, and  much  of  it  sterile  or  inferior  as  well  as  mountainous. 
Their  area,  like  that  of  Prance  or  Austro-Hungary,  is  less  than  that 
of  Texas.  Their  people  have  strong  disuniting  and  disintegrating 
tendencies  which  have  torn  them  into  petty  fragmentary  states 
for  centuries,  and  rendered  great  political  courage,  and  an  iron 
will  on  the  part  of  William  and  Bismarck,  necessary  to  weld  their 
incongruous  parts  into  one  coherent  state.  Frequently,  until 
1866,  these  great  chiefs  found  their  plans  thwarted  by  a  Reichstag, 
or  Parliament,  determined  to  prevent  their  consummation,  and  as 
often  these  two  men  defied  the  action  of  the  Parliament  and  over- 
ruled its  non-concurrence.  In  1866  Parliament  jjassed  an  Act  of 
Indemnity  in  favor  of  the  government,  owing  to  the  conviction 
of  the  people  that  William  and  Bismarck,  in  maintaining  the 
high  efficiency  of  the  army,  had  been  wiser  than  the  representa- 
tives of  the  people.  Certainly,  had  Parliament  had  its  way,  the 
successes  of  the  German  state,  in  its  wars  with  Austria  and  France, 
would  have  been  less  brilliant  and  the  war  might  have  proved  dis- 
astrous, in  which  case  the  North  German  Confederation  would  still 
have  been  the  second-rate  power  which  it  was  on  the  accession 
of  William  to  the  crown  of  Prussia. 

Meanwhile,  however,  the  German  people  have  led  their  bril- 
liant career  only  through  universal  toil  and  sacrifice.  The  labor 
conditions  are  such  that  the  women  bear  actually  more  than  half 
the  burdens  of  the  several  occupations.  In  a  portion  of  the  Wur- 
temberg  Consulate,  containing  100,369  males  and  106,042  females, 
for  each  woman  who  supports  herself  in  civil,  church,  or  profes- 
sional services  (deemed  genteel),  there  are  five  and  a  fraction  who 

increase  of  the  single  wages  from  1879  to  1882,  14.6  per  cent.  ;  from  1879  to  1883,  15  per 
cent.,  and  from  1879  to  1884,  19  2  per  cent.  Since  1879,  the  number  of  men  employed  in 
the  iron  works  increased  by  22.3  per  cent.,  the  total  wages  by  41.4  per  cent.,  the  single 
wages  by  11.8  per  cent. 

"  In  comparison  to  those  figures  of  1879  there  has  also  been  an  extraordinary  large  in- 
crease of  labor  and  wasfes  in  the  iron  works.  Since  then  the  number  of  workmen  has 
increased  by  26.3  per  cent.,  the  total  wages  advanced  by  41.8  per  cent.,  and  the  single 
wages  by  11.8  per  cent.  ;  which,  too,  had  taken  place  at  a  period  when  many  works  in 
England — and  some  in  France  and  Belgium — had  to  suspend  operations  and  thousands 
of  workmen  were  thrown  out  of  employment,  with  considerable  reduction  of  wages." 


WOMA^^  LABOB.  625 

live  by  trade  and  commerce,  nine  and  a  fraction  by  housework, 
twenty-four  and  a  fraction  by  mining,  foundry  and  building 
Avork,  and  sixty-three  and  a  fraction  by  agriculture,  cattle  rais- 
ing, forestry,  and  fishing. 

Compariug  Germany  and  the  United  States,  the  standing  army 
of  men  withdrawn  from  industry  in  Germany,  as  soldiers,  is  but 
little  more  than  one  per  cent,  of  the  population,  while  in  America 
the  standing  army  of  women,  withdi-awn  from  productive  indus- 
try to  live  in  ladyhood,  is  about  twenty-five  per  cent,  of  the  pop- 
ulation, since  only  one  American  woman  in  ten  is  engaged  in  in- 
dustrial occupations. 

In  the  district  above  referred  to,  in  Germany,  160  women  work 
in  quarries,  71  make  knives,  1  makes  mathematical  instruments^ 
one  is  a  chemist,  44  make  explosives,  1907  are  paper  makers,  15 
are  tanners,  54  are  bookbinders  and  boxmakers,  2  are  coopers, 
355  are  turners,  753  sew,  3  are  notary's  clerks,  76  are  teachers,  67 
are  authors  and  writers,  and  16,109  make  their  personal  living  by 
toil  at  agriculture,  cattle  raising,  forestry,  hunting,  and  fishing. 

In  agricultural  pursuits,  to  32,714  male  toilers  there  are  39,218 
female  toilers.  The  women  plant,  sow,  and  prepare  the  soil. 
They  hold  the  plow,  which  is  generally  drawn  by  a  pair  of  cows, 
as  oxen  are  too  expensive  and  yield  too  little  return.  Many  of 
them  carry  the  manure  into  the  fields  in  baskets  strapped  to  their 
backs.  They  do  most  of  the  haying  and  harvesting,  and  thresh 
much  of  the  grain  with  the  old-fashioned  hand-flail.  They  go 
with  the  coal  carts,  and  shovel  the  coal  into  the  cellars,  while  the 
male  drives  and  rides.  They  draw  the  milk  into  town  in  a  hand- 
cart—a woman  and  a  dog  generally  making  the  team.*  Uncon- 
quered  by  these  difficulties,  the  German  peasant  works  with  the 
same  plodding  industry  and  assiduity  as  has  given  fame  to  the 
German  scholars,  musicians,  and  soldiers,  and  a  foremost  position 
among  nations  to  the  German  people. 

194.  Revenue  System  of  Kussia. — Russia  is  painted  in 
such  opposite  colors  by  o])posing  theorists,  and  stands  in  such 
strong  contrast  to  Western  Europe,  and  especially  to  America, 
that  it  will  be  difficult  to  present  a  picture  of  her  economic  system 
that  will  be  accepted  as  accurate  by  those  who  have  drawn  their 
views  of  Ru.ssia  from  unlike  sources  of  information.  In  her  gov- 
ernment and  social  economy,  Russia  combines  all  the  absolutism 
which  western  nations  i)ride  themselves  in  having  cast  off,  with 

♦  U,  S.  Consular  Reports.    "  Labor  in  Europe  "  Report,  p.  29, 


526  ECONOMIC  PHILOSOPHY. 

a  degree  of  socialism  and  communism  in  which  the  land  and 
laboi"  reformers  of  England  and  America  ought  to  be  able  to  see 
the  perfect  realization  of  all  to  which  their  theories  aspire.  Russia 
spans  one-sixth  of  the  land  surface  on  the  planet.  That  system  of 
communal  ownership  of  land,  which  has  given  place  to  individual 
owiiersliip  in  Western  Europe,  still  prevails  in  Russia.*  In  the 
Mir  or  rural  commune,  every  male  is,  from  birth,  an  owner  of  a 
share  in  the  land  of  his  commune.  This  share  is  inalienable  for 
debt,  crime,  or  even  absence,  for  though  he  go  to  a  distant  part  of 
the  empire,  or  into  trade,  the  Mir  assumes  that  he  will  return. 
His  land  is  tilled  on  his  account,  but  at  his  expense,  in  his  ab- 
sence, and  awaits  him  like  a  vacant  chair  at  the  home  fireside. 
The  government  of  the  Mir  is  like  that  of  a  family.  No  one  out- 
side is  expected  to  interfere.  It  is  democratic,  and  is  carried  on 
more  like  a  family  than  a  township,  and  more  by  talking  than  by 
voting.  It  has  one  nominal  chief  or  ruler,  but  every  one  has  his 
say.  In  the  towns  the  Artel  unites  the  artisans  into  a  commune, 
as  the  Mir  unites  the  agriculturists.  No  Russian  subject  is  the 
exclusive  owner  of  his  own  time  or  services.  They  belong  to  the 
commune.  On  the  other  hand,  no  one  is  turned  out  to  beg  or  die 
as  a  pauper,  with  no  refuge  but  the  workhouse  and  no  guardian 
but  the  state.  The  commune  employs  all  burghers  and  peasants, 
whether  farmers  or  artisans,  apportions  the  means  of  support  to 
all,  pays  their  debts  and  taxes,  punishes  their  delinquencies,  and 
usually  makes  their  contracts.  The  lauds  are  tilled  under  the 
three-field  system,  in  the  working  of  which  one-third  of  the  land 
is  always  fallow.  Above  the  burgher,  or  peasant  class,  the  mer- 
chants form  a  sort  of  stratum  or  grade.  Then  come  a  class  made 
up  of  functionaries,  officials,  artists,  and  clergy — the  professions. 
Above  these  are  the  nobility,  whose  rank  is  not  always  dignified 
by  wealth. 

While  the  form  of  government  is  extremely  autocratic,  the 
working  of  it  is  sometimes  the  reverse.  Thus,  in  effecting  the 
emancipation  of  the  serfs,  above  a  million  and  a  half  of  persons 
were  reached  and  advised  with,  in  person,  by  the  various  commit- 
tees, national,  provincial,  and  local,  in  the  interval  in  which  the 
matter  was  under  consideration,  viz.,  from  1856  to  1863.  As  the  re- 
sult of  this  wide  consultation  of  interests,  and  of  the  appointment 
of  arbitrators  innumerable,  to  arrange  the  allotments  of  land  to  the 
serfs,  and  other  details,  the  emancipation  of  23,000,000  serfs  was 


*  W.  Hepworth  Dixon,  "  Free  Russia,"  p.  154. 


TAXES  ON  LIQUOR.  52  i 

effected  without  loss  of  life,  or  expenditure  of  money,  such  as  civil 
■war  w^ould  have  produced.   Every  freed  serf  became  a  land-owner. 

One  of  the  most  potent  agencies,  in  paving  the  way  for  emanci- 
pation, had  been  the  employment  of  many  of  the  serfs  in  manu- 
factures, which  had  itself  been  due  to  the  persistent  protection  of 
Eussian  markets  to  Russian  producers,  which  has  been  maintained 
from  the  reign  of  Peter  the  Great  to  the  present  time. 

The  customs  duties  are  intended,  in  many  instances,  to  prohibit 
importation  rather  than  to  obtain  revenue.  The  area  of  Russia  is 
so  diversified,  and  the  wants  of  the  mass  of  the  people  so  simple, 
that  the  need  of  heavy  importations  is  not  felt.  Hence  out  of  a 
total  revenue  of  £93,076,518  in  1877,  only  £9,106,700  were  obtained 
by  duties  on  imports.  The  chief  sources  of  revenue  are  the  poll 
and  personal  taxes,  the  excise  on  liquors,  salt,  tobacco,  and  beet 
sugar,  customs  duties,  crown  revenues,  and  sales  of  lands.  Rus- 
sia had,  in  1879,  27,927  factories,  employing  685,245  hands,  being 
only  about  one-fourth  the  number  employed  in  manufactures  in 
the  United  States.  There  is  an  enormous  home  flax,  linen,  woolen, 
hemp,  and  cotton  spinning  industry,  which  does  not  appear  in 
these  statistics,  but  which  in  hemp,  linen,  flax,  and  woolen  is  esti- 
mated to  exceed  in  its  product  that  of  the  factories. 

Russia  is  as  remarkable  for  its  excessive  employment  of  children 
as  Germany  is  for  its  extensive  employment  of  women.  Over 
60,000  children  labor  in  the  Russian  factories.  The  singular  plea 
is  made  for  their  employment,  that  their  labor  is  worth  more  than 
that  of  adults,  as  the  latter  are  so  often  impaired  in  their  value  as 
workers  by  drink,  while  the  children  have  not  learned  the  use  of 
liquors.  One  of  the  lessons  taught  by  the  Russian  tax  system  is 
the  tendency  which  raising  a  revenue  by  taxes  on  liquors  has,  to 
create  a  sort  of  partnership  between  the  government  and  the  pro- 
ducers of  liquors.  The  Czar  Nicholas  in  particular,  but  his  succes- 
sors also,  on  several  occasions  have  declared  the  temperance  move- 
ment illegal,  and  the  temperance  unions  and  pledges  mischiev- 
ous, because  of  the  tendency,  which  discontinuance  in  the  use  of 
liquors  would  have,  to  diminish  the  revenue.  Those  who  are  most 
familiar  with  the  practical  workings  of  the  internal  revenue  sys- 
tem in  the  United  States,  perceive  a  similar  tendency  toward  a 
partnership  between  the  liquor  producing  interest  and  the  poli- 
ticians in  power,  though  it  manifests  itself  in  a  difl'ercnt  way. 
Here,  the  higher  the  tax  the  larger  the  capital  required  to  cany 
the  stocks,  and  the  greater  the  tendency  to  concentrate  the  busi- 
ness into  a  fpw  hands.     These  few  regard  the  internal  revenue  tax 


528  ECONOMIC  PniLO SOPHY. 

on  their  product,  as  the  fence  which  surrounds  their  monopoly, 
and  protects  their  pi-ofits.  At  the  same  time  they  obtain  such 
legislation  from  Congress  as  virtually  defers  the  payment  of  the 
tax,  in  many  cases,  until  sales  are  made.  For  these  important  ad- 
vantages they  can  well  afford  to  become  the  largest  contributors 
toward  the  cost  of  running  those  primary  conventions  in  which 
candidates  for  office  are  selected.  These  primary  conventions  for 
selecting  the  candidates  determine  the  personnel  of  the  govern- 
ment to  be  chosen,  as  the  same  class  of  men,  and  very  often  the 
same  men,  control  the  conventions  of  both  parties,  and  also  of 
those  minor  third  and  fourth  parties  formed  to  defeat  one  or  the 
other  of  the  two  main  parties  by  drawing  off  a  portion  of  its  usual 
voters.  In  this  manner  the  producers  of  liquors  have  their  polit- 
ical influence  and  power  greatly  magnified,  by  the  tax  which  is 
supposed  to  rest  on  them  as  a  heavy  burden,  a  sort  of  punishment 
for  their  calling,  and  a  necessary  aid  to  the  principles  of  those 
who  seek  to  suppress  wholly  the  sale  of  spii'ituous  liquors. 

The  practical  socialism,  which  underlies  the  Russian  system  of 
land  cultivation  and  manufacturing  industry,  extends  to  Russian 
imperial  finance.  The  impeinal  government,  for  eighty  years,  has 
been  in  a  close  pai'tnership  with  all  the  banking  and  money-lending 
agencies  of  the  emi^ire.  The  paper  money,  which  has  been  issued 
in  large  quantities  in  Russia,  since  1800,  has  been  issued  jointly  by 
the  government  and  the  banks,  and  when  redemption  or  retire- 
ment of  any  portion  of  the  paper  money  has  been  attempted,  the 
government  and  the  banks  have  co-operated  like  parts  of  one 
mechanism.  In  1840,  after  the  Russian  paper  money,  or  bills  of 
credit  of  the  empire,  had  been  at  a  discount  since  1815,  whereby 
three  and  a  half  roubles  in  pa';3r  would  only  purchase  one  rouble 
in  silver,  the  government,  by  joint  action  with  the  banks,  retired 
the  depreciated  currency  al  its  actual  value  and  issued  a  new  one 
at  par  with  silver,  at  the  same  time  permitting  all  private  con- 
tracts incurred  in  the  depreciated  currency  to  be  paid  in  that  cur- 
rency, and  making  only  new  contracts  payable  in  the  new 
currency.*  At  a  time  when  there  were  595,776,000  paper 
roubles  in  circulation,  their  volume  was  reduced,  by  their  re- 
tirement and  the  re-issue  in  their  stead  of  a  new  currency 
redeemable  on  demand  in  silver,  to  170,221,715  roubles.     Redemp- 

*  La  Revue  des  Deux  Mondes,  January  and  March,  1864  ;  articles  on  Finances  of 
Russia,  by  M.  L.  Wolowski.  Hunt's  Merchant's  Magazine,  vol.  30,  p.  735  ;  vol.  31,  p. 
226.  "  Russia,"  by  Karamsin,  Tooke  and  Segun,  edited  by  Kelley,  1855,  vol.  2,  p.  466. 
"  Modern  Russia,"  by  J.  Eckbardt,  p.  124. 


PRACTICAL  SOCIALISM.  529 

tion  in  silver,  on  the  new  paper  money  so  issued,  was  maintained 
until  the  outbreak  of  the  Crimean  war  in  1851,  when  further 
issues  of  paper  money  placed  the  precious  metals  again  at  a  pre- 
mium. An  effort  was  again  made,  in  1862-3,  to  redeem  the  paper 
money,  merely  by  borrowing  a  large  sum  in  coin  and  paying  it 
out  in  redemption  of  the  pape/.',  in  the  vain  hope  that  holders  of 
government  notes  would  have  their  confidence  in  the  notes  so  re- 
stored that  they  would  cease  calling  for  the  coin  before  the  gov- 
ernment's stock  of  coin  ran  out.  In  this  the  govei-nment  was 
mistaken,  and  the  scheme  failed.*  In  1865-70  Mr.  Horace  Gree- 
ley proposed,  in  the  Tribune^  for  the  United  States  government, 
upon  its  "greenback"  notes,  the  same  scheme  of  redemption  at. 
tempted  in  Russia  in  1863.  It  was  for  a  time  famous  for  the 
apothegm,  "The  road  to  resumption  is  to  resume." 

It  is  a  noteworthy  fact  that  while  Russia  is  spoken  of  by  En- 
glish and  German  critics  as  having  pas.sed  through  "national 
bankruptcy,"  by  this  act  of  "scaling  her  currency,"  it  reduced  a 
redundant  and  depreciated  paper  currency  to  one-fourth  its  pre- 
vious volume  without  occasioning  a  single  bankruptcy  among  the 
Russian  people,  whereas  the  policy  pursued  in  the  United  States 
in  1865  to  1879,  of  forcing  a  depreciated  currency  gradually  up  to 
par,  by  rapid  extinguishment  of  the  debt  of  which  it  formed  the 
most  useful  part,  involved  a  period  of  individual  stringency  from 
1878  to  1878  of  five  years'  duration,  and  extending  to  millions  of 
persons.  There  is,  therefore,  in  autocratic  Russia  a  closer  and 
more  socialistic  solidarity  between  government  and  people,  in  two 
aspects,  than  is  met  with  in  western  nations.  The  imperial  gov- 
ernment is  more  socialist  as  respects  the  banks  and  money.  The 
communal  system  is  more  socialist  as  respects  land  and  industry. 
The  various  ranks  of  society  are  within  themselves  more  socialis- 
tic, since  they  have  much  to  do  witli  distributing  the  taxes  wliich 
fall  upon  their  own  order.  Out  of  this  degree  of  socialistic  soli- 
darity grow  three  important  sources  of  exemption  from  taxation. 
The  Russians  have  not  been  taxed,  as  the  Americans  were,  in  the 
sum  of  ten  thousand  millions  of  dollars,  to  effect  emancipation, 
nor  in  long  periods  of  individual  bankruptcy,  to  eft'ect  resump- 
tion. They  escape,  by  their  communal  system,  the  heavy  taxation 
which  the  English  undergo  to  provide  for  paupers.  They  secure 
unity  and  nationality  between  races  the  most  diverse,  without 
civil  insurrection  or  intestine  war.     The  czar  is  trying  to  induce 

*  "  Condition  of  Nations,"  by  Kolb  and  Streeter;  article  on  Russia. 


530  ECONOMIC  PHILOSOPHY. 

the  people  to  take  on  themselves  the  burden  of  local  self-govern- 
ment, but  they  seem  reluctant  to  do  so.  The  empire  is  divided 
into  fifty  provinces,  each  of  which  is  invited  by  the  imperial  gov- 
ernment to  elect  a  zemstvo,  or  local  legislature,  to  provide  in  a " 
manner  somewhat  like  the  English  local  boards,  or  our  Ameri- 
can county  boards  of  supervisors,  for  matters  of  education,  roads, 
bridges,  and  all  local  interests.  The  local  experiment  seems  to 
have  no  vitality.  Members-elect  have  to  be  fined  to  secure  their 
attendance.  The  elements  of  the  government  which  are  vital 
are  the  commune,  the  empire,  the  army,  the  church,  and  the 
banks,  or  money-lenders.  The  nihilist  faction  does  not  re^jresent 
poverty,  like  the  anti-landlord  party  in  Ireland.  It  consists 
chiefly  of  gentlemen  and  educated  men,  who  hang  on  at  the 
univei'sities,  and  fail  to  find  an  active  career  for  themselves  in  the 
army  or  the  empire.  Men  whose  lives  are  spent  in  study,  with- 
out useful  action,  become  cynical  and  assail  society  and  the  ex- 
isting, with  equal  rancor,  whether  they  dwell  in  democratic  repub- 
lics or  under  the  black  eagles  of  Russian  czardom. 

195.  English  Colonies. — The  greater  the  number  of  tariffs 
and  revenue  systems  we  examine,  the  stronger  becomes  our  per- ' 
ception  of  their  average  uniformity.  Austria-Hungary,  Italy, 
Servia,  Roumania,  and  Spain  in  Europe,  and  on  the  western  con- 
tinent Mexico,  Brazil,  Chili,  Buenos  Ayres,  and  Colombia,  and 
the  various  colonies  of  England,  have  revenue  systems  essentially 
like  those  of  France,  Germany,  and  Russia.  All  mingle  direct 
w^ith  indirect  taxes  ;  all,  or  neai"ly  all,  bring  some  taxes  to  bear 
on  certain  salient  taxable  objects,  such  as  persons  (poll  or  capita- 
tion taxes)  lands  and  houses,  or  fixed  capital,  conveyances, 
descents  of  property,  imports  or  exports,  or  both,  salt,  liquors, 
wines,  opium,  tobacco,  and  beer. 

It  is  sometimes  alleged  that,  of  the  English  colonies  in  Australia, 
Victoria  and  all  the  others  are  protective,  but  New  South  Wales  is 
strongly  for  free  trade.  It  may  be  hazardous  to  impeach,  at  a 
distance,  a  local  opinion  of  this  sort,  and  it  is  certain  that  the 
Victorian  tai'itf  includes  duties  calculated  to  protect  certain 
branches  of  production,  such  as  glassware,  carriage  materials, 
upholstery  and  furniture,  musical  instruments,  wheat,  and  oats, 
grates,  stoves,  watches,  etc.,  which  are  free  of  duty  in  New  South 
Wales.  But  it  is  equally  true  that  New  South  Wales  protects  the 
manufacture  of  galvanized  iron,  while  Victoria  admits  it  free,  and 
protects  also  the  manufacture  of  paper.  Indeed,  most  of  the 
duties   levied  under  both   tariffs  are  protective   in  some  degree, 


THE  NA  TIOXAL  FOLIC Y.  531 

and  they  are  about  seventy  in  number  in  New  South  Wales  and 
about  three  hundred  and  thirty  in  Victoria.  All  the  larger  colo- 
nies of  England  except  India,  including  Australia,  New  Zealand, 
Canada,  and  Tasmania,  are  permitted  to,  and  do  in  fact  protect  their 
domestic  industries  against  such  of  England's  products  as  they 
think  may  subvert  their  own,  and  the  same  duties  are  paid,  in  them, 
on  imports  from  England  as  on  those  coming  from  other  countries. 

In  Canada,  the  protective  policy,  called  there  the  national 
policy,  was  adopted  by  the  election  of  the  government  of  Sir  John 
A.  Macdonald,  and  has  since  been  pursued.  It  has  been  coupled 
with  a  policy  of  costly  internal  improvements,  such  as  the  Cana- 
dian Pacific  Railroad,  and  of  important  public  works,  with  sub- 
ventions and  loans.  Doubtless  all  these  policies  will  stand  or 
fall  together,  though  the  principles  they  involve,  while  affiliated, 
are  not  identical.  The  cotton,  woolen,  iron  and  steel,  leather  and 
wooden- ware  manufactures  have,  since  1879,  sprung  forward  into 
greater  prominence  than  previously,  and  the  prevailing  party 
continues  to  hold  that  the  protective  policy  has  given  more  com. 
modities  for  consumption,  and  better  wages  to  labor. 

The  national  policy  in  Canada,  however,  seems  to  include  a 
sentiment  in  favor  of  aggregating  the  various  provinces  of  the 
Dominion  into  a  condition  of  stronger  defensive  unity  against 
the  United  States,  i.e.,  of  converting  Canada  into  a  military 
power  capable  of  resisting  the  United  States  in  the  event  of  war. 
So  many  influences,  tending  toward  expense,  may  make  the  drain 
upon  Canadian  resources  a  serious  set-off  to  the  advantages  ob- 
tained from  the  protective  policy,  which,  in  themselves,  are  clear 
and  strong,  but  can  not  stand  too  much  handicapping. 

The  peculiarity  which  is  most  striking,  in  the  position  of  Can- 
ada, is  that  her  juxtaposition  to  the  United  States  has  had  great 
influence  in  causing  England  to  withdraw  from  the  attempt  to 
govern  her  in  fact,  or  to  do  any  thing  in  the  smallest  degree  dis- 
agreeable to  the  Canadiaii  peoi)le.  The  possibility  of  the  mother 
country  pursuing  such  a  policy  is  tacitly  regarded,  by  the  states- 
men of  both  countries,  as  tending  to  provoke  Canada  to  annex- 
ation to  the  United  States.  In  this  way  the  United  States  be- 
comes tlie  passive,  but  potential,  author  of  Canadian  liberty.  As 
England  can  not,  with  dignity,  pursue  unlike  courses  toward  colo- 
nies so  much  alike,  in  every  other  respect  than  that  of  their  near- 
ness to  the  United  States,  as  are  the  Australasian  and  Cape  colo- 
nies, the  United  States  becomes  the  tacit  emancipator  of  the  entire 
chain  of  British  colonies. 


532  ECONOMIC  PHILOSOPHY. 

Until  1866,  the  great  republic  performed  this  good  office  for 
her  neighbor  involuntarily  and  without  return.  Canada  had 
near]  3^  as  free  access  to  all  American  markets  as  the  American 
people.  On  the  termination  of  the  i*eciprocity  treaty  of  1854 
with  Canada,  in  1866,  the  United  States,  having  a  large  national 
debt  to  provide  for,  raised  the  duties  on  Canadian  products  in 
accordance  with  her  own  interests.  In  lumber,  coal,  fish,  barley, 
potatoes,  wheat,  rye,  hops,  eggs,  live  stock,  horses,  meats,  etc., 
Canadians  were  not  likely  to  obtain  any  other  or  liigher  price  for 
their  product,  in  the  United  States,  after  a  duty  was  imposed,  than 
they  would  have  obtained  before  and  without  it.  All  these  pro- 
ducts had  a  standard  price,  gauged  according  to  the  ratio  of  the 
whole  supply  to  the  whole  demand,  and  since  all  these  were  arti- 
cles of  export  from  the  States,  the  import  from  Canada  was  no 
part  of  the  efficient  supply  whatever.  It  was  simply  a  supereroga- 
tion, like  an  additional  stream  of  water  brought  into  a  fountain 
which  is  already  running  over.  It  determined  neither  the  level 
nor  the  quantity.  So  these  Canadian  products  neither  added  to 
the  American  supply,  nor  lowered  the  American  price.  They  only 
pushed  out  the  quantity  of  the  American  commodity  which  they 
displaced,  into  an  export,  or  caused  a  cessation  in  its  production, 
at  a  somewhat  more  easterly  point  on  our  frontier  of  cultivation 
than  the  production  would  otherwise  have  reached,  one  or  the 
other. 

For  instance,  of  lumber  the  United  States,  as  a  "whole,  are  ex- 
porters, t.e.,  the  price  of  lumber  along  the  Atlantic  coast  is  such 
that  every  year  about  $28,000,000  worth  of  lumber  must  be  sent 
to  Europe  and  elsewhere.  This  indicates  an  average  American 
price,  on  the  seaboard,  lower  than  in  Europe.  But  Canada  also 
sends  about  the  same  quantity  of  lumber  abroad  as  the  United 
States,  thus  showing  that  the  two  countries  ai'e  ready  to  take  the 
Eui'opean  price  in  preference  to  their  home  price  for  about  $27,- 
000,000  worth  of  lumber,  which  to  the  Canadians  is  two-thirds  of 
their  market  and  to  the  Americans  is  one-fifteenth  or  one-twenti- 
eth of  their  market.  The  American  price  being  thus  determined 
by  their  own  supply,  if  Canadians  are  taxed  a  small  percentage 
of  the  value  of  the  lumber,  on  the  privilege  of  bringing  it  into  the 
American  market,  the  tax  becomes  an  addition  to  the  Canadian 
cost  of  production,  no  different,  in  its  incidence,  from  what  it 
would  be  if  it  wei-e  an  increase  in  cost  of  transporting  or  chopping 
it,  or  a  royalty  on  the  stump.  The  Canadian  producer,  if  he  pays 
it,  suffers  a  deduction  from  his  profits,  but  can  not  charge  it  over. 


TAXING  THE  CANADIANS.  '"^38 

As  a  deduction  from  his  profits,  it  may  have  one  or  several  of 
these  effects.  It  may  depress  the  price  of  lumber  in  Canada,  and 
will  in  those  portions  of  Canada  which  are  so  near  the  American 
market  as  to  leave  the  profit  of  selling  in  the  American  market, 
after  paying  the  duty,  greater  than  the  profit  of  sending  the  lum- 
ber across  the  ocean.  It  may  discourage  the  production  (bring- 
ing forward)  of  certain  portions  of  lumber,  from  Canada,  for  the 
American  market.  It  may  leave  certain  Canadian  producers 
selling  at  two  prices,  one  a  Canadian  price,  high  enough  to  reim- 
burse them  for  the  burden  they  are  under  in  paying  duties  on  the 
portion  they  sell  to  American  purchasers,  and  the  other  an 
American  price  low  enough,  so  that,  with  duty  added,  it  just 
reaches  the  average  American  i)rice. 

The  conditions  thus  traced  out,  as  to  lumber,  apply  with  equal 
force  to  the  importation  of  coal,  barley,  wheat,  hops,  eggs,  rye, 
and  most  farm  and  forest  products,  from  Canada  into  the  United 
States.  Out  of  all  these,  the  United  States  collects  a  revenue  of 
about  four  to  six  millions  of  dollars,  and  I  can  not  resist  the  con- 
viction that  this  revenue  can  not  be  charged  over,  by  those  who 
pay  it,  to  American  consumers  of  these  products.  It  seems  to  be 
a  tax  levied  by  the  United  States  on  Canadian  industries,  and  is 
nearly  equal  in  amount  to  the  revenue  paid  by  Canadians  toward 
the  support  of  their  own  government. 

196.  China  and  Japan. — While  England  reluctantly  per- 
mits Canada  and  Australia  to  protect  their  manufactures  against 
her  own  competition  in  any  degree  they  think  proper,  she  vetoed 
in  1878  an  attempt  to  do  this  in  India,  and  holds  China  and 
Japan  resolutely  fast  under  treaty  obligations  which  were  forced 
upon  them  by  war,  and  which  are  much  lower  and  less  protective 
to  both  those  countries  than  their  governments,  if  relieved  of  all 
terror  of  military  coercion,  would  be  glad  to  enact.*  England, 
that  dare  not  lay  a  tax,  for  her  own  benefit,  in  Canada  or  Australia, 
or  ])lant  a  gun  or  land  a  regiment  to  prevent  either  of  those  colo- 
nies from  shutting  out  her  manufactures  by  protective  or  prohib- 
itory tariffs,  though  they  are  called  subject  provinces,  has  no  hes- 
itation in  dictating  to  the  populous  and  so-called  independent  em- 
pires of  China  and  Japan  wliat  imports  they  shall  admit,  and  at 
what  rate  of  duty,  and  in  forcing  China  by  war  to  admit  as  an 

*  Richard  Cobden,  speaking  in  Parliament  on  February  26, 1857  (see  Speeches  of  Cob- 
den,  by  Bright,  p.  38a,  "  China  War  "),  said  :  "  I  only  wish  that  \vc  had  not  five  ports, 
but  one  port,  in  France,  Austria,  or  Russia,  where  we  sliould  have  the  suuie  low  tariff 
aa  weuow  have  in  China." 


534  ECONOMIC  PHILOSOPHY. 

import  the  detested  opium  of  India,  which  the  Chinese  govern- 
ment sought  to  exclude. 

Every  other  feature  of  the  Chinese  Empire  has  heen  the  sub- 
ject of  interested  inaccuracy  and  mercenary  misrepresentation, 
except  the  fact  which,  to  an  aggressive  foe,  is  fundamental,  that 
its  people  are  incapable  of  opposing  to  foreign  invasion  a  military 
resistance  proportionate  to  their  numbers.  In  1839  to  1840  Great 
Britain  declared  war  upon  China,  because  of  the  carrying  out,  by 
the  Chinese,  of  an  agreement  for  the  destruction  of  all  the  opium 
held  by  British  merchants  in  China,  which  treaty  had  been 
solemnly  proposed  and  made  by  Great  Britain's  own  representa- 
tive or  superintendent  of  trade.  Captain  Elliott.* 

The  world  has  been  made  currently  to  believe  that  the  English 
rendered  a  public  service  to  mankind  "in  opening  the  Chinese 
ports "  in  1840,  to  commerce,  thus  overcoming  an  anterior  per- 
petually exclusive  policy,  which  had  been  native  and  national  on 
the  part  of  the  Chinese  from  time  immemorial.  In  fact,  the 
policy  of  exclusion  had  been  recently  adopted  by  the  Chinese 
only  as  a  police  regulation  to  prevent  the  introduction  of  opium, 


*  The  story  of  this  infamy  is  thus  briefly  told  by  the  "  Encyclopedia  Britannica,"  Art. 
China  :  "  The  chief  cause  of  complaint  adduced  by  the  mandarins  was  the  introduc- 
tion of  opium  by  the  merchants,  and  for  years  they  attempted  by  every  means  iu  their 
power,  by  stopping  all  foreign  trade,  bv  demands  for  the  prohibition  of  the  traffic  in 
the  drug,  and  by  vigilant  preventive  measures  to  put  a  stop  to  its  importation.  At 
length  Captain  Elliott,  the  superintendent  of  trade,  in  1839,  agreed  that  all  the  opium  in 
the  hands  of  Englishmen  should  be  given  up  to  the  native  authorities,  and  he  exacted  a 
pledge  from  the  merchants  that  they  would  no  longer  deal  in  the  drug.  On  April  3, 
20,283  chests  of  opium  were  handed  over  to  the  mandarins  and  were  by  them  destroyed 
—a  sufficient  proof  that  they  were  in  earnest  in  their  endeavors  to  suppress  the  traffic- 
This  demand  of  Commissioner  Lin  was  considered  by  the  English  government  to 
amount  to  a  casus  belli,  and  in  1840  war  was  declared.  In  the  same  year  the  fleet  cap- 
tured Chuson,  and  in  the  following  year  the  Bogue  forts  fell,  in  consequence  of  which 
operations  the  Chinese  agreed  to  cede  Hong  Kong  to  the  victors  and  to  pay  an  indem- 
nity of  $(3,000,000.  As  soon  as  this  news  reached  Pekin,  Ke  Shen,  who  had  suc- 
ceeded Commissioner  Lin,  was  dismissed  from  his  post  and  degraded,  and  Yi  Shon. 
another  Tatar,  was  appointed  in  his  room.  But  before  the  new  commissioner  reached 
his  post,  Canton  had  fallen  into  the  hands  of  Sir  Hugh  Gough,  and  shortly  afterward 
Amoy,  Ningpo,  Tinghai  in  Chusan  Chapoo,  Sh  inghai,  and  Chin  Keang  Foo  shared  the 
same  fate,  and  a  like  evil  would  have  happened  to  Nanking  had  not  the  imperial  gov- 
ernment, dreading  the  loss  of  the  "  Southern  Capital,"  proposed  terms  of  peace.  After 
much  discussion.  Sir  Henry  Pottinger,  who  had  succeeded  Captain  Elliott,  concluded,  in 
1842,  a  treaty  with  the  imperial  commissioners  by  which  the  four  additional  ports  of 
Amoy,  Fuh  Chow  Foo,  Ningpo,  and  Shanghai,  were  declared  open  to  foreign  trade  and 
an  indemnity  of  $21,000,000  was  to  be  paid  to  the  English." 

In  1858  to  1870  another  war  for  indemnity  was  begun  by  the  English,  in  which  the 
French  assisted,  and  the  allied  forces,  under  Lord  Elgin  and  Sir  Hope  Grant,  marched  to 
Pekin  and  obtained  a  "  war  indemnity  "  of  8,000,000  taels. 


CHINA  SEEKING  PROTECTION.  535 

and  because  such  had  been  the  violation  of  their  pledges  on  the 
pai't  of  the  English,  that  it  had  been  found  impossible  to  shut  out 
opium  without  prohibitmg  foreign  commerce  altogether.  Thus 
the  English  are  able  to  paint,  as  barbarism,  a  desire  for  exclusion 
which  they  themselves  produce  ;  to  herald  as  a  boon  to  civiliza- 
tion, the  opening  of  Chinese  ports  to  opium  alone,  since  apart 
from  the  opium  evil  there  had  been  no  desire  to  close  them  ;  to 
exact  a  money  indemnity  for  the  cost  of  killing  off  the  Chinese, 
for  the  crime  of  assuming  that  a  treaty  of  cessation  of  the  opium 
traffic,  authorizing  the  destruction  of  opium,  which  had  been 
solemnly  ratified  by  Great  Britain  herself,  entitled  China  to  the 
rights  it  guaranteed,  and  meant  what  it  said;  and  finally,  to  brand 
as  a  nation  of  liars,  a  race  toward  whom  the  British  kingdom 
has  never  put  itself  on  record  except  by  acts  of  monumental  per- 
fidy. 

In  1860  the  Hon.  Anson  Burlingame  was  appointed  by  the 
United  States  as  minister  to  Cbina,  and  continued  for  years  to 
perform  his  functions  toward  that  government  in  a  manner  that 
won  for  him  the  marked  trust  and  affection  of  the  Chinese  gov- 
ernment. When  the  period  for  his  return  to  the  United  States 
arrived,  the  Chinese  government  requested  him  to  accept  the 
post  of  Minister  Plenipotentiary  for  that  government  to  all  the 
western  powers,  which  he  did.  In  this,  and  antecedent,  and  many 
subsequent  acts  on  the  part  of  the  Chmese  government,  it  has 
manifested  a  strong  desire  to  bring  itself  into  closer  relations 
with  a  government  with  which  friendship  would  not  mean  sub- 
jugation. 

The  early  death  of  Mr.  Burlingame  cut  short  the  hopes  which 
the  Chinese  government,  or  nation,  may  have  based  on  his  talents 
and  energy,  of  being  permitted  to  stand  toward  western  treaty- 
making  powers  as  an  equal.  To  their  simple  minds  it  was  a  mys- 
tery that  the  act  of  a  British  envoy  and  agent  authorizing  a 
destruction  of  opium,  and  consenting  to  the  suppression  of  a  bane- 
ful traffic,  should  be  a  cause  of  war  on  the  part  of  his  own  govern- 
ment against  the  government  which  assumed  that  a  British  bar- 
gain meant  what  it  said.  The  well-known  purpose  of  the  Chi- 
nese government,  in  employing  Mr.  Burlingame  upon  his  diplo- 
matic mission,  was  not  so  much  to  obtain  new  treaties,  as  to  make 
it  possible  that  treaties  of  any  kind,  in  behalf  of  China,  should 
have  the  weight  of  a  moral  obligation  on  western  nations.  A 
rectification  of  internalicjiial  ethics  might  bring  the  western  na- 
tions, or  at  least  the  United  States,  into  a  position  of  intimacy, 


536  ECONOMIC  PUILOSOPHT. 

confidence,  and  trust,  which,  however  valuable  it  might  prove  to 
be,  but  little  has  yet  been  done  to  deserve.  While  the  conquest 
of  China  by  England  is  no  longer  expected  to  follow  that  of 
India,*  the  entire  trade  of  China  is  held,  as  in  a  vise,  by  English 
merchants,  by  and  through  the  treaties  obtained  by  past  coercion, 
and  the  readiness  to  renew  that  coercion  when  necessaiy .  t  Amer- 
ica and  all  other  countries,  though  nominally  entitled  to  admit  their 
products  into  China  at  equal  rates  of  duty,  are  virtually  shut  out 
of  the  trade  with  China  through  the  indirect  effects  of  the  state 
of  armed  precedence  and  quasi-subjugation  effected  by  the  En- 
glish. The  way  to  stop  the  tendency  of  Chinamen  to  leave  China, 
and  flood  the  United  States,  is  to  restore  to  them  the  absolute 
autonomy  of  their  own  country.  If  Great  Britain  shall  be  per- 
mitted to  continue  her  present  degree  of  precedence  in  the  trade 
with  the  Chinese,  her  system  of  taxing  that  empire  through  the 
profits  of  enforced  trade  and  the  subversion  of  Chinese  manufac- 
tures needs  only  the  aid  of  railroads  and  banks  thi'oughout  the 
empire  to  make  it  as  complete  a  success  as  in  India.  In  that  case  it 
will  as  completely  destroy  the  Chinese  system  of  industry  as  it 
has  that  in  Hindostan.  An  enormous  exodus,  and  deportation  of 
the  Chinese,  would  follow,  to  the  American  contment,  as  well  as 
decimating  famines  and  pestilences  in  China  itself.  America  is 
the  chief  silver-pi'oducing  country  of  the  world,  China  the 
largest  silver-consuming  country.  In  America,  silver  bullion 
is  worth  only  one-twentieth  its  weight  in  gold.  In  China, 
it  is  worth  two-twentieths.  Yet  such  is  the  grip  of  England,  on 
the  trade  of  the  Chinese,  that  America  pays  for  her  imports  from 
China  in  the  deai-er  metal,  and  begs  her  small  quota  of  trade  as  a 
crumb  from  the  English  table. 

Most  western  misinformation  concerning  China  has  been  ob- 
tained, either  through  commercial  smugglers  intent  on  violating 
her  laws,  temporary  ambassadoi's  appointed  to  convert  this  clan- 
destine intrusion  into  direct  conquest,  or  Christian  missionaries 


*  Cobden,  in  "  Speech  on  Chinese  War,"  says  :  "  I  am  not  sure  that  America  would 
acquiesce  in  your  making  an  India  of  China.  Does  any  body  who  knows  any  thing  of 
China  believe  that  you  could  annex  it  ?  It  is  an  empire  of  300,000,000  people.  How 
are  you  to  govern  them  ? "  etc. 

+  In  the  speech  above  quoted  of  Cobden  on  the  China  war,  he  said:  "  There  are  a  great 
many  merchants  in  China  who  are  engaged  in  a  traffic  of  a  very  exceptional  character 
which  is  detrimental  not  merely  to  the  health  but  to  the  morals,  to  the  souls  and  bodies 
of  the  Chinese.  .  .  .  And  I  doubt  wheUier  it  is  always  for  their  benefit  as  merchants 
that  they  are  placed  in  a  position  which  enables  them  to  summon  to  their  aid  an  over- 
whelming force,  to  compel  the  authorities  to  yield  to  their  demands." 


CHIXESE  REVENUES.  53  < 

whose  pious  zeal  would  naturally  magnify  those  qualities  of  the 
Chinese  character  which  place  in  tlie  strongest  light  the  apparent 
need  of  missionary  efforts  for  their  conversion.  On  the  other 
hand  the  Cliinese  government,  never  officially  responsible  for 
any  information  communicated,  might  easily  leai'n  without  re- 
buke that  exaggerated  statements  of  the  numbers,  wealth,  or  even 
wickedness  of  the  people  had  been  gravely  published  by  outer  and 
"  barbarian  "  nations,  if  such  errors  seemed  likely  to  lessen  the 
danger  of  invasion,  or  the  probabilities  of  cheap  and  successful 
aggression. 

The  area  of  China  proper  is  about  equal  to  one-half  the  area  of 
Europe,  or  to  the  whole  of  the  central  valley  of  the  United  States 
from  the  summits  of  the  Alleghany  or  Appalachian  range,  to  the 
Rocky  Mountains,  and  from  the  Gulf  to  British  America.  It  has 
an  army  less  in  numbers  than  that  of  a  single  European  first-class 
power,  say  France,  Austria,  or  Germany,  viz.,  240,000  men  actu- 
ally in  service,  and  a  nominal  paper  force  of  800,000  men  not 
withdrawn  from  other  occupations.  The  entire  army  is  also  the 
police  force,  and  is  chiefly  employed  in  police  duty.  The  total 
imperial  revenue  is  stated  at  only  £25,175,000,  or  less  than  one- 
fourth  that  of  the  United  States,  Great  Britain,  or  France,  which 
was  estimated  in  1875  *  to  be  raised  in  the  following  propor- 
tion, viz. :         ' 

A  certain  tax  on  provisions £  6,333,333 

Land  tax 5,703,001 

Customs 4,753,001 

Salt 1 ,584,333 

Sale  of  titles  and  privileges , 2,256,666 

Miscellaneous 4,546,666 

£25,175,000 
These  figures  show  on  their  face,  by  the  unnatural  repetition  of 
3s  and  6s,  that  they  ai*e  arrived  at  by  taking  the  total,  by  guess, 
and  dividing  it  into  fractions  according  to  the  same  system  of 
guesswork.  This,  however,  is  typical  of  the  mode  in  which  all 
statistics  concerning  China  have  been  given  to  the  western 
world. 

The  estimated  revenue  and  army,  above  given,  would  indicate  a 
population  in  China,of  from  80,000,000  to  120,000,000  only,  or  say 
twice  that  of  France,  after  making  every  allowance  for  the  tim- 
idity of  the  people,  their  aversion  to  war,  and  the  higher  value  of 
money  than  prevails  in  western  nations. 

*  "  Condition  of  Nations,"  by  Kolb,  p.  869. 


5.i8  ECONOMIC  rillLOSOPlIY. 

Yet  the  populatiou  of  China  has  been  persistently  stated  by 
western  nations  at  from  430,000,000  to  5(50,000,000  of  people. 
But  no  census  has  ever  been  published  by  authority  of  the  Chinese 
government.  The  statistics  sometimes  spoken  of  as  censuses  are 
really  summaries  *  or  totals,  reported  by  foreigners  as  having 
been  obtained  by  them  from  some  distinguished  mandarin  or 
"  learned  pundit "  of  the  empire,  based  upon  some  alleged  census. 
Not  only  is  the  Chinese  government  responsible  for  none  of  these 
figures,  but  the  fact  that  any  mandarin  is  responsible  for  them 
rests  on  the  testimony  of  an  intermediate  information  and  trans- 
lation. Malte-Brun  denounced  as  a  fabrication  the  alleged  census 
for  1792,  furnished  to  Sir  G.  Staunton  by  the  Chief  Mandarin 
Chow-tin-jin,  and  which  made  the  population  of  China  proper 
307,467,200,  because  the  totals  for  the  provinces  were  all  in  round 
numbers  and  those  for  two  of  the  provinces  were  alike.  In  the 
chart  of  Mr.  Martin,  the  area  of  two  of  the  provinces  is  identical, 
and  their  populations  so  nearly  so  as  to  suggest  that  one  was 
copied  from  the  other.  J.  E.  McCuUoch  distrusts  altogether  the 
alleged  Chinese  censuses,  particularly  the  modern  increase  of  pop- 
ulation which  they  exhibit,  "because  China  had  been  long  set- 
tled and  civilized,  her  public  works  had  been  undertaken  and 
completed  at  a  remote  period,  and  the  arts  have  been  stationary 
for  ages  among  her  people,"  and  thinks  the  (alleged)  "rate  of 
increase  is  such  as  could  have  been  realized,  only  in  an  unoccu- 
pied and  very  fertile  country,  by  a  people  far  advanced  in  the 
arts,  and  that  it  is  all  but  absurd  to  suj^pose  that  it  should  be  real- 
ized in  an  old,  settled  country,  with  stationary  arts,  like  China." 
De  Guignes,  after  a  careful  and  acute  comparison  of  the  evi- 
dences of  population  in  China  with  those  in  Holland  and  France, 
says  :  "  All  these  reasons  clearly  demonstrate  that  the  population 
of  China  does  not  exceed  that  of  other  countries."  R.  M.  Martin, 
compiler  of  the  "Statesman's  Yearbook,"  says  that  the  popular 
estimate  of  425,000,000  souls  for  the  empire  and  405,000,000  for 
China  proper  "rests  upon  various  missionary  reports,  none  of 
which  can  lay  claim  to  be  more  than  vague  estimates." 

A  survey  of  the  censuses  themselves  compels  us  to  agree  with 
these  opinions  of  Malte-Brun,  McCulloch,  De  Guignes,  Martin,  and 
tlie  others  who  have  written  on  this  subject.  The  first  alleged 
census  dates  in  1393,  prior  to  the  Tartar  conquest,  when  China  was 


*  The  data  concerning  the  population  of  China  as  here  presented  were  first  published 
ill  an  article  by  the  writer  in  the  International  Review  for  1878. 


AN  EXAGGERATED  PEOPLE.  539 

under  its  native  emperors.     It  states    the  population  of  China 
proper  at  60,545,811,  or  one-half  more  than  the  present  population 
of  either  France,  Austria,  Germany,  Great  Britain,  or  the  United 
States.    Three  hundred  and  sixty  years  afterward,  in  1755,  when 
the  population  had  been  fully  brought  under  Tartar  gov^ernment, 
it  was  numbered  at  101,328,258,  being  an  increase  of  only  \  of 
one  per  cent,  per  annum,  wliich  would  be  very  fair.    But  thirty- 
nine  years  afterward,  in  1792,  the  census  furnished  by  the  man- 
darin to  Sir  G.  Staunton,  and    denounced  by    Malte-Brun,  as- 
signs a  population    of   307,467,200,  or   fifteen-fold  greater  than 
it  had  been  eighty  years  earlier,  which  would  be  an  increase  of 
about  five  per  cent,  per  annum,  or  twenty  times  the  rate  of 
increase  during  the  preceding  period,  and  several  times  greater 
than  has  been  known  even  in  the  United  States.     Meanwhile  the 
four  censuses  attributed  to  the  Tartar  dynasty  during  the  fifty 
3'ears  from  1662  to  1711,  in  which  it  had  not  complete  sway  over 
the  inhabitants  of  the  southern  and  western  provinces,  exhibit 
the  population  of  China  proper  at  21,068,600  in  1662,  25,368,209 
in  1668,   23,312,200  in  1710,   and  28,605,716  in  1711.     The  mis- 
sionaries, to  whom  we  are  indebted  for  the  larger  estimates  of  the 
Chinese  population,  account  for  these  barren  censuses  by  the 
theory — for  which  there  is  no  proof — that,  during  this  period,  the 
Tartar  emperors  counted  in  the  census  only  the  people  over  whom 
they  exercised  actual  sway ;  but,  on  the  contrary,  in  the  work  of 
John  Francis  Davis,  Esq.,  late  H.  B.  M.   chief  commissioner  in 
China,  entitled  "The  Chinese:  A  General  Description  of  China 
and  its  Inhabitants  "  (1840),  we  find  (page  351)  that  the  same  dis- 
crepancy is  attributed  to  the  fact  that  the  census  taken  in  1710 
was  taken  with  a  view  to  distribute  according  to  it  the  poll-tax 
and  military  service,  while  the  census  taken  in  1793  was  for  the 
avowed  object  of  apportioning  government  relief  during  periods 
of  drought,  inundation,  and  famine.    A  return  fifteen-fold  greater 
was  made,  when  alms  were  to  be  distributed  in  the  ratio  of  the 
population,  than  Avhen  a  poll-tax  was  to  be  assessed.     This  will 
not  seem  strange  to  Americans,  who  have  observed  that  in  those 
of  our  States  where  the  chief  burden  of  the  tax  rests  upon  lands 
in  proportion  to  their  value,  the  lands  are  assessed  at  only  one- 
third   (in  New  York)  to  one-fifth    (in  Illinois)  of  tlieir  value; 
whereas,  were  the  Government  to  propose  a  universal  distribution 
of  live-stock,  seeds,  and  greenbacks,  in  pro{)ortion  to  the  value  of 
the  lands   in   the   several  States,    the  lands   might  possibly  be 
I'eturned  at  from  three  to  five   times  their  value.     Mr.  Davis 


540  ECONOMIC  FHILOSOPHT. 

refers,  "  on  the  authority  of  a  Chinese  work  of  some  note,"  to  a 
census  said  to  have  been  taken  in  the  seventeenth  year  of  Kea- 
King  (1812),  making  the  population  360,279,897;  wliile  Dr.  Med- 
hurst,  a  missionary,  in  his  work  on  "China:  Its  State  and 
Prospects,"  quotes  Dr.  Morrison  as  having  obtamed,  in  1790, 
"exhibits  "of  the  population  as  then  amounting  to  143,125,225. 
Here  is  a  bald  discrepancy,  between  two  statements  only  twenty- 
two  years  apart,  of  217,154,672,  or  nearly  two-thirds.  Commis 
sioner  Davis  explains  the  process  of  census-taking  thus: 

"When  a  census  is  especially  called  for  by  the  emperor,  the 
local  officers  just  take  the  last  one  and  make  a  lumping  addition 
to  it,  in  order  to  please  his  Majesty  with  the  flattering  idea  of 
increase  and  prosperity.  Now,  although  it  is  true  that  the 
enormous  census  of  330,000,000  was  not  made  to  impose  on 
foreigners,  yet  it  might  have  been  made  by  this  proud  nation  to 
impose  on  themselves." 

If  we  pursue  these  estimates  in  detail,  they  resolve  themselves 
into  contradictions  as  palpable  as  those  which  pertain  to  them  in 
mass.  Wherever  actual  statistics  exist,  the  three  indices  of 
density  of  population  are:  (1)  The  presence  of  machine  power; 
(3)  the  abundance  and  rapidity  of  means  of  transportation ;  and 
(3)  the  large  ratio  of  the  area  of  cultivated  lands  to  uncultivated. 
The  first  two  are  entirely  absent  in  China.  No  horses  or  mules, 
camels  or  oxen,  and  very  few  asses  are  kept,  and  nearly  all 
transportation  by  land  is  on  the  backs  of  men.  This  confines 
population  to  the  river-banks,  leaving  the  plateaus  Avith  a  far 
sparser  i)opulation,  and  less  tillage,  than  in  Europe.  Belgium, 
with  a  population  of  four  hundred  and  thirty-six  persons  to  the 
square  mile,  brings  fifteen-seventeenths  of  her  land  into  cultiva- 
tion. New  Jersey,  having  only  one  hundred  and  eight  persons 
to  the  square  mile,  brings  half  her  soil  into  improved  lands,  and 
one-third  into  actual  tillage.  In  China,  on  the  contrary  (accord- 
ing to  the  statistical  cliart  prepared  by  Mr.  R.  Montgomery 
Martin,  her  Majesty's  treasurer  for  the  colonial,  consular,  and 
diplomatic  service  in  China,  and  member  of  tlie  Council  of  Hong 
Kong,  also  compiler  of  the  "Statesman's  Year-book,"  and  an 
experienced  and  careful  statistician),  all  these  figures  are  reversed, 
and  ordinary  principles  concerning  the  population  and  the  factors 
incident  to  their  support  are  set  at  nought.  Even  Mr.  S.  Wells 
Williams,  in  liis  work  on  "  The  Middle  Kingdom,"  while  disposed 
to  believe  the  Chinese  population  to  be  very  large,  discredits  as 
"  unparalleled  "  and  needing  further  proof  the  enormous  averages 


RATIO  OF  PEOPLE  TO  TILLAGE.  541 

of  850,  705,  and  671  inhabitants  to  the  square  mile  respectively 
for  Kiang-su,  Nghan-hwui,  and  Chih-Kiang — districts  where  two- 
thirds  of  the  lands  are  uncultivated.  The  return  indicates  3,200 
to  every  cultivated  square  mile  in  Nghan-hwui,  which  is  a  ratio 
eight  times  greater  than  in  Belgium.  A  chart  presented  by  Mr. 
Martin  contains  some  statistical  information,  from  which  many 
interesting  and  instructive  comparisons  may  be  obtained. 

By  this  it  appears  that  in  China  proper  but  one  acre  in  six  is 
cultivated — a  datum  which,  if  it  has  any  such  basis  in  fact  as 
these  elaborate  returns  seem  to  indicate,  wholly  overthrows  the 
dense  population  theory.  Doubtless,  if  alms  and  relief  were  dis- 
tributed in  tlie  ratio  of  cultivated  acres,  an  immense  area  of  cul- 
tivation would  be  returned.  Moreover,  the  army  which  results 
from  and  holds  in  subjection  this  alleged  population,  nine  times 
as  great  as  that  of  France,  is  barely  as  large  as  that  of  France  or 
Germany,  and  less  than  that  of  Russia !  It  is  not  a  little  singular, 
too, .  that  while  the  Chinese  Empire,  including  Mantchuria,  the 
Corea,  the  Mongol  Territoxy,  Thibet,  and  other  outlying  pro- 
vinces, has  an  area  of  4,098,823  square  miles,  of  which  only 
1,297,999  square  miles  belong  to  China  proper,  yet  we  find  the 
population  of  the  exterior  provinces  authoritatively  (?)  stated  at 
only  about  2,000,000.  Is  this  to  be  accounted  for  on  the  theory 
that  relief  is  never  sent  into  the  provinces  in  case  of  famine,  or 
do  the  tendencies  toward  population  suddenly  disappear  with  the 
boundaiy  line  of  the  Middle  Kingdom,  wherein  provinces  as 
mountainous  and  sterile  as  Switzerland  appear  to  be  populated  as 
densely  as  Illinois  ? 

Comparing  the  chart  with  European  populations,  we  find  that 
Belgium,  a  manufacturing  center,  making  use  of  vast  machine 
and  coal  power,  and  occupying  the  position  of  a  metropolitan 
province  toward  all  Europe,  and  having  a  population  of  436  per- 
sons to  a  square  mile,  is  exceeded  by  the  ratio  of  Clluh-le,  equal 
in  area  to  five  Belgiums,  Shang-tung,  equal  in  area  to  six  Bei- 
giums,  and  is  nearly  doubled  in  ratio  by  Kiang-su,  Nghan-hwui, 
and  Che-kiang,  equal  together  to  twelve  Belgiums;  and  yet  one 
of  these  provinces  is  set  down  as  "  sterile,"  and  another  of  them 
as  "  very  hilly  but  fertile."  Nearly  the  sole  machine  in  use,  in  all 
these  provinces  except,  the  loom,  is  that  by  which  the  priests  suc- 
ceed in  bringing  one  hundred  thousand  dilTercnt  printed  prayei's 
at  once  to  the  eye  of  Joss.  A  buffalo  hitched  to  a  rude  stick 
draws  the  plow,  and  the  rice  is  pounded  to  flour  in  a  mortar, 
as  in  the  age  of  prehistoric  man. 


542  ECONOMIC  FEILOSOPIIY. 

Here,  iiowever,  arises  an  economic  riddle  wliicli  it  would  be 
most  iiuercstiiig  to  clearly  solve.  Is  it  possible  tliat  the  substitu- 
tion of  human  labor,  both  for  animal  power  and  for  machine 
power,  facilitates  such  a  multiplication  of  the  human  species,  and 
such  an  economy  in  their  support,  as  causes  an  increase  in  the 
number  of  human  beings  proportionate  to  the  dejirivation  of  ani- 
mals and  machines  whose  places  are  thus  supplied  ?  In  short,  in 
estimating  Chinese  population,  for  economic  purposes,  must  we 
estimate  that  their  number  will  be  as  much  greater  than  that  of 
the  people  in  Westei*n  nations  which  turn  out  a  like  industrial  re- 
sult, as  the  number  of  people  in  the  Western  nations  would  be 
greater  than  it  is,  if  all  the  cattle,  hoi'ses,  and  live-stock  of  West- 
ei'n  nations,  and  all  their  machinery,  were  included  in  the  census 
according  to  their  "  man  power"?  In  dispensing  with  the  aid  of 
cattle,  horses,  mules,  and  machinery,  do  the  Chinese  make  room 
for  an  increase  in  their  relative  numbers  proportionate  to  the 
number,  and  labor  power,  and  power  to  consume  food  as  well,  of 
the  cattle,  horses,  mixles,  and  flesh  animals  with  whose  direct 
labor  they  dispense,  or  with  the  nervous  and  muscular  vigor  de- 
rived from  consuming  which,  as  food,  they  dispense  ?  In  thus 
taking  the  place  of  cattle,  horses,  mules,  and  machinei-y,  do  they 
impede  their  civilization  by  becoming,  to  a  like  extent,  virtually 
cattle,  horses,  mules,  and  machinery  ? 

Great  Britain  is  commonly  said  to  have  a  machine  power 
equal  to  that  of  1,000,000,000  human  beings— or  say,  healthy 
Chinamen.  If  there  were,  in  fact,  half  that  number  of  people  in 
China,  but  supplying  all  their  own  machine  and  labor  power, 
would  the  fact  cause  the  Chinese  Empire,  with  500,000,000  peo- 
]jle,  to  possess  only  half  the  productive  and  fighting  power  of  the 
British  Kingdom,  with  less  than  one-tenth  the  Chinese  popula- 
tion ?  Whether  from  this  cause  or  not,  this  seems  to  be  not  far 
from  the  net  result.  Not  only  is  the  productive  power,  but  ap- 
parently the  military  power,  the  inventive  power,  and  the  think- 
ing power  of  a  people  increased  in  the  ratio  of  its  stock  of 
machines  and  live-stock,  as  accurately  as  it  would  be  if  its  cattle 
and  engines  were  endowed  with  thinking  powers.  But  all  these 
appliances  are  to  be  considered  not  merely  as  producers,  but  as 
consumers  of  wealth.  They  add  to  the  national  force  and  to  the 
aggregate  earnings  of  the  nation,  but  they  are  heavy  consumers 
as  well.  The  Chinese,  by  dispensing  wdth  them,  lessen  their 
national  earnings,  as  indicated  by  rates  of  wages,  possibly  nine- 
tenths.     But  if  they  avoid  a  consumption  of  labor  and  wealth 


GAIN  AND  LOSS  OF  POWER.  543 

equal  to  eiglit-tenths,  they  still  lose  only  a  fifth,  in  aggregate 
means  of  consumption,  relatively  to  Western  nations,  and  mean- 
while they  render  possible  a  multiplication  of  human  life  corres- 
ponding, in  some  degree,  to  the  Western  multiplication  of 
animals  and  machines,  whose  places  they  take.  The  United 
States  maintained,  in  1880,  a  population  which,  if  reduced  to 
labor  power,  and  power  of  consumption,  so  as  to  measure  it 
fairly  against  the  Chinese,  would  assume  something  like  this 
form  : 

Human  population 51,500,000 

Horses 10,357,488 

Mules  and  asses 1,812,808 

Working  oxen 993,841 

Milch  cows 12,443,120 

Other  cattle 22,488,550 

Sheep 35,192,074 

Swine 47,681,700 

Machines  possessing  a  manual  or  man- 
power equal  to    800,000,000 

982,469,581 

Taking  the  unaided  labor  power  of  one  human  bemg  as  the 
unit  of  account,  it  would  appear  that,  even  if  there  were  in  China 
the  450,000,000  of  people  with  which  rumor  credits  China  proper, 
still  the  aggregate  labor  power,  productive  power,  earnings  and 
fighting  power,  all  of  which  become  one  power  in  the  last  analy- 
sis, which  we  may  call  power  in  exchange,  or  economic  power, 
would  be  less  than  half  that  of  the  United  States  with  its  present 
60,000,000  of  people.  The  latter,  through  its  possession  of  930,- 
000,000  units  of  labor  power,  not  embodied  in  men,  but  in  cattle 
sources  of  animal  food,  and  machinery,  would  have,  for  division 
among  its  60,000,000  people,  the  proceeds  of  the  earnings  of  this 
extra  930,000,000  of  units  of  labor  power,  from  the  profit  of 
which,  of  course,  would  have  to  be  first  deducted  the  cost  of 
maintaining  all  this  subordinate  labor  power.  This  would  bring, 
in  the  first  instance,  to  each  American,  as  wages,  tlie  earnings  of 
sixteen  units  of  labor  power,  or  of  sixteen  men  working,  like 
Chinese,  without  machinery.  If  the  machinery  cost  nothing  to 
maintain,  then  rates  of  human  wages  ought  to  be  sixteen  times 
higher  in  America  than  in  China,  because  it  would  be  sixteen 
times  more  productive.  But  if,  as  we  have  seen  in  our  chapters 
on  profits  and  capital,  the  tendency  of  all  the  appliances  we  use 
in  labor  is  toward  working  at  the  halves,  with  those  wlio  adopt 


544  ECONOMIC  PHILOSOPHY. 

them,  then  the  average  cost  of  constructing  and  maintaining 
these  aids  to  labor  in  America,  in  the  form  of  machinery  and 
animals,  would  be  half  their  gross  earnings.  This  would  leave 
the  average  wage  of  labor  in  America  eight  times  greater  than  in 
China,  and  this  result  corresponds  closely  to  the  fact.  Meanwhile, 
however,  the  Chinese  would  have  for  division  among  their  peo- 
ple in  the  form  of  food,  clothing,  and  shelter  for  liuman  beings, 
a  fund  equal  to  the  expenditure  we  sustain  in  maintaining  our 
domestic  animals,  and  in  building  and  maintaining  our  rail- 
ways and  machinery.  These  tend  toward  a  cost  identical  with 
the  average  returns  on  capital  actively  in  use  in  industry, 
which,  as  we  have  seen  in  the  same  chapters  on  profit  and  cap- 
ital, are  twice  the  average  rates  on  loans  : 

The  cattle  and  live  stock  of  the  United  States  are 

worth $  1,800,000,000 

The  railways  and  transportation  machinery    .     .  7,000,000,000 

The  manufacturing  machinery 3,000,000,000 


$11,800,000,000 


The  cost  of  maintaining  which  is  15  per  cent.  ($1,710,000,000)  per 
annum,  or  enough  at  five  cents  per  day  each  ($18  per  year,  which 
is  the  average  Chinese  cost  of  support)  to  maintain  94,000,000  of 
Chinese  laborers  in  China. 

While  the  machine  and  animal  power  of  the  United  States 
would  multiply  the  productive  power  of  the  American  people  by 
eight,  relatively  to  that  of  any  nation  which,  like  the  Chinese, 
should  wholly  dispense  with  them,  we  do  not  find  that  the  an- 
nual cost  of  this  animal  and  machine  power  in  the  United  States 
— which  would  be  saved  in  China  by  dispensing  with  it — would 
raise  a  fund  adequate  to  the  supj^ort  of  more  than  94,000,000  of 
Chinese.  While  the  absence  of  machine  and  animal  power  would 
reduce  the  average  wage  per  man  to  one-eighth  the  American 
wage,  it  would  only  amount  to  a  saving  which  would  provide 
for  94,000,000  additional  population,  out  of  a  total  production 
equalling  the  American  product.  Very  scanty  data  exist  for 
comparing  the  aggregate  value  of  Chinese  consumption  with  Amer- 
ican. Probably  it  does  not  exceed  one-half,  or  perhaps  two-thirds, 
in  the  total.*    But  assuming  it  to  be  equal  to  the  American,  the 

*  Adam  Smith,  writing  a  century  ago,  says  of  Chinese  industry  : 
"  China  has  been  long  one  of  the  richest,  that  is,  one  of  the  most  fertile,  best  culti- 
vated, most  industrious,  and  most  populous  countries  in  the  world.  It  seems,  however. 


CHINESE  HABITS.  545 

saviiig  of  cost  in  producing  it,  by  dispensing  with  machinery  and 
animals,  would  only  provide  subsistence  for  about  94,000,000  peo- 
ple, or  say  twice  the  population  of  the  United  States. 

We  may  now,  with  interest,  inquire  what  the  sum  total  of  the 
evidence  shows  to  be  the  actual  population  of  China.  For  if  the 
vast  population  sometimes  attributed  to  that  country  actually  ex- 
ists, it  can  not  be  conceded  without  admitting  that  the  Chinese 
system  of  industry  is  something  more  even  than  a  great  success. 
It  would  amount  to  a  success  far  exceeding  that  of  our  Westei'ii 
system  in  its  ability  to  maintain  numbers  in  comfort.  This,  too, 
could  not  be  admitted  without  at  least  raising  the  inference  that 
a  condition  of  society  which  is  without  machines  and  animal  la- 
bor might  find  a  larger  I'elative  place  for  human  labor.  This,  if 
true,  would  be  an  economic  fact  of  the  first  importance. 

England  and  Wales,  of  which  five-sixths  are  cultivated,  though 
aided  in  their  labor  by  a  machine  power  equal  to  the  manual 
labor  of  the  entire  population  of  the  globe,  and  including  the  me- 

to  have  been  long  stationary.  Marco  Polo,  who  visited  it  more  than  five  hundred  years 
ago,  describes  its  cultivation,  industry,  and  populousness,  almost  in  the  same  terms  in 
which  they  are  described  by  travelers  in  the  present  times.  It  had,  perhaps,  even  long 
before  his  time,  acquired  that  full  complement  of  riches  which  the  nature  of  its  law 
and  institutions  permits  it  to  acquire.  The  accounts  of  all  travelers,  inconsistent  in 
many  other  respects,  agree  in  the  low  wages  of  labor,  and  in  the  difficulty  which  a  la- 
borer finds  in  bringing  up  a  family  in  China.  If  by  digging  the  ground  a  whole  day  he 
can  get  what  will  purchase  a  fniall  quantity  of  rice  in  the  evening  he  is  contented.  The 
condition  of  artificers  is,  if  possible,  still  worse.  Instead  of  waiting  indolently  in  their 
work-houses  for  the  calls  of  their  customers,  as  in  Europe,  they  are  continually  run- 
ning about  the  streets  with  the  tools  of  their  respective  trades,  offering  their  service- 
and,  as  it  were,  begging  employment.  The  poverty  of  the  lower  ranks  of  people  in 
China  far  surpasses  that  of  the  most  beggarly  uatioi.s  in  Europe.  In  the  neighborhood 
of  Canton  many  hundreds,  it  is  commonly  said  many  thousand  families,  have  no  habi- 
tation on  the  land,  but  live  constantly  in  little  fishing  boats  upon  the  rivers  and  canals. 
The  subsistence  which  they  find  there  Is  so  scanty  that  they  are  eager  to  fish  up  the 
nastiest  garbage  thrown  overboard  from  any  European  ship.  Any  carrion,  the  carcass 
of  a  dear!  dog  or  cat,  for  example,  though  half  putrid  and  stinking,  is  as  welcome  to 
them  as  the  most  wholesome  food  to  the  people  of  other  countries.  Marriage  is  en- 
couraged in  China,  not  by  the  profitableness  of  children,  but  by  the  liberty  of  destroy, 
ing  them.  In  all  great  towns  several  are  every  night  exposed  in  the  street,  or  drowned 
like  puppies  in  the  water.  The  performance  of  this  horrid  office  is  even  said  to  be  the 
avowed  business  by  which  some  people  earn  their  subsistence." 

The  notion  that  the  Chinese  are  thus  unclean  as  to  animtil  food  is  rendered  absurd  by 
the  fact  that  they  arc  vegetarians  by  habit.  The  scavenger  work  referred  to  may  have 
had  reference  to  obtaining  materials  for  the  manufacture  of  glues  and  fertilizers,  in 
which  the  Chinese  carry  their  economics  to  a  point  not  known  among  Western  na- 
tions. It  would  be  of  great  value  to  the  harbor  of  New  York  if  there  were  Chinese 
scavengers  in  boats,  like  those  at  Canton,  ready  to  cleanse  the  harbor  of  materials 
which  are  now  left  to  slush  back  into  the  Bewers  and  send  disease  into  the  habitations 
even  of  the  wealthy. 


546  ECONOMIC  PHILOSOPHY. 

tropolis  of  the  world,  count  only  389  persons  to  the  square  mile, 
while  the  sterile  i^rovince  of  Shantung,  only  two-fifths  of  which 
are  cultivated,  counts  515.  The  "  sterile  and  hilly  "  province  of 
Kiang-se,  cultivating  only  one-sixth  of  its  land,  counts  a  popula- 
tion of  421  to  the  square  mile,  or  about  2, 500  to  each  cultivated 
square  mile,  while  France,  cultivating  93  per  cent,  of  all  her 
land,  attains  only  to  186  per  square  mile,  or  208  per  cultivated 
square  mile.  The  province  of  Yun-yan,  of  whose  lands  only 
one  forty-seventh  i^art  is  cultivated,  and  which  is  "  the  Switzer- 
land of  China,  very  wild  and  jungly,"  claims  a  population  of  51  to 
the  square  mile,  or  2,400  to  every  cultivated  square  mile,  while 
Illinois  has  a  population  of  only  45  to  the  square  mile,  and  157 
to  the  cultivated  square  mile.  Foo-keen,  only  one-fifteenth  of 
which  is  cultivated,  and  which  is  "very  movmtainous,  but  fertile 
where  tillable,"  has  a  population  of  236  to  the  square  mile,  while 
Connecticut,  cultivating  eight-fifteenths  of  her  land,  has  only 
113.15  ;  Massachusetts,  cultivating  one-third,  has  only  186.84  ; 
New  York,  cultivating  one-half,  has  only  93.25  ;  and  Rhode 
Island,  cultivating  two-sevenths,  has  only  166.43.  In  Wisconsin 
there  are  five  acres  of  cultivated  lands  per  capita  to  each  person 
supported  in  the  State,  while  in  the  very  wild  and  jungly  prov- 
ince of  Kwei-choo,  where  only  one  acre  in  eighty-four  is  culti- 
vated, there  are  ten  living  persons  to  every  acre  of  cultivated 
land,  making  a  cultivated  acre  in  a  Chinese  province,  where  there 
are  plenty  of  uncultivated  acres  to  spare,  support  fifty  times 
as  many  persons  as  in  Wisconsin.  To  credit  such  statistics  is 
needless. 

Travelers  through  vast  regions  of  the  hill  country  of  China, 
away  from  the  rivers,  describe  them  as  being  as  destitute  of  pop- 
ulation, of  roads,  of  hovels,  or  of  tilled  lands,  as  Tartary.  Owing 
to  an  utter  lack  of  transportation,  population  is  only  possible 
along  the  rivers,  and  even  there  it  presents  no  greater  appear- 
ance of  compactness  than  in  Europe  and  America,  save  as  a  larger 
population  live  in  boats.  Let  an  American  immigration  pene- 
trate into  China,  taking  with  it  steam-roads,  horned  cattle, 
plows,  reapers,  horses,  and  mules,  opening  up  the  deserted  pla- 
teaus to  settlement,  and  it  might  be  found  that  the  Chinese 
empire  could  triple  its  present  population  before  its  unused 
portions  would  come  into  that  fullness  of  cultivation  which  obtains 
in  Belgium. 

Those  who  have  defended  the  extravagant  reports  of  the  popu- 
lation of  China  have,  in  one  or  two  instances,  obtained  stories  con- 


CIUNA  AND  AMERICA.  547 

ceriiing  the  average  of  cultivation  which  would  fit  the  statistics 
of  population.  Thus  Di".  Medhurst,  in  his  work  above  quoted 
(1842),  declares  that  "  there  exists  a  report,  made  to  the  Emperor 
Keen-Lung  in  1745,  of  the  amount  of  land  then  under  cultiva- 
tion; according  to  wliich  it  appears  that,  reckoning  the  land  be- 
longing to  individuals,  with  that  in  possession  of  the  Tartar  stan- 
dards, the  military,  the  priests,  and  the  literary  class,  there  were 
at  that  time  595,598,221  English  acres  under  cultivation,  since 
which  period  a  new  estimate  has  given  640,579,381  English  acres 
as  the  total  extent  of  occupied  land  of  China."  The  fact  that 
Commissioner  Martin  five  years  afterward  had  never  heard  of 
such  a  report,  but  was  furnished  with  elaborate  figures  showing 
only  one-fourth  as  large  an  area  of  cultivated  lands,  compels 
distrust  of  Dr.  Medhurst's  alleged  report  to  Keen-Lung.  Esti- 
mating the  population  of  China,  at  the  same  number  per 
cultivated  acre  as  are  sustained  in  France,  it  would  amount  to 
44,997,600.  A  cultivated  acre  will  not  sustain  more  than  from 
two  to  three  times  as  many  persons  in  China  as  in  France. 

We  find  a  race  probably  reaching  an  aggregate  of  from  130,000,- 
000  to  150,000,000.  Their  lack  of  means  of  transportation  pre- 
vents them  from  developing  from  two-thirds  to  three-fourths  of  the 
acreage  of  tillable  land  in  theii-  own  country.  Hence  they  are 
slowly  dribbling  into  others.  Here  they  come  into  conjunction 
with  races  which  are  in  the  midst  of  an  epoch  of  evolutiou,  in 
the  matter  of  implements  of  ti^ansportation  and  of  agriculture, 
such  as  the  world  has  never  before  seen.  What  the  age  of  Peri- 
cles was  in  the  development  of  Greek  art,  or  that  of  Justinian  in 
the  perfection  of  Roman  jurisprudence,  that  is  our  own  age  in  the 
matter  of  transportation  and  the  handling  of  vast  agricultural 
areas.  The  American  people  have  in  the  greatest  abundance  what 
China  most  lacks— live-stock  and  agricultural  and  transportation 
machinery.  China,  so  far  as  her  home  trade  fails,  has  a 
surplus  of  what  we  most  lack— docile,  patient,  temperate,  skilful, 
obedient  laborers,  with  muscles  of  steel  and  hearts  of  women. 
Yet  the  exchange  of  these  needs  is  a  delicate  problem,  to  be  con- 
ducted with  tact  and  prudence  on  both  sides.  The  Chinese  gov- 
ernment is  not  wholly  unwise  in  fearing  the  disruption  of  indus- 
try, and  the  perils  of  starvation  to  millions  of  Chinamen,  which 
would  result  from  the  sudden  breaking  up  of  their  long-settled 
habits  and  channels  of  industry  by  any  premature  introduction 
of  railroads,  steamers,  stationary  machinery,  and  manufactures. 
These  would  underwork  the  Chinamen  themselves,  and  turn  tliem 


548  ECONOMIC  PlIILOSOPHY. 

out  by  millious  to  die  of  famine,  or  to  be  transported — as  has  been 
the  fate  of  the  Hindu  populations  under  like  causes.  Among  the 
leading  mandarins  and  diplomats,  who  accompanied  Burlin- 
game's  embassy  to  this  country  twenty  years  ago,  the  oj)inion  was 
freely  expressed,  that  when  American  machinery  and  agricultural 
implements  could  be  inti'oduced  into  China  through  the  services 
of  returned  American  Chinamen,  fully  educated  in  their  use,  so 
that  race  questions  and  international  issues  would  not  intervene 
to  complicate  the  inevitable  labor  troubles,  then  they  would  not 
only  be  tolerated  but  welcomed  by  the  Chinese  nation.  This  is 
sound  Chinese  statesmanship.  So  far  as  it  is  possible  for  the 
people  of  one  nation  to  have  duties  within  the  territory  of  an- 
other, a  national  duty  devolves  on  Americans  to  see  that  it  is  not 
broken  down  in  China,  as  its  needed  counterpart  has  been  in 
India,  by  Christian  bayonets  and  bullets  ! 

The  total  of  arrivals  of  Chinese  in  this  country,  during  thirty 
years,  have  not  exceeded  233,000  ;  the  official  figures  show  93,000 
of  these  to  have  gone  back  again  ;  and,  estimating  deaths  of 
twenty  in  every  thousand  i)er  annum,  only  105,000  were  left, 
when  that  form  of  national  exclusion  which  America  united  with 
England  in  denying  the  right  of  the  Chinese  government  to 
adopt  against  the  United  States,  was  adopted  by  the  United  States 
against  the  Chinese.  The  total  arrival  was  smaller  than  has 
often  come  from  Europe  within  two  months.  Arrivals  at  the  rate 
of  4,000  per  annum  became  particularly  terrible  in  the  eyes  of 
those  veiy  recent  accessions  to  our  growth,  by  a  European  immi- 
gration, which  had  freely  come  at  the  rate  of  600,000  per  year. 

At  present  we  send  expeditions,  innumerable,  to  explore  the 
fields  of  shifting  ice  that  girt  the  Polar  Circle,  whei-e  population 
is  impossible,  and  commerce  a  forgotten  dream,  while  we  prac- 
tice international  iniquity,  founded  on  economic  ignorance, 
toward  a  people  whose  mere  numbers  we  do  not  know,  within  a 
margin  of  four  times  the  whole  population  of  America  or  France. 
If  we  do  not  know  within  200,000,000  its  numbers,*  how  can  we 
know  its  economics  or  jiolitics?  In  ignorance  of  these,  so  far  from 
Western  nations  being  in  a  condition  to  assume  control  of  the 
destinies  of  the  Chinese  Empire,  they  have  failed  to  reach  a  stage 
in  which  it  could  be  possible  for  them  to  judge  wisely  of  their  own 
interests  relatively  to  this  great  people. 

*InBehmancl  Wagner's  Statistical  Atlas  for  ISSOa  rodiiction  equal  to  the  com- 
bined population  of  America  and  Italy  is  made  in  their  estimate  of  Chinese  population. 
—Behm  and  Wagner,  '•  Die  Bevolkerung  der  Erdc,"  VII. 


JUSTICE  THE  TRUEST  WISDOM.  549 

The  policy  of  at  least  postponing,  and  hindering,  the  deportation 
of  the  Chinese  to  this  country,  is  doubtless  final,  so  far  as  legisla- 
tion is  concerned,  but  to  render  it  effective,  it  is  essential  that  the 
Chinese  people  shall  be  permitted  to  prosper  in  their  industries 
at  home.  This  they  can  not  do,  if  any  foreign  nation,  and  espe- 
cially any  nation  using  machinery  in  manufactures  against  Chi- 
nese hand  labor,  is  to  be  permitted  to  force  the  products  of  its 
steam-driven  looms,  its  cottons,  silks,  and  woolen  cloths,  upon 
the  nation  among  whom  cotton,  silks,  and  the  loom  all  had 
their  origin.  The  Chinese  will  find  homes  elsewhere,  if  their 
manufactures  shall  be  subjected  to  any  such  immolation  as  over- 
whelmed the  weavers  of  India.  In  this  regard,  Burlingame  and 
his  embassy  clearly  saw  that  the  economic  interests  of  the  Chi- 
nese nation  and  of  England  were  at  war,  while  those  of  the  Chi- 
nese and  of  the  United  States  are  identical.  Should  Manchester 
looms  destroy  Chinese  manufactures,  America  would,  in  spite  of 
all  statutes,  be  beset  by  the  fleeing  hosts  of  refugees  from 
famine. 

The  Chinese  Empire  is  a  country  of  unique  economies,  yet  of 
immense  resources.  We  can  not,  if  we  would,  fairly  compute  its 
relative  loss  and  gain,  by  adhesion  to  manual  against  machine 
labor.  A  nation  which  can  transport  its  immense  products  of 
tea  and  silk,  of  metals,  grain,  food,  woods,  cloths,  and  furniture 
on  the  backs  of  men,  over  vast  ranges  of  mountains,  using  no 
other  means  of  ti-ansportation,  until  it  reaches  its  canals  and 
rivers,  and  can  do  all  tliis  because  it  regards  the  cost  of  feeding 
beasts  of  burden  as  too  expensive,  is  to  us  an  anomaly. 

But  it  must  not  be  inferred  to  be  an  absurdity.  The  Chinese 
invest  no  labor  in  means  of  transportation  by  steam,  whereby 
they  save  a  cost  relatively  to  the  American  people  of,  say,  seven 
billions  of  dollars,  or  one-seventh  of  all  the  values  now  existing 
in  our  republic.  They  invest  per  capita  probably  not  more  than 
one-fifth  as  nnich  labor  as  the  American  people  in  habitations— 
one-tenth  as  much  in  beasts  of  burden,  draught  animals,  and  in 
feeding  animals  kept  for  food,  and  perhaps  a  fourth  as  much  iii 
clothing,  a  twentieth  in  furniture,  a  tenth  in  improvements  on 
land.  This  leaves  them  more  time  relatively  for  amusement, 
education  and  labor,  devoted  purely  to  providing  themselves  with 
food  and  raiment.  Perhaps  one-half  of  what  Western  nations 
expend  time  and  effort  in  producing,  Chinese  labor  exempts  itself 
from  the  tax  of  producing  by  avoiding  the  use  of  it. 

One  of  the  ambassadors  accompanying  Burlingame  to  Amer- 


550  ECONOMIC  PHILOSOPHY. 

ica  was  asked  what  he  thought  of  the  American  industrial  sys- 
tem, compared  with  that  of  the  Chinese.  "It  is  very  fine  for 
you, "  he  repHed,  ' '  because  you  like  to  expend  vast  labor  on  things 
which  we  would  not  care  to  work  for.  It  would  not  do  for  us, 
for  we  do  not  care  to  work  so  hard.  You  have  very  big  houses 
which  you  do  not  need — a  great  many  animals  which  you  have 
to  feed  at  great  cost — much  machinery  and  carriages,  carts,  wag- 
ons, which  you  have  to  labor  early  and  late  to  keep  up,  for  they 
wear  out  fast.  We  don't  like  these  things.  We  like  our  small 
houses  better,  We  are  less  ambitious,  but  we  work  less,  rest 
moj'e  and  are  more  happy."* 

Though  the  Chinaman's  means  of  production  are  small,  he  saves 
the  great  fund  of  toil  which  we  expend  in  producing  means  of 
production  themselves,  as  distinguished  from  enjoyable  commod- 
ities. All  that  the  Chinaman  does,  though  it  may  be  done  at  a 
small  wage  and  a  slow  rate,  is  expended  directly  in  producing 
immediate  means  of  sustenance. 

Whether  the  population  of  China  be  the  four  or  five  hundred 
millions  frequently  assigned  to  it,  or  the  two  hundred  millions 
assigned  to  it  by  the  late  Minister  Seward,  or  the  three  hundred 
and  fifty  millions  reckoned  by  Behm  and  Wagner,  or  the  one 
hundred  and  twenty  millions  herein  supposed,  it  is  still  a  marvel 
of  success  in  an  industrial  point  of  view.  It  maintains  a  higher 
standard  of  material  comfort  than  exists  in  any  other  part  of  the 
world  except  inWestern  Europe  and  America,  and  a  more  equal  dif- 
fusion of  elementary  education  than  exists  anywhere  except  in  the 
United  States.  The  thousand  years  of  deepening  barbarism ,  which 
descended  upon  Europe  during  the  Middle  Ages,  did  not  work  its 
dark  revulsion  in  China.  The  libidinous  moral  chaos,  which  Gib- 
bon describes  as  attending  the  demoralization  and  downfall  of 
Rome,  left  China  still  content  with  the  homely  Franklin  ism  of 
Kong-fut-zi,  the  spiritism  of  La-ot-zi,  and  the  altruism  of  Saky-a- 
mun-i,  or  the  Buddha. 

When  the  Crusades  were  desolating  the  pathway  between  the 
homes  of  the  Christians  and  the  birth-place  of  their  religion,  when 
the  ensuing  Inquisition  and  religious  wars  were  throwing  their 
lurid  light  over  the  career  of  faith  in  the  West,  China  knew  only 
a  toleration  so  broad  that  the  same  person  might  indulge  in  the 
threefold  faith  of  being  a  Confucian  in  his  philosophy,  a  Taoist 
in  his  spiritualism,  and  a  Buddhist  in  his  creed. 

*  As  significant  of  the  more  restful  nature  of  the  Chinese  life,  the  last  work  on  the 
Coreais  entitled  "  The  Land  of  the  Morning  Rest." 


LET  THEM  GO  SLOW.  551 

The  retaliations  which  have  been  practiced,  in  exceptional 
instances,  upon  foreign  religious  houses  have  often,  if  not  always, 
grown  out  of  reasons  which,  rightly,  or  wrongly,  brought 
them  into  supposed  responsibility  for  confessed  foreign  interven- 
tions and  aggressions  of  a  peculiarly  perfidous  and  cruel  character. 
These  are  nearly  or  quite  the  only  deduction  to  be  made  from  a 
record  singulai'ly  mild,  humane,  peaceable,  and  sensible,  which 
the  Chinese  have  pursued  toward  the  surrounding  world. 

The  Chinese  system  of  economy,  after  all  due  allowance  is 
made  for  it,  is  still  wasteful  of  human  labor  I'elatively  to  one 
that  involves  a  larger  use  of  animal  labor  and  machinery.  Its 
saving  at  the  spigot,  like  that  of  all  inferior  modes  of  work,  is 
effected  by  a  spilling  at  the  bung. 

It  leaves  large  portions  of  the  hill  country  of  China  untilled ; 
indeed,  if  any  reliance  is  to  be  placed  on  the  statistics  concerning 
areas  of  cultivation  furnished  by  the  Chinese  mandarins,  it 
dooms  five-sixths  of  the  area  of  China  to  waste.  Certainly,  if  we 
could  introduce  American  cattle,  horses,  and  agricultural  imple- 
ments into  those  parts  of  China  which  are  now  excluded  from 
cultivation  by  their  distance  from  the  great  rivers  and  canals,  a 
gradual  but  more  effective  revolution  would  take  place  in 
Chinese  methods,  than  would  be  effected  by  the  introduction  of 
railroads  and  telegraphs.  It  is  probable  that  it  would  be 
a  like  mistake  to  press  the  Chinese  for  the  privilege  of  intro- 
ducing railways  before  we  had  introduced  beasts  of  burden,  as 
was  from  the  first  made,  in  our  treatment  of  our  native  savages, 
in  trying  to  convert  them  directly  from  a  savage  and  hunting 
race,  into  a  civilized  and  agricultural  one,  without  passing  them 
through  the  natural  intermediate  stage  of  herdsmen  and  shep- 
herds. The  Chinese  should  have  cattle,  horses,  and  agricultural 
implements,  for  at  least  a  century,  before  they  could  safely  or 
wisely  permit  the  building,  by  a  superior  race,  in  their  midst,  of 
railways  and  steam  manufactories.  Their  transition,  to  be  safe, 
must  be  gradual.  It  must  also  be  largely  the  work  of  the  Chinese 
themselves.  Not  until  the  Chinese  that  come  to  the  United 
States,  learn  and  practice  something  of  our  methods  of  farming, 
will  they  take  back  those  methods  to  their  own  country.  Not 
until  they  do  take  back  these  methods  to  China,  can  we  begin  to 
find,  in  China,  that  market  which  will  be  most  beneficial  to  both 
countries — viz.,  for  our  live  stock,  agricultural  im])lements,  and 
macliinery.  The  first  requisite  to  a  freer  and  friendlier  inter- 
course with  China  is  that  we  should  take  pains  to  learn  more  of  it. 


552  ECONOMIC  PHILOSOPHY. 

A  low  estimate  of  Chinese  honesty  is  common  among-  West- 
ern nations,  yet  it  is  a  curious  fact  that  when  the  latter  obtained 
tlieir  silk  fabrics  direct  from  China,  a  silk  di-ess  when  made  would 
stand  without  support,  and  M^ear  from  ten  to  thirty  years ;  indeed, 
would  descend  to  daughters  as  an  heirloom.  Now  that  Western 
integrity  has  had  a  chance  to  expend  its  exacting  energy  on  the 
manufacture  of  silks,  the  article  conmionly  sold  will  wear  but  a 
few  weeks  without  destruction,  and  silks  embodying  the  ancient 
qualities,  of  durability  and  purity,  are  not  obtainable.  Indeed,  a 
public  taste  has  set  in  which  requires  that  silks  should  be  rela- 
tiv^ely  worthless.  If  any  were  now  put  on  the  market  con- 
taining the  earlier  characteristics,  they  would  meet  with  no  sale. 

They  were  also  the  originators  of  porcelain  ware,  and  of  certain 
varieties  of  cotton  cloth,  in  whose  manufacture  they  are  without 
superiors,  except  as  machinery  is  superior  to  manual  power.  The 
interior  silk,  porcelain,  cotton  goods,  paper  and  tea  trades  of 
China,  are  so  much  more  important  and  valuable  than  their  export 
or  import  in  any  of  these  lines,  that  if  the  latter  were  entirely 
obliterated  or  prohibited,  prices  and  supply  would  hardly  be 
affected.  The  Chinese  are  so  eminent,  as  manufacturers,  that  they 
need  no  foreign  trade  whatever,  and  such  trade  is  in  no  material 
sense  a  boon  to  them.  Along  with  this  complete  versatility  in 
manufactures,  there  has  been  a  total  exemption  from  famines 
and  destitution,  except  as  local  emergencies  are  created  by  an 
overflow  of  rivers  or  like  calamity,  which  it  is  a  chief  function  of 
the  imperial  government  to  provide  against  and  alleviate.* 

*  Mitchell,  "Accompaniment  to  Map  of  the  World,"  etc.,  who  places  the  population 
of  China  at  200,000,000,  eays  :  "A  general  good-humor  and  courtesy  reign  in  their 
aspect  and  proceedings.  Flagrant  crimes,  and  open  violations  of  the  laws,  are  by  no 
means  common.  The  attachments  of  kindred  are  encouraged  and  cherished  with 
peculiar  force,  particularly  towards  parents  and  ancestry  in  general.  The  support  of 
the  aged  and  infirm  is  inculcated  as  a  sacred  duty,  which  appears  to  be  very  strictly 
fulfilled.  It  i.s  surely  a  phenomenon  in  national  economy  very  worthy  of  notice,  that, 
in  a  nation  so  immensely  multiplied,  and  so  straitened  for  food,  there  should  not  be 
such  a  thing  as  either  begging  or  pauperism.  The  wants  of  the  moat  destitute  are  re- 
lieved within  the  circle  of  their  family  and  kindred.  It  is  said  to  be  customary,  that  a 
who  e  family,  for  several  generations,  with  all  its  members,  married  and  unmarried, 
live  under  one  roof,  and  with  only  two  apartments,  one  for  sleeping,  and  the  other  for 
eating;  a  system,  the  pos.«ibility  of  maintaining  which  implies  a  great  degree  of 
tranquillity  and  harmony  of  temper.  Within  the  domestic  circle,  however,  and  that  of 
ceremonious  social  intercourse,  seems  to  terminate  all  that  is  amiable  in  the  Chinese 
disposition.  In  every  other  respect  they  show  no  interest  in  the  welfare  of  their  fellow- 
creatures,  nor  even  the  common  feelings  of  sympathy.  Repeated  instances  have  oc- 
curred of  Chinese  dropping  into  the  sea,  and  being  rescued  by  the  English,  while  their 
own  countrymen  did  not  take  the  least  notice,  or  make  a  single  efifort  to  save  them. 
Their  propensity  to  fraud  has  been  amply  noticed  by  travelers,  but  appears  to  have 


FORCINO  FREE  TRADE.  5o3 

The  state  of  pai'tial  subjugation  of  China  and  Japan,  by  the 
European  powers  and  the  United  States,  in  185-4  to  1858,  was  one 
of  tlie  results  of  the  strong  tide  of  opinion  in  favor  of  coercive  or 
forcible  free  trade,  which  culminated  in  the  repeal  of  the  Corn 
Laws  in  1846  and  the  passage  of  the  Robert  J.  Walker  tariff,  in  the 
United  States,  in  the  same  year.  The  platform  of  the  democratic 
pai-ty  in  the  United  States,  at  this  period,  declared  it  to  be  one  of 
the  duties  of  enlightened  nations  to  pursue  an  aggressive  policy, 
in  foi'cing  free  trade  on  nations  not  disposed  to  adopt  it.  The 
gentlemen  in  America,  who  were  most  determined  in  this  policy, 
were  the  same  who  were  also  determined  to  force  slave  labor  on 
communities  whose  defective  economic  education  did  not  enable 
them  to  perceive  its  advantages.  Mr.  Townsend  Harris,  pur- 
suant to  this  policy,  began  his  residence  in  Japan,  in  1856,  with 
the  fixed  purpose  of  wheedling  that  country  if  possible,  but 
forcing  it  if  necessary,  into  adopting  a  tariff  which  was  a  copy 
in  its  essential  structure  of  the  Walker  tariff  of  1846,  except 
that  in  the  free-trade  point  of  view  it  was  more  enlightened, 
since  the  duties  were  lower.  The  additional  enlightenment 
necessary  to  make  the  duties  lower  was  communicated,  first,  by 
an  imposing  and  intimidating  visit  from  Commodore  Perry  with 
an  American  fleet,  supplemented  in  1858  by  the  appearance  of  a 
combined  English  and  French  naval  force.  The  treaty  thus  ob- 
tained was  intended,  by  Mr.  Harris,  to  provide  for  a  duty  of  five 
per  cent,  only  on  effects  required  for  the  immediate  use  of  alien 
residents,  while  goods  intended  for  sale  should  pay  20  per  cent., 
intoxicating  liquors  35  per  cent.,  and  opium  should  be  prohibited. 
There  was  also  a  five  percent,  duty  on  exports.*  But  Lord  Elgin, 
in  negotiating  the  English  treaty  immediately  afterward,  caused 
cotton  and  woolen  stuffs  for  sale  to  be  added  to  the  five  per  cent, 
list.  In  1863  they  were  cajoled  into  abolishing  the  35  per 
cent,  duty  on  wines  and  spirits,  and  in  1864  they  strove  to  avert 
an  armed  invasion  by  transferring  a  large  number  of  Western 
manufactures  from  the  classification  of  20  per  cent,  to  that  of  five 
per  cent."  Switzerland,  in  the  same  year,  "  when  the  European 
fleets  wei'e  gathering  for  the  assault,  obtained  a  treaty  which 
formally  authorized  the  admission  of  almost  every  conceivable 
ware  at  the  lowest  rate."  Under  the  "most  favored  nation" 
clause,    this  enured  to   the   equal   advantage   of  all   the   other 

been  somewhat  exaggerated.  To  the  Hong  merchants  belongs  the  merit  of  liaving 
established  a  character  of  very  strict  honesty;  and  many  even  of  what  are  called 
'outside  merchants  '  appear  to  be  highly  respectable." 

*  For  particulars  of  the  course  of  Western  powers  toward  Japan,  see  E.  II.  House  on 
"  The  Martyrdom  of  an  Empire,"  in  Atlantic  Monthly,  and  on  "  The  TarifiE  in  Japan," 
New  Princeton  Review,  January,  188^. 


554  ECONOMIC  PHILOSOPHY. 

nations.  The  greatest  hardship  of  these  treaties  is  that,  by  a  con- 
struction which  would  not  for  a  moment  be  entertained  between 
western  nations,  they  have  now  for  twenty  years  been  held  irre- 
vocable. Western  armed  greed  has  denied  to  both  nations  an  in- 
herent part  of  their  sovereignty.  Thus  we  see  "free  trade  "  trans- 
formed into  that  phase  of  international  piracy,  which  first  forces 
revenue  laws  upon  semi-civilized  nations,  which  are  destructive 
both  of  their  revenues  and  of  their  manufactures,  and  then  holds 
at  the  cannon's  mouth  that  these  laws  are  irrevocable,  solely 
because  they  are  infamously  injurious  to  the  people  over  whom 
they  are  imposed. 

At  present,  while  the  public  expenditure  is  $80,000,000,  and  a 
tariff  framed  for  revenue  only  would  produce  $15,000,000,  and 
one  for  protection  $30,000,000,  the  tariff  for  subjugation,  imposed 
on  Japan  by  European  guns,  produces  only  $2,500,000  a  year. 
Even  with  these  low  rates  of  duty,  British  officials  openly  threat- 
en the  Japanese  with  cannonading,  if  they  attempt  to  suppress 
smuggling.  Thus,  while  in  protective  countries  free  traders 
object  to  protective  laws,  on  tbe  ground  that  they  encourage 
smuggling,  when,  as  in  Japan  and  China,  the  duties  are  reduced 
virtually  to  3  per  cent,  they  flourish  their  fists  under  the  nose  of 
the  officials  and  say  :  "Stop  our  smuggling  if  you  dare."  In 
1870  an  imposing  and  dignified  embassy  of  Japanese  notables 
visited  Europe  and  America  to  urge  the  restoration  of  their 
clear  national  rights.  Their  request  was  as  firmly  ignored 
as  if  orientals  had  no  rights  which  occidentals  could  be  bound 
to  respect.  The  taxes  of  Japan  are  collected  almost  wholly 
from  land.  Mr.  House,  long  and  amply  familiar  with  the  coun- 
try fx'om  thirteen  years  of  residence  in  it,  says:  "  Tbe  civil  war, 
which  swept  over  the  country  in  1868,  was  infinitely  less  devas- 
tating in  its  effects  upon  the  solid  prosperity  of  the  people,  than 
the  disruption  caused  by  the  commercial  invasion  of  the  few  pre- 
ceding yeai's.  Intercourse  with  strangers  had  largely  augmented 
the  national  expenditures,  and  at  the  same  time  had  drained  tlie 
sources  of  supply.  The  cultivators  of  cotton,  sugar,  and  otlier 
staples,  which  had  been  partially  extinguished  by  excessive  im- 
portation, were  incapable  of  meeting  the  demands  upon  them. 
In  several  provinces  the  levy  could  not  be  collected  by  any 
process.  Attempts  to  enfoi'ce  it  provoked  revolts.  .  .  .  The 
gradual  growth  of  external  commei'ce  wrought  nothing  but 
injury,  for  the  indulgence  in  foreign  novelties  cost  the  country 
many  millions  of  treasure,  which  were  never  reimbursed  by  an 
equivalent  influx  from  abroad. " 


CHAPTER    XIV. 

THE  FREE  TRADE  CRITICISM. 

197.  Methods  of  Arguinent  Concerning  Protection 
and  So-called  "  Free  Trade." — There  has  been  great  repug- 
nance, impatience  and  supercilious  contemptuousness,  on  the  part 
of  a  class  of  theorists,  to  the  doctrine  and  practice  of  protection 
to  industry,  by  tariifs,  bounties,  and  navigation  laws.  This  is  the 
more  singular,  as  such  protection  as  a  practice  constituted,  for  440 
years,  a  leading  feature  in  the  policy  of  Great  Britain,*  is  still  prom- 
inent in  her  laws  and  policy,  though  veiled  in  some  of  its  outward 
aspects,  and  pervades  more  or  less  the  policies  of  all  other 
nations  except  Turkey,  India,  and  (by  force)  China  and  Japan. 

The  Marquis  of  Salisbury  recently  remarked  in  debate:  "The 
whole  civilized  world  rejects  free  trade."  Protective  theories 
have  the  qualified  endorsement  of  Adam  Smithf  and  John  Stuart 

*  A  working-man,  P.C.Carroll,  of  Louisville,  Ky.,  writes  to  the  Bulletin  of  the  Ameri- 
can Iron  and  Steel  Association  the  following  well-condensed  summary  of  Englishpro- 
tective  legislation  prior  to  1846  : 

"  Knight's  History  of  England,  on  page  123,  vol.  2,  tells  us  that  in  the  third  year  of 
nenry  IV.  England  levied  a  prohibitory  tariff  on  the  importation  of  laces,  rib- 
bons, fringes,  twined  silk,  embroidered  silk,  bodkins,  scissors,  pins,  knives,  daggers, 
razors,  andirons,  gridirons,  hammers,  pincers,  flre-tongs,  ladles,  dripping-pans,  candle- 
sticks, playing  cards,  and  dice.  This  act  graced  the  statute  books  of  England  from  1402 
to  1842.  Lord  Stanhope  is  not  a  very  bad  authority  on  '  English  laws.'  This  is  what  he 
says,  in  the  34th  volume  of  the  English  Parliamentary  Debates,  page  178  :  'We  have 
now  977  acts  of  Parliament  protecting  our  woolen  industries  ;  964  acts  protecting  the 
fisheries  ;  460  acts  protecting  our  tobacco  manufacturers  ;  283  acts  protecting  our  cur- 
rency ;  and  440  acts  regulating  the  wages  of  labor.'  His  lordship  says  that  194  of 
those  acts  were  entirely  prohibitory.  John  Wade  ('Black  Book,  or  Corruption  Un- 
masked,' tells  us  that,  within  his  own  recollection,  the  English  Parliament  passed  200 
acts  protecting  the  manufacture  of  alcoholic  liquors;  54  acts  protecting  her  cotton  man- 
ufactures, and  22  acts  protecting  iron,  steel,  lead,  copper,  tin,  etc.,  were  scattered  over 
and  nearly  filled  1,000  volumes  of  Parliamentary  Reports." 

+  Adam  Smith  in  book  iv.,  chapter  ii.,  page  203,  of  the  "  Wealth  of  Nations,"  says  : 

"Though  there  seem,  however,  to  be  two  cases  in  which  it  will  generally  be  advanta- 
geous to  lay  some  burden  upon  foreign  for  the  encouragement  of  domestic  industry  : 

"  The  first  is  when  some  particular  sort  of  industry  is  necessary  for  the  defence  of  the 
country. 

"  The  second  case  is  when  some  tax  is  imposed  at  home  upon  the  produce  of  domestic 
industry. 


556  ECONOMIC  PHILOSOPHY. 

Mill,*  even  while  they  call  forth  the  petulance  of  both,  and  pro- 
voke the  ill  temper  of  Mill.  Jevons,  Cairnes,  Bonamy  Price, 
Fawcett,  and  Thorold  Rogers  all  lose  their  good  manners  on  no 

"  So  there  are  two  others  in  which  It  may  sometimes  be  matter  of  deliberation  : 

"  1.  When  some  foreign  nation  restrains,  by  high  duties  or  prohibitions,  the  importa- 
tion of  some  of  our  manufactures  into  their  country. 

"2.  When  particular  manufactures,  by  means  of  high  dulies  or  prohibitions  upon  all 
foreign  goods  which  can  come  into  competition  with  them,  have  been  so  far  extended 
as  to  employ  a  great  number  of  hands.  Were  those  high  duties  and  prohibitions  taken 
away  all  at  once,  cheaper  foreign  goods  of  the  same  kind  might  be  poured  so  fast  into 
the  home  market,  as  to  deprive  all  at  once  many  thousands  of  our  people  of  their  ordi- 
nary employment  and  means  of  subsistence." 

The  looseness  of  Dr.  Smith's  specification  will  appear  when  we  consider  that 
each  of  the  classes  he  specifies  includes  nearly  every  thing.  Woolen  goods  and  there- 
fore sheep,  leather  and  shoes  and  therefore  cattle  and  tanneries,  food  in  independent 
supply,  medicines,  ships,  printing  facilities,  railways,  telejraphs,  iron  and  steel  roads, 
bridges,  all  are  important  as  elements  in  national  defence.  As  to  the  second 
case,  taxes  are  always  imposed  at  home  on  the  products  of  domestic  industry.  The  gen- 
eral burden  of  domestic  taxation  has  to  be  borne  by  its  domestic  labor  (except  in  so 
far  as  it  may,  through  certain  forms  of  taxes  on  imports  or  exports,  collect  a  revenue 
from  foreign  producers  of  our  imports,  or  consumers  of  the  exports  of  those  countries 
which  tax  exports).  It  all  rests,  therefore,  with  these  exceptions,  on  domestic  pro- 
ducts. The  third  specification  is  also  universal,  since  at  all  times  foreign  nations 
restrain,  by  high  duties  on  importations,  certain  imports  from  our  country  into  theirs. 
England  restrains  by  a  500  per  cent,  duty  the  import  of  leaf  tobacco  from  the  United 
States,  and  prohibits,  essentially,  our  manufactured  tobacco.  Hence,  under  this  third 
specification,  we  are  to  at  least  deliberate  whether  we  should  not  protect  our  woolen 
manufacture  against  the  English. 

In  his  fourth  specification.  Dr.  Smith  does  not  point  out  the  chief  evil  result  of  pre- 
maturely removing  a  productive  duty,  viz.,  that  it  may  prevent  that  expansion  of  the 
dimensions  of  the  domestic  industry,  which  is  found  by  experience  to  be  often,  and  al- 
ways if  the  country  has  the  proper  natural  resources,  the  shortest  road  to  cheapness. 

*  John  Stuart  Mill,  volume  ii.,  page  538,  comes  very  near  giving  an  adequate  state- 
ment of  one  of  the  good  effects  of  protection ;  he  says  : 

"The  only  case  in  which,  on  mere  principles  of  political  economy,  protecting  duties 
can  be  defensible,  is  when  they  are  imposed  temporarily  (especially  in  a  young  and  ris- 
ing nation)  in  hopes  of  naturalizing  a  foreign  industry,  in  itself  perfectly  suitable  to  the 
circumstances  of  the  country.  The  superiority  of  one  country  over  another,  in  a  branch 
of  production,  often  arises  only  from  having  begun  it  sooner.  There  may  be  no  inher- 
ent advantage  on  one  part.or  disadvantage  on  the  other,  but  only  a  present  superiority  of 
acquired  skill  and  experience.  A  country  which  has  skill  and  experience  yet  to 
acquire,  may  in  other  respects  be  better  adapted  to  the  production  than  those 
which  were  earlier  in  the  field  ;  and  besides,  it  is  a  just  remark  of  Mr. 
Itae  that  nothing  has  a  greater  tendency  to  promote  improvements,  in  any 
branch  of  production,  than  its  trial  under  a  new  set  of  conditions.  But  it  cannot  be 
expected  that  individuals  should,  at  their  own  risk,  or,  rather,  to  their  certain  loss,  in- 
troduce a  new  manufacture  and  bear  the  burden  of  carrying  it  on,  until  the  producers 
have  been  educated  up  to  the  level  of  those  with  whom  the  processes  are  traditional. 
A  protecting  duty,  continued  for  a  reasonable  time,  will  sometimes  be  the  least  incon- 
venient mode  in  which  a  nation  can  tax  itself  for  the  support  of  such  an  experiment. 
But  the  protection  should  be  confined  to  cases,  in  which  there  is  good  ground  of  assur- 
ance that  the  industry  which  it  fosters  wiil,  after  a  time,  be  able  to  dispense  with  it  ;  nor 
should  the  domestic  producers  ever  be  allowed  to  expect  that  it  w^l  be  continued  to 


ARROGANCE  OF  FREE  TRADE  SECT.  557 

other  issue  but  this,  and,*  singularly  enough,  their  lack  of  all  pa- 
tience in  investigation,  candor  in  analysis,  and  even  honesty 
of  statement,  seems  proportionate  to  the  fervor  of  their  anger.  Of 
late  Henry  Sidgwick  of  Cambridge,  C.  S.  Devas  in  his  "Ground- 

them  beyond  the  time  necessary  for  a  fair  trial  of  wliat  tliey  are  capable  of  accomplish 
ing." 

Again  discussing  the  Englisah  navigation  laws,  he  thus  justifies  their  enactment  and 
places  the  absence  of  tlieir  further  need  on  tlie  protective  ground  that  English  ships 
and  sailors  can  now  navigate  as  cheaply  as  those  of  any  other  country,    lie  says  : 

"When  the  Easlish  navigation  laws  were  enacted,  the  Dutch,  from  their  maritime 
skill  and  their  low  rate  of  profit  at  home,  were  able  to  carry  for  other  nations,  England 
included,  at  cheaper  rates  than  those  nations  could  carry  for  themselves.wWich.  placed  all 
other  countries  at  a  great  disadvantage  in  obtaining  experienced  seamen  for  their  ships 
of  war.  The  navigation  laws,  by  which  this  deficiency  was  remedied,  and  at  the  same 
time  a  blow  struck  against  the  maritime  power  of  a  nation  with  which  England  was 
then  frequently  engaged  in  hostilities,  were  probably,  tliongh  economically  disadvan- 
tageous, politically  expedient.  But  English  ships  and  sailors  can  now  navigate  as 
cheaply  as  those  of  any  other  country,  maintaining  at  least  an  equal  competition  with 
the  other  maritime  nations,  even  in  their  own  trade.  The  ends  whit-fi  inay  once  have 
justified  navigation  laws  require  them  no  longer,  and  afford  no  reason  for  maintaining 
this  invidious  exception  to  the  general  rule  of  free  trade." 

♦As  specimens  of  perfervid  temper,  not  backed  by  the  least  pretence  of  basis  or  justi- 
fication, we  cite  the  following,  which  indicate  that  if  arrogance  and  effrontery  can  suc- 
cessfully continue  to  bulldoze  the  British  minority,  there  will  never  be  any  dissent  in 
England  from  views  in  which,  as  the  Marquis  of  Salisbury  says,  the  whole  civilized  world 
is  against  the  English. 

Thorold  Rogers  ("Six  Centuries  of  Work  and  Wages  in  England,"  p.  522)  says;  "From 
sheer  folly  or  from  interested  motives,  a  belief  that  better  profits  would  ensue  to  em- 
ployers, or  in  order  to  serve  party  ends  by  giving  a  false  interpretation  of  economical 
phenomena,  there  are  persons  who  are  foolish  or  wicked  enough  to  advocate  the  return 
to  a  protective  policy  in  England  under  the  name  of  fair  trade.  .  .  .  Such  shameless 
mendicancy  is  in  keeping  with  the  conditions  of  aristocratic  government,  which  has,  in 
the  history  of  English  finance  and  legislation,  put  the  burdens  of  state  on  the  many 
and  freed  the  property  of  the  few,  but  when  it  is  fully  understood,  it  will  not  serve  the 
men  who  advocate  it,  or  the  party  (Tory)  which  has  the  meanness  to  encourage  it." 

Bonamy  Price  ("Practical  Political  Economy"  p.  300)  says:  "  We  are  again  summoned 
not  by  the  brilliant  fallacies  of  some  clear  thinker,  but  by  the  renewed  vigor  and  pro- 
gress of  protection  in  the  practical  world  (p.  299— in  Germany,  in  France,  in  the  United 
States,  in  Canada,  in  most  of  the  British  colonies,  countries  full  of  men  of  high  intelli- 
gence and  ability) — to  reargue  the  first  principles  of  free  trade.  .  .  .  Pro  ection 
seems  to  be  indestructible— a  weed  that  no  intellectual  or  social  culture  cau  root  up— 
a  principle  that  is  part  of  human  nature  itself." 

On  p.  315  Price  says  :  "No  name  of  high  celebrity  is  put  forward  so  incessantly,  as 
the  shield  of  their  d  jctrine,  by  the  advocates  of  protection,  as  that  of  Mr.  Mill,  and  so 
great  is  the  support  which  it  gives  to  a  policy  so  profoundly  injurious  to  the  happiness 
of  mankind,  that  it  may  almost  be  questioned  wliether  Mr.  Mill  has  not  done  more  harm 
to  the  welfare  of  the  Iniman  race  by  the  countenance  he  has  given,  though  limited,  to 
protection,  tlian  he  has  done  good  by  all  his  other  writing  on  political  economy." 

Price  says  that  "  free  trade  is  tlie  one  subject  in  political  economy  wh'ch  is  suscepti- 
ble of  complete  demonstration."  Yet  in  his  40-page  chapter  he  substitutes  assumption 
for  proof,  and  begs  the  whole  question,  getting  out  of  the  supposed  argument  with- 
out stating  a  sing  e  economic  fact  with  deflniteness  enough  to  suggest  a  conclusion. 

Prof.  A.  L ,  Perry  says :  "  There  is  nothing  original  and  nothing  American  and  noth- 


658  ECONOMIC  PHILOSOPHY. 

■work  of  Economics,"  R.  S.  Moffat  in  his"  Economy  of  Consump- 
tion "  have  followed  in  the  wake  of  Judge  Byles,  Sir  Edward  Sul- 
livan and  the  few  othei's  who  have  kept  up  the  battle  for  the  protec- 
tive policy  on  English  soil.  Lord  Beaconsfield,  in  his  life  of  Lord 
George  Bentinck,  indicates  his  own  protectionist  convictions,  and 
there  is  no  reason  to  believe  he  ever  departed  from  this  convic- 
tion. 

The  besetting  sin  of  the  free-trade  school  of  writers  is,  that  they 
advance  the  puerilities  of  children,  with  the  pompousness  of  kings, 
and  the  unscrupulousness  of  rogues,  and  then  say  this  is  de- 
monstration, when  no  intelligent  mind  sees  in  it  the  quality  of 
conclusiveness,  and  often  it  lacks  all  semblance  of  knowledge,  or 
candor,  or  economic  expertness  in  thinking.  For  instance, 
Bonamy  Price,  in  1875,  writes  ("Practical  Pol.  Econ.,"  p.  314), 
"  In  what  state  would  now  be  the  colossal  manufactures  of  Eng- 
land if  the  duties  on  foreign  corn  had  kept  bread  dear  over  the 
w^hole  land  ?"  We  infer,  therefore,  that  Bonamy  Price  believes 
that  the  repeal  of  the  corn  laws  in  1846  caused  a  large  permanent 
reduction  in  the  prices  of  bread-stuffs.  On  the  contrary,  turning 
to  the  Encyclopaedia  Britannica  (Corn  Trade),  we  find  that  in  the 
seven  years  ending  Christmas,  1846,  the  prices  per  imperial  bushel 
were  : 

Wheat.  Barley.  Oats.  Total. 

7s.  O^d.  4s.  2s.  8|d.  13s.  M. 

The  average  gazette  prices  per  imperial  bushel  in  the  seven  years 
ending  1875  were : 

Wheat.  Barley.  Oats.  Total. 

6s.  ^d.  As.  lOd.  3s.  2\d.  14s.  7\d. 

Here  are  two  free-trade  authorities,  the  professor  aiid  the 
"  Encyclopaedia,"  the  professor  boldly  assuming  that  the  repeal 
of  the  corn  laws  made  bread  cheap,  and  therefore  built  up  the 
colossal  manufactures  of  England,  and  the  "  Encyclopeedia " 
trying  to  prove  that  the  withdrawal  of  protection  from  the  farmers 
benefited  them,  for  breadstuffs  sold  higher  under  free  trade  than 
ever!     The  " Encyclopeedia"  states  the  prices  correctly,  and  they 

ing  continental  in  the  petty  and  piddling  and  devilish  devicesof  ourprotection  system." 
(19th  ed.  p.  508.) 

Jevons  says  :"  Protectionistsoverlook  the  fact  (1)  that  thcobject  of  industry  is  to 
make  goods  abundant  and  cheap  ;  (2)  that  it  is  impossible  to  import  cheap  foreign  goods 
without  exporting  home-made  goods  of  some  sort  to  pay  for  them." 

It  is  difficult  to  conceive  how  a  sane  man  could  utter  these  words  of  Jevons  without 
Bbame. 


POMPOUS  DODGING.  559 

show  that  bread  was  not  permanently  cheapened.  So  that  which 
the  Oxford  professor  offers,  as  a  demonstration,  turns  out  to  be  a 
falsehood. 

Again  Bonamy  Price  says  (p.  320)  at  the  repeal  of  the  corn  laws 
"the  whole  agricultural  hierai'chy"  (with  what  candor  can  a 
minority,  that  is  outvoted  on  a  question,  be  called  a  "hierarchy," 
especially  when  it  consists  of  several  millions  of  farmers?)  "land- 
lord, farmer,  and  laborer,  believed  that  the  wheat  lands  of  England 
would  go  out  of  cultivation."  This  was  not  the  exact  charge,  so 
much  as  that  the  wheat  lands  of  Ireland  and  Scotland  would  go 
out  of  cultivation.  But  now  we  look  to  see  Price  show  that  the 
wheat  lands,  even  of  England,  did  not  go  out  of  cultivation. 
Does  he  do  so  ?  Not  at  all.  He  says :  ' '  Parliament  was  not  deterred 
by  this  alarm  ;  it  persevered  with  the  abolition  of  the  duties  on 
foreign  corn.  And  what  has  been  the  final  issue  ?  An  improve- 
ment in  the  efficiency  and  productiveness  of  agricultural  labor 
unparalleled  in  the  kingdom,  a  growth  of  wheat  per  acre  unknown 
to  former  ages,  a  rise  of  rent  for  the  landlord,  and  better  wages 
for  the  laborer  !  " 

Suppose  all  this  were  true,  does  it  refute  the  prophecy  that 
wheat  lands  would  go  out  of  cultivation  ?  It  has  no  bearing  on 
it.  It  does  not  appear  that  the  landlord,  farmer,  and  laborer  pre- 
dicted that  hogs,  cattle,  or  poultry  could  not  be  raised  at  a  profit, 
or  that  farming  of  all  kinds  would  be  destroyed.  They  only  pre- 
dicted that  wheat  lands  in  England  would  go  out  of  cultivation, 
i.e.,  that  enough  English  wheat  would  cease  to  be  cultivated,  and 
would  give  place  to  foreign  grown  wheat,  to  leave  the  aggregate 
supply  the  same  and  the  average  price  the  same.  This  was  a 
significant  prophecy,  for,  if  true,  it  exploded  the  whole  free  trade 
argument  at  two  points,  viz.,  at  the  point  where  it  claimed  that 
free  trade  would  cheapen  bread,  and  at  the  point  where  it  claimed 
that  it  would  not  send  wheat  out  of  cultivation.  This  proi^hecy 
Price  seeks  to  explode  as  false.  How  ?  Shades  of  the  logicians ! 
By  proving  that  the  English  went  to  raising  hogs  and  cows. 
Meanwhile  the  Encyclopaedia  Britannica  concedes  that  between 
1852  and  1867  there  was  a  net  decline  in  cultivation,  to  all  crops, 
over  all  gains,  in  the  fifteen  years,  of  447,000  acres  in  England, 
and  a  net  decline  in  tillage  of  wheat,  oats,  beans,  peas,  and  bare 
fallow  of  1,297,000  acres  in  England  alone,  while  in  Scotland  and 
Ireland  "  the  decline  was  more  marked,  tlie  production  in  wheat 
falling  oft"  one-half."  And  yet  an  economic  teacher,  who  tlius 
does  not  even  juggle  with  his  facts,  but  openly  mis-states  them. 


560  EC02\0MIC  rUlLOtiOPlIY. 

not  only  asks  us  to  regard  his  unscrupulous  errors  as  conclusive 
demonstration,  but  proceeds  to  dignify  us  as  "weeds"  if  we 
suggest  that  lie  is  not  even  bright. 

Turning  to  Mr.  Jevons,  we  would  be  justified  in  expecting,  from 
the  value  of  his  arguments  on  other  questions,  that  he  would 
handle  this  one  in  a  manner  that  would  do  him  credit.  Instead 
of  this  we  find  him  shutting  his  eyes  to  the  pith  of  the  protection 
argument,  and  in  order  that  it  may  be  possible  for  him  to  refute 
it,  he  states  it  in  a  manner  to  dx'op  its  entire  bottom  out  in  the 
statement.  Protectionists  do  not  claim  that  buying  a  commodity 
abroad  does  not  imply  the  employment  of  any  home  labor  what- 
ever. They  know  and  admit  that  it  implies  the  employment,  in 
this  country,  of  the  labor  and  capital  which  i^roduce  whatever 
domestic  product  is  given  in  exchange  for  the  imported  articles. 
What  they  claim  is,  that  the  making  of  the  article  sought,  in  this 
country,  employs,  as  compared  with  its  importation  from  abroad, 
two  domestic  capitals,  and  two  sets  of  domestic  laborers,  instead  of 
only  one, — viz.,  that  the  making  it  here  employs  both  the  capital 
and  labor  which  produce  the  article  (corn,  for  instance)  which  is 
given  in  exchange  for  the  thing  sought  (cloth  or  iron),  and  also 
the  capital  and  labor  which  produce  the  cloth  and  iron  themselves, 
whereas  the  importing  it  from  abroad  gives  employment  to  only 
one  domestic  capital  and  set  of  laborers,  while  the  capital  and 
labor  employed  in  producing  the  imported  iron  or  cloth  are  a  for- 
eign capital  and  foreign  set  of  laborers.  This  point  was  stated 
clearly  by  Adam  Smith,  in  defining  the  greater  profit  of  home 
over  foreign  trade.  Side  by  side  with  this,  is  the  claim  that 
the  production  at  home,  as  compared  with  the  importation,  in- 
volves two  domestic  consumptions  of  products  instead  of  one,  viz. , 
the  domestic  consumption  of  the  corn,  and  of  the  cloth  or  iron  for 
which  it  is  exchanged,  while  the  importation  of  the  cloth  or  iron 
involves  a  domestic  consumption  only  of  the  cloth  or  iron,  and  a 
foreign  consvmiption  of  the  corn.  Hence  domestic  production, 
as  compared  with  importation  of  foreign  goods,  involves  a  doubled 
consumption  and  a  doubled  production. 

Instead  of  meeting  this  point,  Mr.  Jevons  acts  as  if  he  thought 
he  had  met  it,  in  the  following  statement:  * 

"But,  it  may  be  objected,  what  is  to  become  of  workmen  at 
home,  if  all  our  supplies  be  got  from  another  country?  The  reply 
is  that  such  a  state  of  things  could  not  exist.  Foreigners  would 
never  think  of  sending  us  goods,  unless  we  paid  for  them  in  goods, 

*  "Primer  of  Pol.  Ecou.,"  p.  132. 


JEVONS  SOMETIMES  NODS.  561 

or  in  money.  Now  if  we  paid  in  goods,  woi'kmen  will,  of  course, 
be  needed  to  make  those  goods,  and  the  more  we  buy  from  abroad 
the  more  we  shall  need  of  home  produce  to  send  in  exchange. 
Thus  the  pui'chase  of  foreign  goods  encourages  home  manufac- 
tures in  the  best  possible  way,  because  it  encourages  just  those 
branches  of  industi-y  for  which  the  country  is  most  suited,  and  by 
which  wealth  is  most  abundantly  ci'eated." 

Here  the  point  that  domestic  production  employs  two  capitals 
and  sets  of  laborers,  while  importation  from  abroad  employs  only 
one,  is  met  by  saying,  "  No,  you  ai'e  mistaken,  for  I  have  clearly 
pointed  out  to  you,  that  importation  does  employ  one  domestic 
capital  and  set  of  laborers."  And  then  protectionists  are  gravely 
told  that  their  views  are  persistent  weeds,  which  no  intellectual 
culture  can  overcome  ! 

198.  Sidgwick  on  Protection  to  Native  Industry. — 
Nearly  all  the  writings  of  English  economists  treat  the  protection 
question  in  a  manner  which  is  slovenly,  when  brought  into  con- 
trast with  the  elaborate  thoroughness,  and  economic  acuteness, 
with  which  it  has  been  treated  in  America  by  practical  statesmen, 
and  by  a  somewhat  numerous  class  of  writers.  Of  late,  however, 
a  school  of  writers  is  arising  which  promises  more  fairness. 
Prof.  Henry  Sidgwick  of  Cambridge  *  holds  that  from  the  point 
of  view  of  abstract  theory,  protection  may,  under  certain  prob- 
able circumstances,  "yield  a  direct  economic  gain  to  the  protect- 
ing country,  but  that  it  is  difficult  to  secure  in  any  government 
sufficient  wisdom,  strength,  and  singleness  of  aim  to  introduce 
protection,  only  so  far  as  it  is  advantageous  to  the  community, 
and  withdraw  it  inexorably,  so  soon  as  the  public  intei-ests  require 
its  withdrawal."  Hence,  he  thinks  it  practically  best  "to  adhere 
to  the  broad  and  simple  rule  of  taxation  for  revenue  only." 

This  statement  seems  to  us  like  the  distant  speculations  of  a 
closet-thinker,  who  means  to  be  just  but  has  had  no  opportunity 
for  close  or  minute  observation  of  the  operations  of  a  pi'otective 
system  of  duties  in  detail.  It  does  not  require  "  wisdom,  strength, 
or  singleness  of  aim  "  to  "  introduce  protection  only  so  far  as  it 
is  advantageous  to  the  community."  Protection  introduces  itself, 
and  only  so  far  as  it  is  advantageous  to  the  con)nuinity,  by  the 
simple  act  of  attempting  to  lay  a  duty  for  revenue  only,  on  any 
foreign  product  which  the  taxing  country  has  all  the  natural  re- 
sources to  produce,  but  which  for  lack  of  some  purely  artificial 
facility,  such  as  that  the  price  shall  Ijo  equal  to  its  present  cost  of 

♦The  Principles  of  Pol.  Econ.,  p.  485. 


5G2  ECONOMIC  PUILOSOPIIY. 

production,  or  such,  as  low-priced  labor  or  capital,  or  raw  mate- 
rials, or  implements  or  machinery,  it  has  not  yet  begun  to  pro- 
duce. So  naturally  does  protection  introduce  itself  from  the 
passage  of  a  tarifp  for  revenue  only,  that  when  England  imposes 
a  duty  of  3s,  6(i.  sterling  (87c.)  per  pound  on  the  importation  of 
leaf  tobacco,  she  is  obliged  to  prevent  protection  from  introduc- 
ing itself,  by  enactmg  that  leaf  tobacco  shall  nowhere  be  culti- 
vated in  the  United  Kingdom.  For,  if  she  did  not  make  it 
criminal  to  cultivate  the  leaf,  Irish  and  Scotch  farms  would 
immediately  be  covered  with  tobacco,  the  price  of  which  would 
soon  fall  under  domestic  competition  to  the  cost  of  production, 
say  3<i.  per  pound,  and  from  the  time  the  price  fell  below  3s.  9d. 
per  pound,  the  duty,  now  maintaiiied  as  a  revenue  duty  by  pro- 
hibiting the  production,  would  act  as  a  protective  duty  prohibit- 
ing the  importation. 

English  economists  assume  that  the  government  needs  no 
"wisdom,  strength,  or  singleness  of  aim  "  to  enable  it  to  forbid 
the  production  of  a  crop,  whose  production,  if  permitted,  might 
bring  pi'osperity  to  millions  of  people  who  sadly  need  prosperity. 
But  in  the  view  of  an  American,  a  government  requires  far  more 
wisdom,  strength,  and  singleness  of  aim  to  justify  it  in  prohibit- 
ing a  domestic  industry  than  in  prohibiting  an  importation.  In- 
deed, the  American  government  is  in  one  sense  compelled  to  be 
protective,  since  in  order  not  to  be  protective  it  would  have  to 
possess  the  power,  which  England  exercises  in  the  case  of  tobacco, 
to  prohibit  a  domestic  industry.  Else  the  duty  it  lays  for 
" revenue  only  "  would  immediately  cease  to  produce  "revenue 
only,"  and  would  begin  to  produce  protection  to  the  domestic 
protected  crop.  But  the  government  of  the  United  States  would 
search  in  vain,  in  the  Federal  Constitution,  for  any  clause  empow- 
ering it  to  prohibit  any  domestic  production,  for  any  purpose.  It 
has  never  tried  it,  and  the  thought  of  it  is  peremptorily  inadmis- 
sible, and,  from  our  American  standpoint,  despotic,  wasteful, 
cruel,  and  barbarous.  Since,  without  the  power  to  suppress  the 
domestic  pi'oduction,  we  could  not  prevent  the  duty  on  the  impor- 
tation from  acting  with  a  protective  effect,  Prof.  Sidgwick  will 
see  that,  so  far  from  its  being  true  that  a  tarifF  for  revenue  only  is 
either  a  broad  or  simple  rule  of  taxation,  it  is  in  the  United  States, 
an  absolutely  unattainable  system,  unless  we  could  by  constitu- 
tional amendment  clothe  the  Federal  government  with  a  new 
power,  the  exact  reverse  of  tlie  power  it  was  chiefly  created  to 
manifest,  viz.,  a  power  to  prohibit  and  destroy  domestic  indus- 


GO  VERNMENT  AN  A  GENT.  563 

tries,  to  prevent  their  product  interfering  with  government 
revenue  from  imports. 

Professor  Sidgwick  seems  further  to  overlook  the  fact  that  if  a 
duty  on  an  import  does  not  render  it ' '  advantageous  to  a  commu- 
nity "  to  produce  a  commodity,  that  community  will  not  produce 
it,  and  the  duty  will  remain  a  purely  revenue  duty.  Such  were 
the  American  duties  on  tea  and  cofPee  prior  to  their  repeal  in  or 
about  1870.  The  fact  that  the  duty  begins  to  operate  protectively 
is  indicated  by  the  fact  that  it  begins  to  be  "  advantageous  to  the 
community,"  or  to  some  of  its  members,  to  produce  the  commod- 
ity. No  injury  to  government  revenues  sets  in,  until  there 
begins  to  be  a  benefit  to  the  community,  in  the  introduction  of  a 
new  industry.  It  really  needs  no  argument  to  prove  that  a  new 
avenue  of  industry,  source  of  profit,  or  means  of  occupation, 
to  a  considerable  number  of  people,  must  be  of  more  importance 
to  a  government  itself,  than  the  drying  up  of  one  of  its  sources  of 
revenue,  from  impoi^tations.  For  the  entire  revenues  of  govern- 
ment are  very  small,  compared  with  the  revenues  of  the  whole 
people,  seldom  exceeding  one-twentieth,  and  when  a  new  indus- 
try is  set  on  foot,  affecting  the  revenues  of  the  i^eople  at  large,  the 
chances  are  about  twenty  to  one  that  its  importance  to  them  will 
exceed  in  value  its  importance  to  their  agency  for  certain  limited 
purposes,  the  government.  Indeed,  viewing  the  government  as 
an  agent,  and  the  people  as  their  principal,  it  is  a  species  of  breach 
of  trust  for  the  agent  to  sacrifice  the  principal's  revenues  to  his 
own,  as  England  does  in  suppressing  the  cultivation  of  tobacco  in 
the  United  Kingdom.  It  is  a  misnomer  to  style  it  a  duty  "for 
revenue  only,"  when  it  is  a  duty  "for  revenue "  and  also  for 
"  the  suppression  of  a  domestic  industry. "  Hence,  the  fact  that 
it  becomes  advantageous  to  a  part  of  the  people  to  produce  a  com- 
modity is  to  be  assumed,  or  at  least  will  be  assumed,  in  all  demo- 
cratic countries,  to  be  of  more  importance  than  any  loss  the 
government  revenues  may  sustain  by  its  production  ;  for  the 
government  is  a  mere  agency,  and  on  a  question  of  relative  pro- 
duction should  prefer  the  interests  of  the  people  to  its  own. 

But  the  chief  obscurity  in  Prof.  Sidg wick's  passage  lies  in  the 
fact  that  he  does  not  seem  to  have  observed  that  when  a  protective 
duty,  once  wisely  laid,  is  Avorking  protectively,  there  can  be  no 
public  interest  that  can  require  its  withdrawal,  so  far  as  its  effect 
upon  prices  is  concerned.  For  its  function  is  to  create  a  domestic 
competition  in  tlie  production,  which,  beginning  when  the  price 
of  the  domestic  article  is  equal  to  the  foreign  price  plus  the 


564  ECONOMIC  PlIILOSOPnY. 

duty,  will  continue  to  reduce  the  domestic  price  until  it  comes 
down  to  the  level  of  the  foreign  price,  and  becomes  an  article  of 
export  from  the  country  imposing  the  duty,  to  the  countries  from 
which  it  formerly  imported.  This  is  exactly  the  series  of  stages 
through  which  France  has  gone  in  the  production  of  porcelain, 
raw  silk,  and  silk  goods,  cottons,  woolens,  and  sugar,  through 
which  England  advanced  by  means  of  her  protective  duties  on 
woolen  goods,  iron  and  steel  manufactures,  coal,  cottons,  carpets, 
silks,  etc. ,  and  through  which  America  has  advanced  in  farming 
implements,  heavy  machinery,  fire-arms,  fire-engines,  carpets, 
cottons,  musical,  mechanical  and  mathematical  instruments,  raw 
cotton,  etc.  When  the  protective  duty  has  brought  the  domestic 
price,  by  competition  among  domestic  producers,  down  to  the 
foreign,  it  is  absurd  to  say  that  any  public  interests  require  its 
withdrawal,  because  tlie  statute  imposing  the  duty  no  longer 
affects  prices,  which  are  exactly  what  they  would  be  if  the  statute 
were  repealed.  Until  the  duty  has  brought  the  domestic  price 
down  to  a  level  with  the  foreign,  it  is  absurd  to  say  that  any  pub- 
lic interest  requires  its  withdrawal,  unless  we  also  say  that  no 
jrablic  interest  ever  required  it  to  be  imposed,  which  we  can  not 
say  so  long  as  it  is  creating  a  domestic  competition  adequate  to 
bring  the  domestic  price  down  to  a  level  with  the  foreign.  But 
to  say  this  is  to  say  that  it  has  not  worked  protectively  at  all,  and 
has  not  stimulated  the  domestic  production.  And  to  say  this  in 
turn  is  to  say  that  it  has  been  a  duty  for  revenue  only,  and  has 
not  raised  the  price  of  any  thing  which  any  domestic  producer 
had  the  facilities  to  produce.  Hence,  the  plea  that  a  public 
exigency  demands  the  repeal  of  a  duty  involves  one  or  the  other  of 
two  corollaries — either  that  the  person  making  the  plea  does  not  be- 
lieve in  a  protective  duty  at  all,  or  that  the  duty  in  question  has  not 
been  a  protective  duty  in  its  action.  For  every  truly  protective 
duty  repeals  its  own  effect  as  a  tax,  when  it  runs  its  full  course, 
and  never  needs  repeal  by  a  legislature  for  any  economic  reason. 
Prof.  Sidgwick  says  that  ' '  the  question  a  statesman  is  usually 
called  on  to  consider  is  whether  a  merely  temporary  protection 
is  in  the  interest  of  a  particular  nation;  and  to  affii*m  sweepingly, 
that  this  is  opposed  to  sound  economic  doctrine,  appears  to  me  a 
simple  and  palpable  blunder."*  "Such  protection,  of  course,! 
so  long  as  it  continues  necessary,  imposes  an  extra  tax  on  the 
consumers  of  the  article  protected. |.     But  there  are  conceivable 

♦"Principles,"  etc.,  p.  486.  +Ib.,  p.  413. 

J  This  partial  error  ia  corrected  subsequently. 


TAXING  FOREIGN  PRODUCERS.  5G5 

cases  in  which  the  loss  to  a  country,  thus  caused,  might  be  com- 
pensated by  the  ultimate  economic  gain  accruing  from  the 
domestic  production  of  a  commodity  now  imported,  while  yet 
the  initial  outlay,  required  to  establish  the  industry  without  the 
protection,  would  not  be  likely  to  be  compensated  to  the  private 
capitalists  that  undertook  it.  This  would  be  the  case,  if  the  need 
of  the  outlay  were  of  such  a  kind  that,  when  once  adequately  met 
by  the  original  entrepreneur,  it  would  no  longer  exist  for 
others,  or  would  exist  in  a  much  less  degree,  since  (in  that  case) 
almost  as  soon  as  the  industry  began  to  be  profitable,  competition 
would  tend  to  reduce  profits  again,  bringing  prices  to  a  point  at 
which  they  would  be  remunerative  to  the  later  comere,  but  not 
to  the  introducer  of  the  industry  who  had  borne  the  initial 
sacrifices." 

Professor  Sidgwick  then  proceeds  to  argue  that,  on  purely 
economic  grounds,  there  would  be  a  direct  gain  if  the  manufacture 
of  iron  in  Michigan  could  be  protected  by  duties  against  the  free 
importation  of  iron  from  Pennsylvania.  He  then  (p.  491)  pro- 
ceeds to  consider  "how  far  a  share  of  the  loss,  involved  in 
protection,  can  be  thrown  on  the  foreign  producers  on  whose  pro- 
ducts the  protective  duty  falls.  It  is  obvious  that  this  result  will 
be  prima  facie  attained,  so  far  as  the  reduction  in  the  demand 
for  the  taxed  foreign  products  tends  to  lower  their  price,  and 
causes  them  to  be  sold,  in  the  protecting  country,  at  a  rate  less 
than  their  previous  price  plus  the  import  duty.  Free  traders  are, 
of  course,  right  in  pointing  out  that,  so  far  as  this  is  the  actual 
eflFect  of  import  duties,  such  duties  do  not  also  fulfil  their  sup- 
posed primary  end  of  protecting  native  industry,'^  since  to  what- 
ever extent  the  foreign  products  are  still  purchased,  to  that  extent 
the  native  products  are  not  encouraged. 

"  But  this  in  no  way  proves  the  inexpediency  of  the  duties  in 
question,  since  they  may  very  well  give  adequate  encouragement 
to  native  industry  without  completely  excluding  foreign  pro- 
ducts; and  it  can  not  be  an  objection  to  them  from  a  purely 
national  point  of  view,  that  a  part  of  their  effect  is  merely  to 
levy  a  tribute  on  foreigners  for  the  national  exchequer.  A  simple 
case  will  show,  a  duty  may  at  once  protect  the  native  manufac- 
turer adequately,  and  recoup  the  country  for  the  expense  of  pro- 
tecting him.    Suppose  that  a  five  per  cent,  duty  is  imposed  on 

♦  Practically  the  same  duty  may  give  revenue  in  part  and  protection  in  part,  revenue 
on  the  portion  of  gooda  it  admits,  proiecti  on  from  the  excess,  which  would  be  admitted 
were  there  no  duty  at  all,  over  the  quantity  actually  admitted  under  the  duty. 


506  ECONOMIC  PHILOSOPHT. 

foreign  silks,  and  that  in  consequence,  after  a  certain  interval, 
half  the  silks  consumed  are  the  product  of  native  industry,  and 
that  the  price  of  the  whole  has  risen  two  and  a  half  per  cent.  It 
is  obvious  that  under  these  circumstances  the  other  half  which 
comes  from  abroad  yields  the  state  five  per  cent. ,  while  the  tax 
levied  from  the  consumers  on  the  whole  is  only  two  and  a  half 
per  cent. ;  so  that  the  nation  in  the  aggregate  is  at  this  time 
losing  nothing  by  protecting,  except  the  cost  of  collecting  the 
tax,  while  a  loss  equivalent  to  the  whole  tax  falls  on  the  foreign 
producers." 

Professor  Sidgwick,  therefore,  holds  that  protective  duties, 
when  not  high  enough  to  completely  exclude  the  product  pro- 
tected against,  ' '  will  partly  have  the  effect  of  levying  a  tribute  on 
foreign  producers,  the  amount  and  duration  of  which  may  in 
certain  cases  be  considei-able. "  This  power  should  be  exercised 
with  caution  lest  it  lead  to  like  protective  duties  on  the  part  of 
other  countries.*  Still,  in  a  guarded  way.  Prof.  Sidgwick  also 
argues  that  a  country,  by  protecting  its  industi'ies,  may  maintain 
a  higher  standard  of  wages  than  its  competitor  under  free  trade 
would  maintain,  and  in  this  way  the  former  may  draw  away  a 
pai't  of  the  population  and  wealth-producing  power  of  the  free- 
trade  competitor. 

199.  Moffat  on  Protection  in  Growing  Countries. — Mr. 
Robert  Scott  Moffat,  in  an  elaborate  work  entitled  ' '  The  Economy 
of  Consumption,"  says  (p.  345):  "The  population  of  countries 
which  have  a  redundant  supply  of  food  is  naturally  a  growing 
one,t  and,  where  there  are  no  artificial  obstacles,  its  growth  is 
usually  rapid.  The  spare  supplies  of  such  communities  are  con- 
stantly encroached  on,  and  absorbed,  by  home  wants.  But  this 
natural  absorption  is  hastened  by  the  conditions  arising  out  of 
the  commercial  relations  of  these  countries  with  the  countries 
which  they  supply  with  food.  This  commerce  gives  them  the 
initial  advantage  of  enabling  them,  by  supplying  their  other 
wants,  to  turn  their  whole  industry  in  the  one  direction,  and 
thus  secures  a  rapid  expansion  of  the  agricultural  basis  of  indus- 

*  Obviously  only  a  benefit  to  mankind,  and  to  both  countries,  would  ensue  if  it  did. 

t  This  statement  illustrates  the  risk  of  even  plausible  a  pi'iwi  assumptions  in 
economics.  Ireland,  Egypt,  Persia,  and  India,  all  have  redundant  supplies  of  food 
even  in  the  years  when  their  famines  have  swept  oH  the  people  most  remorselessly 
Ireland  especially  exported  large  quantities  of  food  to  England  in  the  years  of  the  Irish 
famine,  producing  far  more  than  would  have  sufficed  for  the  consumption  of  her 
people,  but  it  was  drained  away  to  pay  for  manufactured  goods  which  idle  Irish  capital 
and  idle  Irish  labor,  should  have  produced. 


HOME  TRADE.  567 

trial  oi'ganization.*  Commerce,  moreover,  gives  them  the 
nucleus  of  towns,  combining  with  an  incipient  organization  of 
industry  a  training  in  the  spirit  of  entei'prise  and  speculation. 
It  is  impossible  that  a  free  country  can  rest  in  this  position. 
Apart  from  industrial  advantages,  there  are  social  and  political 
motives  which  prompt  it  to  aim  at,  and  strive  for,  a  complete 
organization  of  its  home  industry.  From  an  industrial  point  of 
view  there  are  also  many  advantages  in  the  possession  of  a  fully 
organized  industrial  system,  and  the  immediate  command  of 
every  variety  of  industrial  skill,  which  are  not  to  be  measured  by 
the  mere  price  paid  for  commodities. 

"  There  are  also  various  reasons,  already  hinted  at,  in  the  com- 
mercial relations  of  these  countries  with  the  manufacturing  ones, 
to  quicken  their  zeal  on  behalf  of  a  home  organization  of  industry. 
There  are  the  fluctuations  of  a  commerce  which,  in  addition  to 
the  uncertainties  produced  by  its  own  uncontrollable  complexity 
and  world-embracing  magnitude,  i*esulting  in  periodical  disor- 
ganizations and  prostrations  of  industry,  is  liable  to  similar  dis- 
tui'bances  from  political  causes  throughout  the  whole  of  its  wide 
area.  The  immediate  gain  of  taking  foreign  products  is  frequently 
also  more  apparent  than  real.  Cosmopolitan  manufactures  are 
always  the  most  doubtful  in  jooint  of  quality,!  and  initial  cheap- 
ness is  not  always  confirmed  by  the  test  of  use.  Countries  in 
this  position  are  thus  naturally  inclined  to  favor  the  protection 
of  native  industry,  and  this  is  the  exception  to  the  natural  pro- 
gi'ess  of  industry  towards  liberty. 

"This  tendency  towards  protection  is,  as  I  have  said,  natural, 
and  it  is  fully  justified  by  the  strictest  economic  reasoning.  The 
fanatical  intolerance,  with  which  it  is  often  assailed  in  this 
country,  is  the  result  simply  of  ignorance,  and  the  prejudices  bred 
by  self-interest. 

"The  aim  of  the  policy  is  manifestly  a  legitimate  one.  It  has 
already  been  shown  that  a  home  organization  of  industry  is,  in 
the  strictest  sense,  the  most  economical;  and  there  can  b*s  no 
doubt  that,  when  a  new  country  has  raised  its  manufactures  to 
an  equality  in  efficiency  with  those   of  older  countries,  it  will 

*  On  the  contrary,  the  more  manufacturers  come  into  a  country,  producing  a  eurplus 
of  food,  the  more  food  the  farmers  can  produce. 

tMany  of  the  cottons  made  in  Enfjland  for  barbarian  customers  are  so  "sized  "  and 
otherwise  adulterated  that  they  lose  one-fifth  their  weight  in  being  washed  once. 
According  to  Chambers'  Encyclopedia  shoddy  enters  largely  Into  the  best  British 
woolen  manufactures. 


568  ECONOMIC  PHILOSOPHY. 

gain  greatly  by  exchanging  its  agricultural  products  against  its 
own  manufactures,  instead  of  sending  them  abroad.  The  whole 
question,  then,  is  one  of  method;  and  the  arguments,  which  those 
who  call  themselves  free  traders  direct  against  this  form  of  pro- 
tection, relate  exclusively  to  the  cost  of  the  process  it  entails. 
Now,  it  is  impossible  for  an  unorganized  industry,  at  any  point  of 
its  progress,  to  attack  an  organized  one  without  entailing  loss  and 
submitting  to  temporary  disadvantage ;  and  if  immediate  advan- 
tage alone  is  to  be  consulted,  the  industry  of  such  a  country  must 
remain  forever  unorganized.*  Is  it,  then,  to  be  held  that  the. 
wisdom  or  energy  of  private  enterprise,  alone,  is  equal  to  making 
the  sacrifices  required  for  the  common  good ;  or  is  this  a  dogma 
of  such  elevation  as  to  entitle  those  who  hold  it  to  lecture,  as  from 
a  superior  moral  standpoint,  the  holders  of  a  contrary  opinion  ? 

"  I  apprehend  that  a  new  country,  in  imposing  protective  du- 
ties in  favor  of  native  industry,  is  simply  doing,  by  a  common 
enterprise,  what  individuals,  both  in  an  old  and  a  new  country, 
do  when  they  endeavor  to  organize  an  opposition  to  an  estab- 
lished industry.!  And  there  can  be  no  doubt  as  to  the  adaptation 
of  the  means  to  the  end." 

200.  Devas  on  Protection. — The  most  valuable  English 
chapter  on  protection  is  in  Mr.  C.  S.  Devas'  ' '  Groundwork  of 
Economics,"  sections  136  to  142.  He  says  :  "  The  argument  in 
favor  of  free  trade  is  based  on  two  fundamental  assumptions. 
The  first  is  that  each  country,  if  laws  do  not  interfere  with  its 
imports  and  exports,  will  produce  that  for  which  it  is  physically 
best  fitted.  But  this  assumption  is  often  untrue,  and  for  two  rea- 
sons at  least.  First,  a  country  may  possess  many  natural  ad- 
vantages (as  coal  beds,  water-power,  and  water  communications), 
which  may  remain  unused,  and  the  industries  that  might  be 
founded  on  them  remain  unpracticed,  because  the  costs  of  start- 
ing such  enterprises  are  an  insuperable  barrier  to  their  introduc- 
tion as  long  as  the  produce  of  other  countries,  who  have  the 
advantage  of  priority,  can  be  introduced  unhindered.  New  in- 
dustries, like  new  plants,  may  require  shelter  ;  when  acclimatized 
they  may  be  found  to  grow  even  more  vigorously  in  their  new 
home  than  in  their  old,  and  the  cost  of  their  earlier  years  is  well 
repaid.    Till  the  workpeople  are  well  educated  to  the  work,  and 

*{.«.    the  country  must  remain  without  a  due  balance  of  manufacture  again8t 
agriculture. 

t  i.e.,  they  put  up  or  sink  capital,  knowing  that,  till  loss  is  first  sustained,  gains  can 
not  be  made. 


INDUCEMENTS  TO  PROTECT.  569 

the  technical  minutiae  of  the  industry  adapted  to  the  special  con- 
ditions of  the  country,  there  may  be  a  heavy  national  loss,  the 
produce  being  got  at  much  greater  cost  than  Avhat  it  took  to  pro- 
duce the  goods  formerly  exported  in  exchange  for  it.  But  these 
expenses,  which  would  ruin  any  private  enterpriser  or  private 
company,  are,  as  it  were,  the  expenses  of  a  national  apprentice- 
ship, and  when  once  the  machinery  is  brought  into  full  working 
order,  and  the  human  agents  are  trained,  it  may  be  found  that 
much  more  is  got  from  this  form  of  national  industry  than  from 
the  previous  production  of  goods  for  exportation.  Costs  of  trans- 
port are  saved,  and  especially  use  is  now  made  of  the  rich  treas- 
ures of  external  nature,  and  the,  perhaps,  richer  treasures  of 
national  capacities  and  energies.  To  gain  these  advantages  a 
protective  tariff  is  likely  to  be  the  best  means,  by  enabling  and 
inducing  enterprisei's  to  introduce  the  new  industry,  and  distrib- 
uting the  costs  of  the  introduction  as  equably  as  well  can  be  over 
the  whole  people.*  Moreover,  this  temporary,  tentative  and  ac- 
climatizing protection,  is  more  than  ever  called  for,  in  a  time 
when  the  great  development  of  means  of  transport  has  greatly 
lessened  the  former  natural  protection,  afPorded  by  remoteness, 
and  when,  also,  the  assimilation  of  local  and  national  tastes  to  a 
cosmopolitan  fashion  has  nigh  levelled  the  protection  afforded  by 
a  variety  of  tastes."  f 

Mr.  Devas  then  points  out  that  protection,  to  the  labor  of  one 
country,  may  also  be  made  necessary  by  the  oppression,  slavery, 
or  unnatural  economic  conditions  prevailing  in  the  country  with 
whose  labor  it  was  obliged  to  compete  ;  also  that  a  protective  pol- 
acy  may  tend  to  nationalize  and  loyalize  tlie  more  or  less  discord- 
ant elements  of  a  nation,  binding  them  together  into  a  common 
interest  and  sentiment,  and  promoting  industries  which  in  any 

*  "Blind  free-traders"  (says  Roscher,  "Principles  of  Political  Economy,"  trans- 
lated by  J.  J.  Lalor,  New  York,  1878,  vol.  ii.,  pp.  432,  433)  "always  like  to  assume  that 
every  man  capable  of  working  always  busies  himself,  whereas  idleness  frequently  ex- 
cuses the  wasting  of  its  time  by  the  plea  that  a  remunerative  market  of  the  possible 
new  products  is  improbable,  or  at  least  uncertain." 

+  "Under  such  circumstances  it  would  be  possible  that  a  whole  nation  might  be 
made  continually  to  act  the  part  of  an  agricultural  district  {plattes-land)  to  one  earlier 
developed,  leaving  to  the  latter  almost  exclusively  the  life  of  the  city  and  of  industry. 
A  wisely  conducted  protective  system  might  act  as  a  preventive  against  this  evil,  the 
temporary  sacrifices  which  such  a  system  necessitates  being  justiliable  where  some  of 
the  factors  of  industrial  production  unquestionably  exist,  but  remain  unused,  because 
others,  on  account  of  the  mere  posteriority  of  the  nation,  can  not  be  built  up."  He 
justly  reprobates  the  term  hot-house  plant  being  applied  to  industries  fostered  by  tem- 
porary protection.    (Roecher,  1.  c.  ii.,  43V,  438.) 


570  ECONOMIC  PHILOSOPHY. 

way  tend  toward  the  unity  or  defense  of  the  state,  irrespective  of 
their  cost.  He  says  :  "  Adam  Smith  urges  that  defense  is  much 
more  important  than  opulence,  approves  the  navigation  laws,  and 
does  not  condemn  a  bounty  on  the  expoi'tation  of  home- made  sail- 
cloth and  gunpowder  ;  moreover,  it  is  generally  admitted  that, 
besides  being  independent  of  foreigners  for  the  supply  of  muni- 
tions of  war,  the  supply  of  food  ought  not  to  be  such  as  to  be 
liable  to  interruption  in  war,  as  when  Athens  could  be  starved 
into  submission  by  closing  the  Bosphorus,  while  a  fi'ee-trader, 
like  McCulloch,  extends  this  precaution  to  any  important  article, 
saying  that  '  nothing  can  be  more  injurious  .  .  .  to  the  real  and 
lasting  interests  of  any  great  nation  than  to  have  any  considera- 
ble portion  of  its  population  dependent  on  the  friendship  or  policy 
of  foreigners.'*  But  free-traders  are  only  not  unpatriotic  because 
they  leave  one  of  their  first  pi'inciples  in  the  luirh.  And  being 
compelled  by  common  sense  to  make  the  concession  in  regard  to 
national  safety,  they  can  be  logically  forced  to  admit  that  sound 
political  reasons  may  in  any  case  forbid  free  trade."  Protection, 
he  argues,  aids  in  securing  a  country  against  disrupting  tenden^ 
cies  fostered  by  foreign  influence — may  tend  to  prevent  emigra- 
tion and  invite  immigration — may  help  to  so  distribute  and  multi- 
ply occupations  as  to  employ  a  much  larger  portion  of  the  people 
in  accordance  with  their  tastes  and  capacities — may  cause  the 
food  and  clothing  of  the  people  to  be  made  up  and  sold  more  hon- 
estly, as  to  quality,  as  artisans  always  deal  more  honestly  in  a 
home  than  in  a  distant  market,  and  faults  and  swindling  are  more 
easily  corrected.  Home  production  also  causes  greater  evenness 
of  prices  and  certainty  of  supply. 

' '  For  in  countries  like  Hungary,  Egypt,  and  British  India, 
with  little  accumulated  wealth,  if  there  is  habitual  exportation  of 
grain,  the  superfluity  of  good  harvests  leaves  the  country,  instead 
of  being  stored  within  it  ;  and  when  a  bad  harvest  comes  there  is 
not  sufficient  wealth  to  attract  from  abroad  a  supply  of  food  ; 
while  even  in  the  midst  of  a  famine  grain  may  continue  to  be  ex- 
ported, as  from  Egypt  in  1833,  from  Ireland  in  1845-6,  and  fi'om 
India,  when  millions  were  starving  in  1877-8.  Protective  laws, 
by  favoring  home  trade  at  the  expense  of  foreign  trade,  may  hin- 
der or  mitigate  such  calamities. "  t  Finally,  Devas  indorses  Carey's 
argument  that  protection  may  help  prevent  a  wasteful  exhaustion 

*  Notes  to  "  Wealth  of  Nations,"  xxv.,  p.  601. 
t  Roscher,  "Ackerbau,"  section  157,  gives  numerous  instances. 


FOREIGN  LABOR.  571 

of  soils  by  inducmg  a  more  diversified  system  of  culture  and  ro- 
tation of  crops,  which  can  only  be  practiced  where  markets  are 
near.  This  applies  also  to  exhaustion  of  forests,  fish,  mineral 
treasures,  and  all  bulky  raw  materials.  He  concludes  that  "  vio- 
lent denunciations  of  the  one  policy  or  the  other  as  per  se,  and  of 
necessity,  foolish  and  mischievous,  without  any  regard  to  the 
manifold  diversities  of  period,  people,  and  country,  are  out  of 
place  in  the  sober  reasonings  of  science.  Even  to  say  that  free 
trade  should  be  the  rule,  protection  the  exception,  or  conversely, 
is  more  likely  to  mislead  than  elucidate  ;  and  such  a  vague  and 
general  formula  does  not  help  us  in  the  complicated  discussion 
needed  for  each  peculiar  and  actual  case." 

201.  Prof.  Perry's  Free  Trade  Methods— Does,  or  Does 
Not  Free  Trade  Employ  Foreign  Labor  ? — Prof.  Arthur  L. 
Perry's  "  Elements  of  Political  Economy  "  has  had  a  success  like 
that  of  debased  coins,  due  as  much  to  its  alloy  as  to  its  value. 
It  discards  the  inductive  or  statistical  method,  as  does  also  Mr. 
Mill,  and  says  : 

"  It  may  be  considered  as  a  point  already  well  settled  by  expe- 
rience that  no  man's  sagacity  is  sufficient  to  guide  himself  or 
others  to  any  sound  conclusions  on  this  field  who  takes  his  stand 
at  the  outset,  amid  the  whirl  of  interlocking  phenomena,  and 
then  endeavors  to  work  himself  out  through  the  entangling 
meshes  which  surround  him  at  every  step.  Happily,  there  is  no 
need  of  any  such  procedure.  Happily,  man  is  man,  motive  is 
motive,  and  exchange  is  exchange,  and  the  apparent  chaos  of 
commerce  can  be  resolved  through  these  alone  into  harmony  and 
order." 

This  is  as  if  Descartes,  in  defending  the  assumption  that 
planetary  motion  is  due  to  a  celestial  ether  moving  in  vortices, 
against  Newton's  theory  of  gravity,  should  charge  Newton  with 
taking  his  stand  at  the  outset  amid  the  whirl  of  interlocking  phe- 
nomena, and  should  suggest  that  a  much  simpler  solution  of  the 
problem  lies  in  the  fact  that  the  earth  is  the  earth,  the  sun  is 
the  sun,  ether  is  ether,  motion  is  motion,  and  vortices  are  vortices. 
The  simplicity  of  such  lines  of  proof  is  only  apparent  to  minds 
that  not  only  need  no  proof,  but  would  not  comprehend  it  if  it 
were  offered. 

In  arguing  that  the  importation  of  foreign  goods,  as  compared 
witli  their  production  in  this  country,  involves  no  loss  to  the 
national  industry,  Prof.  Perry  commits  the  same  palpable  over- 
sight which  we  have  pointed  out  in  Jevons,  and  this  oversight 


572  ECONOMIC  PHILOSOPHY. 

takes  the  place,  with  him,  of  both  foresight  and  insight.    He  says 
(eleventh  edition,  pp.  396-7) : 

"  Foreign  articles  are  certainly  wrought  by  foreign  labor  ;  do  we  then  byjbaying 
them  employ  foreign  labor  to  the  prejudice  of  our  own  laborers  ?  We  are  obliged  to 
pay  for  every  thing  we  buy— are  we  not  ?  In  what  do  we  pay  ?  Clearly,  in  the  products 
of  our  own  labor.  We  employ  our  own  laborers  to  produce  the  articles  we  exchange 
for  foreign  articles.  We  pay  for  our  imports  by  our  exports.  Our  exports  are  created 
by  home  labor,  and  the  only  possible  way  for  us  to  obtain  the  results  of  foreign  toil  is 
to  offer  in  exchange  the  results  of  domestic  toil.  A  commercial  nation  there/ore  not 
only  does  not,  but  it  cannot,  e7nploy  foreign  labor.  The  more  it  buys  of  foreigners,  the 
more  home  labor  it  must  employ  to  create  the  articles  with  which  it  pays  for  what  it 
buys,  etc.,  etc." 

To  employ  American  labor  in  creating  the  price,  commodity, 
crop,  or  quid  pro  quo  which  we  exchange  for  a  product,  employs 
only  half  as  much  American  labor,  as  to  employ  American  labor, 
in  creating  both,  that  with  which  we  pay,  and  that  which  we  pay 
it  for.  If,  for  instance,  we  raise  corn  to  buy  iron,  he  claims  that 
we  encourage  American  labor  equally  whether  we  buy  foreign 
or  American  iron,  because  in  either  case  we  pay  for  it  with  the 
products  of  American  labor.  But,  in  the  purchase  of  foreign  iron, 
only  the  price  we  pay  represents  American  labor,  while,  in  the 
purchase  of  American  iron,  both  the  price  we  pay,  and  the  thing 
ive  pay  it  for,  represent  and  are  the  fruit  of,  American  labor. 
Supposing  that,  in  both  cases,  we  get  the  worth  of  our  corn  in 
iron,  in  the  case  of  the  imported  iron  we  give  employment  only 
to  the  American  labor  that  produces  the  corn,  while  in  the  case 
of  the  American  iron,  we  give  employment  to  the  same  amount 
of  American  labor  in  producing  the  corn,  and  toaw  equal  amount 
in  addition,  in  producing  the  iron. 

This  point  having  been  stated  very  plainly  by  Adam  Smith, 
both  Jevons  and  Perry  were  bound  to  apprehend  it  in  its  true 
significance  as  an  alternative  between  an  importing  policy,  which 
it  is  admitted  employs  one  capital  and  set  of  laborers,  and  a  policy 
of  home  production,  which  employs  two.  The  fact  that  neither 
Jevons  nor  Perry  truly  states  the  point,  before  assuming  to  con- 
trovert it,  leaves  the  impression  on  the  mind  that  they  see  that 
to  state  it  is  to  make  it  incontrovertible  on  its  face.  Again 
Prof.  Perry  says  on  page  371  (eleventh  edition)  that  the  differ- 
ences which  give  rise  to  international  trade  are  a  "diversity  of 
original  gifts,  in  climate,  soil,  natural  productions,  position,  and 
opportunity,"  and  an  acquired  "diversity  of  tastes,  aptitudes, 
habits,  strength,  intelligence,  and  skill."    He  then  says  : 

"  It  is  on  these  diversities,  original,  traditional,  and  acquired,  that  international  com- 
merce depends  ;  it  never  would  havecorae  into  existence  without  them,  and  it  would 
ceiise  instantly  and  completely  without  them." 


THE  "NATURAL  CONDITIONS"  PLEA.  573 

So  far  as  international  commerce  arises  out  of  diversity  of  nat- 
ural conditions,  as  between  a  temperate  climate  and  a  tropical,  or 
between  a  climate  and  soil  like  that  of  China,  adapted  to  tea,  or 
like  Arabia  and  Brazil  to  coflPee,  protectionists  say  :  "  Off  with 
all  duties  " — let  these  articles  be  free.  Nor  could  any  duty  which 
could  be  placed  on  such  articles  be  a  protective  duty,  since  there 
would  be  no  domestic  product  to  receive  the  protection.  Hence, 
protectionists,  in  1868  to  1870,  were  foremost  in  removing  all 
duties  from  tea  and  coffee,  and  their  principle  requires  them  to 
strive  to  keep  all  duties  off  from  tropical  products,  unless  our 
territory  extends  far  enough  southward,  as  in  the  cases  of  sugar, 
oranges,  and  bananas,  to  admit  of  a  portion  of  our  people 
producing  them.  To  these  duties  which  protect  nothing  the  free 
traders  of  the  United  States  adhere,  however,  tenaciously,  on  the 
ground  that  they  are,  of  all  duties,  the  most  purely  for  revenue 
only.  Hence,  Prof.  Perry  is  inaccurate  in  claiming,  as  a  free 
trade  doctrine,  a  reason  for  taking  off  duties,  which  only  applies  to 
cases  wherein  the  free  traders  as  a  party,  and  Prof.  Perry  with 
the  rest,  want  the  duties  to  be  high,  while  only  the  protectionists 
take  them  off  altogether.  The  duties,  which  protectionists  desire 
to  maintain,  and  free  traders  to  abolish,  are  those  which  rest  on 
products  coming  from  England,  France,  Germany,  and  Canada, 
between  which  countries  and  ourselves  there  is  no  natural  diver, 
sity  but  only  substantial  identity  of  climate,  soil,  and  other  con- 
ditions, and  which  produce,  not. an  unlike  crop,  or  product,  to  offer 
in  exchange  for  ours,  but  the  same  crop  or  product,  to  offer  in 
competition  with  ours,  to  our  own  consumers. 

It  is  not  true  that  a  nation  will  cease  instantly  and  completely 
to  make  iron,  because  another  nation  has  richer  mines,  or  more 
coal  and  lime,  or  could  make  the  iron  with  less  effort  measured 
in  days'  work ;  on  the  contrary,  such  first  nation  may  never  find 
it  possible  to  begin  to  make  iron,  if  every  ton  it  turns  out, 
though  by  a  third  less  labor,  is  converted  into  a  loss  of  money, 
by  being  met  with  a  ton  of  foreign  iron,  which  will  undersell  it 
by  a  third  in  money. 

By  the  report  of  Mr.  Hewitt,  American  Commissioner  to  the 
Paris  Exposition  of  1867,  on  iron,  it  appears  that  as  much  iron 
could  then  be  produced  in  Pennsylvania  by  one  day's  work  as 
could  be  made  in  England  by  two,  and  in  France  by  two  days 
and  a  half.  Tliis  settles  conclusively  the  fact  that  all  natural 
and  acquired  diversities  favoring  the  production  of  iron  were  even 
then  two  to  one  in  our  favor,  for  we  could  produce  iron  by  one- 


574  ECONOMIC  PHILOSOPHY. 

half  the  effort  that  the  English  could,  and  by  two-fifths  of  that 
expended  by  the  French.  But  wliether  from  such  a  division  of  the 
price  of  the  iron,  between  the  British  iron-master  and  his  work- 
men, that  the  latter  got  less  than  half  the  proportion  paid  to  the 
American  workmen,  or  other  cause,  the  English  iron-master  did 
produce  iron  at  twice  the  actual  cost,  in  effort,  and  still  sold  it 
at  a  less  money  cost  than  the  American  producer. 

As  Mr.  Devas  truly  points  out,  if  the  "diversity"  on  which  a 
competitor  depends  for  his  ability  to  undersell  us,  is  a  disinher- 
ited and  pauperized  proletariat  of  starved  workmen,  undergoing 
eviction  from  their  homes  and  exile  from  their  country,  is  it  not 
wiser  in  the  interests  of  the  whole  human  race  to  attract  this 
pauperized  workman  to  the  United  States,  where  by  one-half  the 
expenditure  of  effort  required  in  England,  he  can  make  as  much 
iron  as  there,  and  get  for  himself  a  larger  proportion  of  the  cost 
of  production  as  wages  ? 

202.  Why  Canadians  may  Not  have  Free  Trade  with 
Vermont.— Prof.  Perry  asks  (p.  396,  eleventh  edition)  the  fol- 
lowing question  : 

"  The  south  end  of  Vermont  trades  freely  and  advantageously  with  its  neighbors 
across  the  line  iu  Massachusetts  ;  is  there  any  good  reason  why  the  north  end  of  Ver- 
mont should  not  trade  just  as  freely  and  advantageously  with  its  neighbors  across  the 
line  in  Canada  ?  " 

If  Prof.  Perry  were  asked  why  he  did  not  teach  political  econ 
omy  in  Timbuctoo,  where  the  mental  darkness  is  very  great,  in- 
stead of  in  Massachusetts,  whei^e  there  is  relatively  almost  a  sur- 
plus of  education,  it  might  be  difficult  to  compress,  into  one 
sentence,  all  the  answei-s  to  so  revolutionary  an  inquiry.  But  a 
first  and  sufficient  answer  might  be,  that  the  regents  of  the  uni- 
versities of  Timbuctoo  had  not  invited  him  ;  secondly,  that  Tim- 
buctoo had  no  universities  or  regents;  and,  thirdly,  that,  as  Tim- 
buctoo does  not  protect  its  industries  in  any  way,  it  had  reached 
that  acme  of  political  wisdom,  in  which  to  export  a  Prof.  Perry 
to  it  would  be  like  carrying  coals  to  Newcastle.  So,  in  answer  to 
Prof.  Perry's  question,  it  may  be  said:  first,  that  the  American 
tariff  is  designed  to  give  American  producers  a  first  chance  at 
American  markets,  and  the  Canadians,  never  having  intention- 
ally contributed  toward  the  cost  of  maintaining  American  insti- 
tutions, are  not  entitled  to  share  in  that  first  chance;  secondly, 
that,  as  the  Canadians  and  Vermonters  both  produce  the  same 
crops,  they  could  have  no  motive  to  sell  to  each  other ;  and  hence, 
that  the  goods  which  would  in  fact  cross  the  line  would  be  En- 


HOME  UNITIES  VS.  FOREIGN  FREEDOMS.  675 

glish  manufactures  from  Manchester,  Birmingham,  and  Sheffield, 
seeking  to  undermine  the  American  manufacturers  in  New 
Hampshire,  Massachusetts,  and  Connecticut. 

The  people  of  the  New  England  States  have  certain  financial 
interests  in  common  in  which  Canadians  do  not  participate,  and, 
on  the  other  hand,  Canadians  have  interests  in  common  as 
members  of  one  national  family.  While  these  interests  relate 
primarily  to  government,  education,  mutual  national  co-operation 
and  defence  in  war,  yet  they  relate  in  many  ways  to  trade, 
money,  especially  paper  money,  banks,  bankruptcies,  transporta- 
tion, and  other  matters  affecting  business. 

When  a  man  has  married  a  wife,  and  becomes  the  head  of  a 
family  of  his  own,  the  closer  relationship  which  thus  binds  him 
to  his  wife  and  daughters  precludes  the  dignity  and  propriety  of 
his  receiving  services  from,  and  rendering  attentions  to,  the  wives 
and  daughters  of  his  neighbors,  merely  on  the  ground  that,  in  a 
single  transaction,  it  might  be  shown  to  be  cheaper.  The  business 
life  of  two  nations,  like  the  social  life  of  two  families,  is  not  a  mere 
isolated  transaction, but  is  a  continuous  national  career,the  dignity 
and  utility  of  which  requires  that  its  several  parts  shall  surrender 
some  hypothetical  freedom  for  the  perfecting  of  the  higher  unities 
which  ensue.  The  Vermonters  and  Canadians  produce  substan- 
tially the  same  products,  viz.  :  lumber,  grains,  meats,  potatoes, 
wool,  hay,  butter,  and  cheese.  If  Canadians  were  permitted, 
therefore,  to  trade  free  with  Vermonters,  it  would  not  be  with 
them  that  they  would  trade,  but  they  would  compete  with  them 
in  selling  the  above  jDroducts  to  the  manufacturing,  artisan,  and 
exchanging  populations,  of  New  England  and  New  York.  As 
competitors,  seeking  to  undersell  the  Vermonters,  let  us  see 
whether  the  international  boundary  line  does  not  mark  a  very 
great  difference  of  conditions.  The  present  value  of  the  New 
England  markets,  to  a  farmer,  grows  largely  out  of  the  vigor  of 
their  manufactures,  and  the  great  number  of  persons  dwelling  in 
New  England  who  are  not  engaged  in  farming.  To  secure  these 
large  manufactures,  the  Union  had  to  be  preserved  from  dissolu- 
tion at  a  cost  of  many  millions  of  dollars,  and  many  antecedent 
losses  and  failures  in  business  had  to  be  undergone,  in  none  of 
which  Canada  had  any  part.  These  manufactures  are  in  part  the 
product  of  patent  laws,  and  in  part  of  protective  tariff  laws,  and 
in  part  of  state  aid,  and  in  part  of  corporate  and  individual  enter- 
prise, and  in  part  of  state  legislation,  state  education,  and  other 
state  and  national  expenses,  in  whicli  Canada  has  no  share.  From 


670 


ECONOMIC  PIlILOtiOPHY. 


1861  to  1873  the  Vermonters  paid  their  share  of  a  national,  state, 
and  local  taxation  wliich  amounted  to  about  $850,000,000  a  year, 
or  $31.25  per  capita  for  40,000,000  people.  As  the  head  of  a  fam- 
ily at  the  average  supports  seven  persons,  this  amounted  for  such 
an  one  to  $150  a  year.  The  Canadians,  during  the  same  period, 
were  part  of  a  nation  of  3,692,461  inhabitants,  who  paid  in  taxes 
£3,534,760  per  year,  or  about  $4.50  per  capita,  or  for  a  head  of  a 
family  of  seven  persons  about  $31.  For  twenty  years,  the  Ver- 
monters were  paying  about  fourteen  per  cent,  of  their  earnings 
in  taxes,  while  the  Canadians  were  paying  3.1  per  cent.  Hence 
a  tax  of  eleven  per  cent,  on  the  proceeds  of  any  sales,  made  by 
Canadians  in  this  country,  would  have  to  be  laid,  to  neuti'alize  the 
lower  rate  of  taxation  prevailing  for  so  long  a  period  in 
Canada. 

203.  The  Profit  Argument :  Protection  Profits  a 
Nation  or  Nations  Would  Not  Protect.  —  Prof.  Perry 
makes  a  supposed  argument  for  free  trade  because  trade  is  profit- 
able to  the  individual,  which  applies  equally  in  favor  of  protec- 
tion, provided  it  be  true,  as  all  protectionists  believe,  that  protec- 
tion is  profitable  to  the  aggregate  of  individuals  constituting  the 
nation.     The  two  parallel  arguments  would  run  thus  : 


PERRY  FOR  FREE  TRADE. 


Men  do  not  engage  in  foreign  trade  for 
fun. 

They  engage  in  it  for  the  sake  of  the  mu- 
tual gain  desirable  by  both  parties. 


They  desist  from  it  as  soon  as  that  mu- 
tual gain  disappears. 


And  there  is  no  mutual  gain  in  any  series 
of  exchanges  unless  each  party  has  a  supe- 
rior power  in  producing  that  which  is  ren- 
dered compared  with  his  power  in  produc- 
ing that  which  is  received. 


We  will    suppose  a  trade  between  En- 
gland and  France  in  cottons  and  silks. 


England  sending  cottons  to  France  and 
France  sending  silks  in  return. 


When  and  how  long  will  this  be  a  profit- 
able trade  ? 


THE    SAME    LOGIC   TRANSFERRED 
TO  PROTECTION. 

Nations  do  not  enact  protective  tariffs 
for  fun. 

They  lay  protective  duties  for  the  sake 
of  the  increased  general  prosperity  it  im- 
parts  to  all  their  people. 

They  desist  from  it  as  soon  as  there  are 
no  longer  any  industries  whose  expansion 
by  its  means  would  promote  the  general 
prosperity. 

And  there  is  no  national  gain  in  any  pro- 
tective tariff  unless  the  state  levying  it  has 
such  natural  resources  for  producing  the 
article  it  professes  to  protect  that  the  en- 
tire cost  of  bringing  it  into  a  state  of  profit- 
able production  will  be  far  exceeded  l)y  the 
profits  of  Its  production. 

We  will  suppose  a  rivalry  between  En- 
gland and  America  in  the  manufacture  of 
clothing. 

England  desiring  the  profits  of  making 
American  clothing,  and  Americans  prefer- 
ring to  make  these  profits  themselves,  by 
the  aid  of  a  protective  tariff. 

When  and  how  can  these  profits  be  prof- 
itably transferred  to  American  producers  T 


PROTECTION  PROFITS. 


677 


PERKY  FOR  FREE  TRADE. 


Then  when  efforts  bestowed  in  France 
upon  silks  will  procure  through  exchange 
with  England  more  of  cottons  ilian  the 
same  amounr,  of  effort  bestowed  in  France 
upon  cottons  will  produce  of  cottons 
directly. 


And  then  when  efforts  bestowed  upon 
cottons  in  England  will  procure  more  of 
silks  than  the  same  amount  of  efforts  be- 
stowed in  England  upon  silks  will  produce 
of  silks  directly. 


THE    SAME   LOGIC    TRANSFERRED 
TO  PROTECTION. 

Then  when  American  producers  of  cloth- 
ing, through  tue  stimuius  imparted  to  their 
eff'>rt8  by  the  assured  coiUrol  of  at  least  the 
American  market,  have  so  brought  the  ar- 
tificial facilities  of  production,  such  as  di- 
mensions, division  of  labor,  capital,  ma- 
chinery, skill,  and  credit,  alongside  of  the 
natural  resources  which  they  had  at  the 
start,  that  they  are  superior  in  both,  for 
when  this  happens  they  will  excel  their 
competitors  in  quality  of  poods,  dispatch 
in  turning  them  out,  credits  in  selling 
them,  and  cheapness. 

And  then  when  efforts  bestowed  upon 
transferring  the  place  of  production  from 
England  to  America  through  protection  re- 
sult in  a  more  abundant  and  cheaper  pro- 
duction per  capita  in  America  than  the 
sanity  amount  of  effort  bestowed  on  the  ex- 
pansion of  the  production  of  clothing  in 
England  would  have  produced  of  abun- 
dance and  cheapness  in  America. 

It  is  not  true  in  fact  that  the  exchange  of  commodities  is  neces- 
sarily profitable  to  either  party,  any  more  than  it  is  true  that  pro- 
duction or  legislation  is  necessarily  profitable.  People  may  make 
trades  in  which  both  parties  lose,  or  in  which  one  loses  and  the 
other  gains,  or  in  which  they  both  gain.  Legislation  itself  is  an 
exchange,  in  one  form.  It  is  the  exchange ,  or  trade,  of  the  old  law 
for  the  new  one.  Hence,  to  assert  that  all  exchanges  are  profit- 
able, would  include  that  all  laws  are  profitable,  and  hence  that 
protective  laws  are  profitable.  We  use  these  illustrations,  merely, 
to  point  out  that  plausible  phrases  must  not  be  mistaken  for  sub- 
stantial proofs. 

Prof.  Perry  seems  honestly  to  believe  that  when  he  has  once 
established  that  international  traders  trade  at  a  mutual  profit, 
and  not  at  a  loss  to  each  other,  the  doom  of  protection  is  sealed. 
He  elaborates,  with  painful  assiduity,  his  demonstration  that 
traders  trade  at  a  profit,  ergo  no  taxes  should  be  collected  on  im- 
ported goods  !  It  is  difficult  to  doubt  that  such  financiers  and 
publicists  as  Colbert,  Napoleon,  Bismarck,  Beaconsfield,  Von 
Beust,  Thiers,  Mazzini,  Alexander  Hamilton,  and  even  Clay, 
Webster,  Lincoln,  and  Dr.  Henry  C.  Carey  himself,  are  compe- 
tent to  suspect  that  traders  often  trade  at  a  profit.  If  so  simple  a 
clue  as  this  could  solve  the  question,  the  tariff  question  would 
come  in  just  after  nmmble-peg,  or  marbles. 

All  industries  are  unprofitable  at  the  beginning,  in  proportion 
to  their  complexity  and  ultimate  value.  When  the  first  glass  bot- 
tle was  made  in  Pittsburg,  its  maker,  O'Hara,  charged  its  cost  on 


578  ECONOMIC  PIIILOSOPIIY. 

his  books  at  $30,000.  But  the  second  glass  bottle  cost  but  a 
cent.  Now,  if  O'Hara  had  known  that  the  science  of  society  con- 
sists in  profitable  swapping-,  instead  of  introducing  a  new  in- 
dustry, he  could  have  learned  from  Prof.  Perry  whei*e  he  could 
get  his  first  glass  bottle  cheaper,  by  $29, 999.99  ,  than  by  mak- 
ing it. 

There  was  a  time  when  the  French  could  not  make  silks  in 
competition  with  Genoa.  France  would  never  have  begun  to 
make  silks,  had  she  not  removed  by  her  tariff  the  disadvantage 
and  loss  her  people  would  incur,  until  their  works  acquired  the 
dimensions  to  rival  the  Italians.  The  more  complicated  the  con- 
ditions of  success  in  production,  the  greater  the  loss  by  the  first 
swap  of  the  old  industry  for  the  new.  A  farmer  who  sends  his 
boy  to  school  loses  the  value  of  his  labor  for  the  time,  and  submits 
to  a  tax  for  his  tuition,  in  the  hope  that  he  may  be  a  better  and 
more  rapid  and  skillful  producer,  through  the  knowledge  he  will 
there  acquire.  All  shrewd  business  is  a  wise  sinking  of  present 
advantage  for  a  far  greater  future  gain.  Why  may  not  a  city, 
state,  nation,  take  this  course  as  well  as  an  individual  ?  Prof. 
Perry  might  have  explained  to  the  New  Yorkers,  that  the  first 
glass  of  pure  water  they  could  get  from  the  Croton  River  would 
cost  them  $10,000,000,  while  they  could  get  it  elsewhere  at  two 
cents  a  glass.  But  they  did  not  hesitate  to  tax  themselves  heavily, 
to  bring  water  by  aqueducts,  to  build  docks  for  ships,  to  pave  and 
light  the  streets,  to  lay  out  parks  for  the  amusement  of  the  people 
— in  short,  to  do  any  and  every  thing,  which  could  attract  resi- 
dents to  New  York,  and  make  business  thrive.  According  to 
Penny's  barren  doctrine,  they  should  have  confined  the  duties  of 
government  to  simply  keeping  the  peace.  But  why  keep  the 
peace,  thus  discriminating  against  those  who  would  break  it  ?  And 
how  can  peace  exist  when  work  can  not  be  had  ?  Suppose  that 
at'present  the  country  could  raise  the  wheat,  cotton,  and  i^etroleum 
to  pay  for  500,000  tons  of  foreign  bar  iron  per  year,  with  less  labor 
than  they  could  produce  the  bar  iron.  That  forms  no  reason  why 
we  should  not  strive  to  place  ourselves  in  a  position  to  make  the 
iron  next  year  cheaper  than  we  can  import  it.  As  we  have 
already  quoted,  the  same  amount  of  effort  or  labor  which,  in 
England  will  make  one  ton  of  pig  iron,  will  here  make  two 
tons.  If  half  the  iron -workers  in  England,  therefore,  could  be 
set  at  work  here,  they  would  produce  as  much  as  the  whole 
now  do.  As  their  places  would  be  supplied  from  the  sur- 
plus and  unemployed  English  paupers,  the  tendency  would  be 


WEEN  TAKING  MORE  LEA  VES  MORE.  579 

to  add  to  our  product  the  whole  product  of  England,  and 
leave  her  product  unimpaired.  Three-fourths  of  tlie  cost  of 
iron  consists  of  agricultural  products,  raw  or  manufactured. 
American  iron  represents  our  own  crops  consumed  by  laborers 
in  making  it.  English  iron  represents  mainly  European  crops. 
Hence  the  increase  of  our  bar  iron  manufacture  by  500,000 
tons,  worth,  say,  $35,000,000,  would  not  only  furnish  American 
farmers  with  a  market  for  the  crops  which  pay  for  this  iron,  but 
also  for  the  crops  consumed  in  making  the  iron,  which  are  as 
much  more.  In  other  words,  if  we  buy  $35,000,000  of  bar  iron 
from  England,  we  export  products  of  the  farm  and  plantation, 
and  so  find  a  market  for  $35,000,000  worth  of  crops.  But  if  we 
buy  the  same  amount  of  American  ix'on  we  find  a  market,  fii'st 
for  the  $35,000,000  required  to  pay  for  the  iron,  and,  in  addition, 
for  $31,000,000,  or  thereabouts,  of  American  crops  consumed  in 
making  the  iron. 

204.  Cost  of  Labor  in  America  and  Europe. — In 
all  research  we  are  certain  to  arrive  at  false  conclusions,  if  we 
adopt  our  theory  first  and  insist  that  facts  shall  agree  with  it. 
In  the  following  statement  of  the  relative  dearness  of  labor  in  this 
country  compared  with  its  cost  in  Europe,  Prof.  Perry  is  misled 
by  a  too  trustful  confidence  in,  and  misapplication  of,  one  of 
Ricardo's  half-truths.     He  says  (p.  422) : 

"  The  cost  of  labor  must  be  lower  in  this  country  than  in  Europe,  because  the  rate 
per  cent,  of  capital  is  higher.  Labor  and  capital  alone  conspire  in  production.  Profits 
are  the  leavings  of  the  cost  of  labor.  If,  therefore,  on  every  hundred  invested  the 
rate  of  profit  is  higher,  the  conclusion  is  unavoidable  that  the  cost  of  labor  is  lower." 

This  assumes  that  the  ratio  of  the  joint  product  of  labor  and 
capital,  to  the  principal  invested,  and  the  effort  made,  is  the  same 
in  Europe  as  here,  whereas  it  is  four  times  greater  here  than 
there.  If  $1,000,  and  1000  days'  works  combined,  earn  four 
times  more  here  than  in  Europe,  capital  would  get  higher 
interest  here,  without  its  following  that  labor  would  get  lower 
wages.  On  the  conti'ary,  if  capital  got  only  a  two-fold  higher 
interest,  labor  might  get  a  six-fold  higher  wage.  Thus,  if  the 
two  combined  earn  $10,000  here  in  a  given  period,  and  only 
$3,000  in  the  same  period  in  Europe,  and  in  Europe  wages 
might  take  $1,000,  and  here  $6,000,  its  leavings  for  capital 
would  still  be  $4,000  here,  against  $2,000  in  Europe.  After  pay- 
ing six  times  as  high  wages,  it  might  still  pay  a  two-fold  higher 
interest. 

No  schedule  of  relative  wages  here,    and  in  Europe,   would 


580  ECONOMIC  PHILOSOPHY. 

sustain  Prof.  Perry's  error.  He  plainly  does  not  mean  by  "cost 
of  labor "  the  cost  of  machine  labor,  or  of  production,  but  of 
human  labor  time.  The  four  hundred  thousand  emigrants 
coming  from  Europe  to  this  country  every  year  are  the  best 
proof  that  wages  are  higher,  relatively  to  cost  of  living,  here 
than  there.     On  the  next  page  he  says  : 

"  Our  bureau  of  statistics  gives  tlie  wages  of  fouiteeu  classes  of  operatives  in  woolen 
mills  in  England,  and  the  corresponding  wages  here  reduced  to  gold.  Our  average  is 
only  21.89  per  cent,  liigher  than  theirs." 

This  would  seem  to  refute  his  previous  position  that  the  cost 
of  labor  is  less  here  than  in  Europe.  But  doubtless  in  Prof. 
Perry's  view  the  proof  that  American  labor  costs  only  21.89  per 
cent,  moi'e  than  that  of  Europe,  fully  sustains  his  own  statement 
that  it  costs  less!  Prof.  Perry  may  even,  so  differently  are  we 
constituted,  regard  a  statistic  showing  that  wages  are  22  per  cent, 
higher  in  America  than  in  Europe,  as  jDroof  that  the  cost  of  labor 
is  22  per  cent,  lower,  since  capital  must  get  more  here  or  it  would 
not  pay  such  high  wages,  and  if  capital  gets  more — Presto — labor 
must  get  less  !  One  could  as  well  reverse  the  proposition  and 
prove  that  our  rates  of  interest  are  lower  by  assuming  that  our 
wages  are  higher.  If  capital  and  labor  can  earn  in  conjunction 
about  twice  as  much  here  as  in  England,  because  of  the  gi^eater 
general  productiveness  of  industry,  they  will  have  twice  as  much 
product  to  divide,  both  will  get  twice  as  much — the  one  in  wages 
and  the  other  in  interest.  Assuming  that  the  rates  of  wages 
in  certain  industries  are  only  21.89  per  cent,  higher  hei'e  than 
in  England,  that  would  render  a  tariff  of  21.89  per  cent,  on 
the  importation  of  the  product  of  that  labor  from  Eng- 
land, necessary  in  order  to  i)lace  the  producers  of  the  same 
X^roduct  here  in  a  position  to  compete  on  equal  terms  with 
those  in  England.  How  much  more  shall  we  allow  for  dif- 
ference in  rates  of  interest  on  capital,  and  for  our  more  burden- 
some taxation  to  pay  off  the  public  debt  ?  These  three  causes 
together  would  be  very  likely  to  make  a  difference  of  35  per 
cent.,  to  which  extent  our  tariff  of  duties  on  imports  would 
be  merely  a  compensation  for  difference  in  rates  of  wages  and 
capital. 

In  1868-9  the  following  were  the  relative  rates  of  wages  in 
nineteen  principal  industries  in  the  United  States,  and  in  two  of 
the  countries  with  which  our  manufacturers  principally  com- 
pete, both  in  our  home  and  foreign  markets : 


Great 

United 

Britain. 

States. 

$3  87 

$5  25 

5  20 

7  60 

5  14 

7  13 

5  85 

9  85 

7  83 

8  70 

8  36 

13  17 

5  46 

9  88 

6  30 

9  42 

7  00 

11  10 

6  75 

13  76 

8  17 

13  63 

7  85 

12  00 

6  88 

10  58 

5  50 

9  83 

7  62 

10  37 

6  60 

13  40 

4  84 

9  00 

6  16 

11  70 

6  70 

10  00 

AMERICAN  WAGES.  581 


Branch  of  Industry.  Prussia. 

Cotton  mills    $2  88 

Woolen  mills  2  52 

Worsted  mills 2  40 

Sugar  refineries 

Iron  rolling  mills    4  02 

Steel  works  3  60 

Machine  shops 3  90 

Hardware,  man 3  60 

Edge  tools,  man 3  62 

Agricultural  implements,  man 5  24 

Firearms,  man 4  39 

Saw,  man 3  60 

Gas  works 

Leather,  man 3  35 

Glass  works,  man  2  74 

Silk  hat,  man 

Paper  mills  2  50 

Wood  shipbuilding; 

Iron  shipbuilding 

The  following  were  at  the  same  period  the  relative  rates  of 
weekly  earnings  paid  to  the  puddlers : 

United  States $16  54  gold. 

England 8  75     " 

France 8  00     " 

Belgium  and  Rhenish  Prussia    ..     6  00     " 

Russia  (Vicksa  Ironworks) 1  93     " 

In  the  Western  As.sociation  of  Iron-makei^s,  including  those  of 
western  Pennsylvania,  the  wages  are  graduated  according  to  the 
price  obtained  for  the  product.  It  would,  perhaps,  be  a  still 
further  advance  from  dividing  according  to  price,  to  divide 
according  to  profits. 

These  rates  may  be  supposed  to  have  been  influenced  by  the 
conditions  incident  to  recent  war.  The  Canadian  Afanufacturer 
condenses  as  follows  the  annual  report  of  the  Massachusetts 
Bureau  of  Labor,  upon  the  relative  condition  of  working-men 
in  Great  Britain  and  Massachusetts,  in  1883.  The  inquiry  was 
exhaustive. 

The  comparison  is  based  on  pay-rolls  obtained  from  two  hun- 
dred and  ten  establi-shments  in  the  State,  and  one  hundred  and 
ten  in  Great  Britain,  to  obtain  which  thirty-two  towns  and  cities 
in  the  former,  and  twenty-six  in  the  latter,  were  visited.  The 
industries  covered  by  this  special  comparison  for  1883,  and  for 
wliich  statistics  were  gathered  during  the  last  four  months  of  the 
year,  involved  74.9  per  cent,  of  the  total  products  of  the  manu- 
facturing industries  of  Massachusetts,  The  general  result  of  the 
inquiry  appears  in  the  following  table  of  the  average  weekly 
wages  paid  employees: 


582  ECONOMIC  PHILOSOPHY. 

Great 
Industries.  Massachusetts.      Britain. 

Agricultural  implements .f  10  25  $8  85 

Artisans' tools 1180  4  89 

Boots  and  shoes 11  63  4  37 

Brick  8  63  4  16 

Building  trade    14  99  7  21 

Carpetings 6  08  4  11 

Carriages  and  wagons 13  80  4  89 

Clothing 10  01  6  71 

Cotton  goods 6  45  4  63 

Flax  and  jute  goods 6  46  2  84 

Food  preparations 9  81  2  72 

Furniture 11  04  7  96 

Glass 12  28  6  94 

Hats  (fur,  wool,  and  silk) 11  01  5  51 

Hosiery     6  49  4  67 

Liquors  (malt  and  distilled)  12  87  12  66 

Machines  and  machinery 11  75  6  93 

Metals  and  metallic  goods 11  25  7  40 

Printing  and  publishing 11  37  5  53 

Printing,  dyeing,  bleaching,  and  finishing 

cotton  textiles 8  67  4  94 

Stone  14  39  8  68 

Wooden  goods 12  19  5  67 


o^ 


Woolen  goods 6  90  4  86 


o 


AVorsted  goods 7  82  3  60 

All  industries,  Massachusetts,  $10.31;  Great  Britain,  $5.86. 

The  statistical  tables  sliow  not  only  this  general  advantage  to 
all  wage-earners  in  the  protected  country,  irrespective  of  age  or 
sex,  hut  afford  a  means  of  arriving  at  the  ratio  of  wages  paid 
women,  young  persons,  and  children  to  those  paid  to  men. 
Taking  the  average  wages  paid  to  men  as  100,  in  Massachusetts 
the  ratio  of  those  paid  to  women  is  as  51.39  to  100  (that  is,  the 
average  wages  of  women  ai'e  a  little  more  than  one-half  as  much 
as  those  ijaid  to  men),  those  paid  to  young  persons  43.04  to  100, 
and  those  paid  to  children  32.15  to  100.  In  Great  Britain  the 
ratio  for  women  is  40.92  (men's  wages  considered  as  the  unit, 
or  100),  for  young  persons  29.6  to  100,  and  for  children  9.56  to  100. 
In  Massachusetts,  on  the  average,  one  woman,  young  person,  and 
one  child  working  together,  would  earn  as  much  combined  as 
1.26  men  ;  in  Great  Britain  they  could  only  eai'n  .79  as  much  as 
a  man,  or  59.4  per  cent,  in  favor  of  the  women,  young  persons 
and  children  of  Massachusetts.  There  is  in  Great  Britain  no 
branch  of  industry  of  those  considered,  in  which  men  are 
employed,  in  which  the  prevailing  avei-age  weekly  wage  rises 
above  $20,  while  in  Massaclrasetts,  in  eight  per  cent,  of  the  occu- 
pations, the  average  weekly  wage  exceeds  tliat  figure,  reaching 


WENDELL  PHILLLPS  ON  WAGES.  58:5 

$40,  or  double  the  highest  average  weekly  wage  in  Great  Britain. 
In  Great  Britain  there  is  no  branch  of  these  industries  in  which 
women  are  paid  more  than  $6  per  week  on  the  average,  while  in 
Massachusetts,  in  53  per  cent,  of  the  various  occupations  or 
branches  of  industry,  the  avei'age  weekly  wages  exceeds  $6  per 
week,  reaching  as  high  as  $19,  or  more  than  three  times  the 
highest  occupation  average  for  Great  Britain.  In  Great  Britain 
$6  is  tlie  highest  occupation  avei-age,  for  young  persons  in  these 
industries  ;  the  occupation  average  in  Massachusetts  reaches  to 
$11,  or  nearly  double  the  Great  Britain  highest  occupation 
average  for  young  persons.  In  the  case  of  children,  the  highest 
occupation  average,  in  the  industries  considered  for  Great  Britain, 
is  $2,  while  in  Massachusetts,  in  98  per  cent,  of  the  branches  of 
these  industries  in  which  children  are  employed,  the  range  is 
higher,  reaching  $7  in  a  small  percentage  of  the  occui^ations. 

On  the  other  hand,  the  cost  of  living  is  somewhat  higher  in 
Massachusetts  than  in  Great  Britain,  the  exact  difference  beino" 
17i  per  cent.,  of  which  Hi  jjer  cent,  arises  out  of  the  one  item  of 
rent.  The  question  of  expense  is  insignificant  compared  with 
that  of  wages,  which  under  protection,  by  a  close  and  careful 
test,  are  shown  to  average  neai'ly  double,  in  Massachusetts,  those 
prevailing  in  Great  Britain. 
Says  Wendell  Phillips  : 

"  Putting  aside  all  theories,  every  lover  of  progress  must  see, 
with  profound  regret,  the  introduction  here  of  any  element  which 
will  lessen  wages.  The  mainspring  of  our  progress  is  high  wages 
— wages  at  such  a  level  that  the  working-man  can  s^jare  his  wife 
to  preside  over  a  'home,'  can  command  leisure,  go  to  lectures, 
take  a  newspaper,  and  lift  himself  from  the  deadening  level  of 
mere  toil.  That  dollar  left  after  all  the  bills  are  paid  on  Saturday 
night  means  education,  independence,  self-respect,  manhood  ;  it 
increases  tlie  value  of  every  acre  near  by,  fills  the  town  with 
dwellings,  opens  public  libraries,  and  crowds  them,  dots  the 
continent  with  cities,  and  cobwebs  it  with  railways.  The  one 
remaining  dollar  insures  progress,  and  guarantees  millions  to  its 
owner,  better  than  a  score  of  statutes.  It  is  worth  more  than  a 
thousand  colleges,  and  makes  armies  and  police  superfluous." 

The  freedom  of  the  working  classes  may  be  secured  by  the  bal- 
lot and  laws,  but  it  is  created  by  and  is  proportionate  to  wage's. 
Low  prices  for  the  products  of  labor  (machinery,  and  other  facil- 
ities of  production  being  equal)  mean  low  prices  for  labor  itself, 
for  no  employer  can  pay  liigh  wages  to  his  workmen  and  sell  the 


58-i  ECONOMIC  PIIILOSOPHY. 

products  of  tlieir  work  at  as  low  prices  as  one  who  pays  half  w^ages, 
unless  he  does  so  by  having  more  machinery,  cheaper  tools,  a 
larger  capital,  or  force,  or  some  other  facility  whicli  the  employer 
at  low  wages  can  not  equally  command.  , 

In  the  case  of  the  American  farmers  paying  higher  wages  than 
the  English,  yet  underselling  the  English  in  wheat,  beef,  and 
pork,  the  struggle  is  really  not  in  the  main  between  the  two  classes 
of  laborers,  but  between  cheaper  land  and  machinery  on  one 
side  and  dearer  on  the  other.  Nor  is  it  possible  for  the  American 
manufacturer  to  have  at  present  as  cheap  capital,  or  more  or 
cheaper  machinery,  than  his  English  rival  in  most  industries. 
In  some  occupations,  however,  as  shoemaking,  watchmaking, 
and  farming,  the  American  workman  has  cheaper  machinery, 
and  makes  a  larger  use  of  it.  Freights  on  American  railroads 
are  about  one-third  the  English  rates  per  ton  per  mile. 

205.  Making-  Taxes  Productive. — Prof.  Peny  says  (page 
389): 

"  How  anybody  can  intelligently  suppose  that  a  system  of  taxes  can  be  bo  cunningly 
adjusted  as  to  become  a  positive  productive  agent,  a  spur  to  the  progress  of  society, 
they  must  explain  who  suppose  so.  I  myself  once  supposed  so.  But  it  was  when  I 
was  in  ignorance  of  the  real  nature  and  operation  of  such  taxes." 

Prof.  Perry  could  not  have  produced  the  book  in  whicli  he 
denies  that  taxation  can  produce  anything,  except  by  taxing  hig 
intellectual  energies.  A  slightly  larger  per  cent,  of  taxation 
would  bring  its  views  into  harmony  with  the  intei'ests  of  society 
and  the  exigencies  of  statesmanship.  He  has  advised,  however, 
a  system  which  would  do,  if  a  state  needed  no  revenue,  and  a 
nation  no  unity.  The  farmer  taxes  himself  severely  to  raise  his 
crops,  the  parent  to  support  his  family.  Society  is  everywhere 
sustained  by  mutual  taxation.  Most  colleges  are  the  product  of 
self-imposed  taxes,  laid  either  on  the  rich  by  themselves  while 
living,  or  by  the  dying  on  their  heirs,  or  by  the  state  on  the  tax- 
payers. Society  itself  is  a  network  of  reciprocal  taxation,  levied 
to  effect  a  network  of  reciprocal  service. 

Taxes,  when  collected,  are  in  the  hands  of  the  government 
capital  with  which  they  may  promote  production  in  ways  more 
effective  than  individual  capital  could  ever  do.  The  taxes  that 
open  and  improve  our  roads,  pave  our  streets  (in  cities),  build  our 
piers,  dig  our  Erie  canals,  bring  water  into  our  cities,  educate  our 
children  in  common  schools,  clear  our  rivers  for  navigation,  and 
so  on,  ai'e  laid  solely  to  promote  production  ?  Why  should  capital 
lose  its  fructifying  and  productive  power  when  it  passes  into  the 


K 


"  TAXES"  THAT  ENRICH.  585 

hands  of  the  state  ?  Since  capital  is  useful  only  in  commanding 
the  services  and  energies  of  our  fellow-men,  and  taxation  is  a 
mode  of  commanding  these  very  services  and  energies,  why  is  not 
the  power  to  tax,  itself,  a  form  of  capital,  and  therefore  fruitful  ? 

If,  as  we  have  said,  the  average  rates  of  wages  paid  in  1868  to 
1873  were,  in  fourteen  different  manufacturing  industries,  twenty- 
two  per  cent,  higher  hei'e  than  in  England,  and  if  rates  of  earn- 
ings for  capital  employed  in  conjunction  with  labor  averaged 
fifteen  per  cent  higher,  and  if  our  taxation,  national  and  state, 
made  a  further  difference  of  five  per  cent,  moi-e  in  cost  of  produc- 
tion, then  it  would  follow  that  in  all  kinds  of  production  which 
England  could  carry  on  with  the  same  expenditure  of  effort  as  our- 
selves, our  price  would  need  to  be  forty-two  per  cent,  higher 
than  the  English  price.  Otherwise  we  would  be  absolutely  ex- 
cluded from  carrying  on  all  those  kinds  of  business  which  we  could 
conduct  with  the  same  expenditure  of  effort  as  the  English. 
We  should  have  been  also  excluded  from  all  such  kinds  of 
business  as  would  demand  of  them  less  than  foi*ty-two  per  cent, 
more  of  effort  than  they  demanded  of  us.  This  would  have  dis- 
charged several  millions  of  our  wages-working  class.  But  just 
here  comes  in  the  ojiportunity  to  make  taxes  promotive,  or  at  least 
defensive,  of  jiroduction.  We  levied  twenty  to  sixty  per  cent, 
duties  on  such  ^.rticles  as  competed  with  our  own  industries,  and 
what  was  the  result  ?  We  continued,  at  a  profit,  the  production 
of  all  products  which  we  could  produce  with  the  same  expendi- 
ture of  effort  as  our  foreign  competitors.  We  sustained  our 
rates  of  wages,  and  yet  divei\sified  our  industry,  by  defending  all 
branches  of  production  which  we  had  equal  natui-al  powers  with 
other  countries  for  carrying  on. 

200.  Collecting  Taxes  from  Foreign  Producers.— But 
this  was  not  all.  The  schedule  '^^  consists  of  articles  the  duties  on 
which,  in  1870,  were  paid  entirely,  or  substantially,  by  foreigners. 
There  were  others  in  which  foreigners  paid  a  portion,  greater 
or  less.  On  these  they  paid  the  whole  duty.  A  careful  study 
of  the  table  may  show  that  it  is,  after  all,  possible,  not  only 
to  devise  a  system  of  taxes  which  will  be  a  pi'oductive  agent, 
but  which  will  be  an  economy  instead  of  a  burden  to  the 
taxpayers. 

Of  each  of  these  articles,  we  produce  from  fifty  to  a  thousand 
times  as  much  as  we  import.     Which  of  them  will  Prof.  Perry 

*  The  following  is  a  table  of  articles,  the  ])rice  of  Wiicli  is  fixed  wholly  by  American 


586 


ECONOMIC  PHILOSOPHY. 


take  as  a  test,  and  say  that  the  duty  is  added  to  the  selling:  price 
of  the  whole  quantity  consumed,  whether  imported  or  produced 
here  ?  If  he  says  this  of  butter,  our  farmers  would  smile  to  learn 
that  Congress  can,  by  a  mere  act  of  legislation,  raise  the  price 
of  all  the  butter  consumed  in  the  country  by  four  cents  a 
pound.  So  of  all  other  articles.  The  dvities  on  these  are  $19,- 
000,000.  This  is  a  very  moderate  part  of  the  total  revenue  paid 
by  foreigners  under  our  pi'otective  system.  It  aims  to  include 
none  of  the  cases  in  which  foreigners  pay  part  of  our  revenue 
and  American  consumers  pay  the  balance.  In  the  cases  of 
all  articles  in  which  competition  between  the  foreign  and  Amer- 


production,  and  consequently  the  duties  on  which  are  paid  wholly  by  foreign  pro- 
ducers : 

IMPORTATIONS  FOR  THE  YEAR  ENDING  JUNE  30,  1870, 


Commodities. 

Quantities. 

Butter,  tts 

4,089,098 

Brick             

Candles,  fts— 

Star,  stearine 

6,834 

Parafflne,  sperm. . 

10,754 

Cheese,  lbs  

2,289,257 

Hops,  ft)S 

21,568 

Coal,  tons 

415,728 
701,323 

Copper  ore 

Glue    

Lead,  Kis 

80,916,724 

Leather        

Beef  and  Pork 

840.074 

Bacon,  lihds 

138,599 

Es-gs,  yolks  of.    .. 

Linseed  oil.  gals 

129.5.57 

White  Lead,  tt>s 

6,238,385 

Paper — 

Printing 

Writing 

Potatoes,  bu 

88,978 

Rice,  lbs 

30,0,37,640 

Salt,  !bs 

569,658,703 

Tallow,  fts 

33,693 

Lard,  fts 

19,9.56 

Cigars,  fts 

535,736 

Vinegar,  gals 

263,819 

Firewood 

Furniture      

Clothing- 

Cotton        .... 

Silk       

Wool    

Pig  Iron,  tons 

179,848 

Wheat,  bu   

509,734 

Flour,  brls 

63,939 
6,735,496 

Barley,  bu 

Oats,  bu 

2,131,690 

(;orn,  bu 

89,005 
5,430,333 

Wool,  raw 

Values. 


$64,374 


4c.  ^  R.. 
30  f  cent. 


46,479 
184,542 


4,554,260 
410,416' 


69,021 
145,743 


1,690,477 


227.788 

805,881 

6,660,156 

6,382,078 

455,987 

3,028,361 


290,907 


Rate  of  Duty. 


5c.  ^   lb 

8c.  ^  ft 

4c.  ^  ft 

5c.  #  ft 

$1.25  ^  ton. 

3c.  ^   ft 

20^  cent 

20   ^   cent... 
2c .  ^  ft  . . . . 
30  ^  cent  . . . 

Ic  ^  ft 

2c.  ^  ft 

10^  cent .... 
23c.  ^gal... 
3c.  I?  ft 


20  ^  cent 

35^  cent 

35c  ^  bu 

3Kc^  ft 

18  and  24c.  ^  100  fts.. 

Ic.  I?  ft 

2c.  ^  ft 

$2.50  ^  ft  and  25  ^  cent 

10c.  |9  gal        

20  |3  cent 

.35  %?  cent 

20  |i  cent 


25^  tent 

60  \i  cent 

50c.  ^  ft  and  40  ^  cent 

S9  ^  ton 

20c.   %!  bu 

20  per  cent 

15c.  per  bush 

10c.  pf-r  bush 

10c.  per  bush 

10c.  per  ft,  and  11  per  ct, 


Amount  of 
Revenue. 

$163,563 
12,874 

362 

860 

91,570 

1,078 

519,661 

22,839 

9,349 

36,913 

1,718,051 

1,367,261 

8,400 

2,771 

41,046 

29,798 

186,846 

13,804 

61,090 

22,244 

755,502 

1,198,552 

336 

339 

1,737,533 

26,405 

45,604 

282.113 

1,334,751 

2  233  741 
273,592 

1.762,806 

1,618,632 
101,944 
58,181 

1  008,834 

213,169 

8.900 

2.228,840 


Total $19,189,358 


MILL  ON  TARIFFS.  587 

icaii  producer  is  made  active  by  the  advances  of  the  latter  toward 
supplying  a  product  which  the  former  has  previously  supplied, 
the  foreign  producer  pays  part  of  the  revenue  in  order  to  hold 
his  market.  Such  are  the  cases  of  bar  iron,  imported  hardware, 
cotton,  and  woolen  cloths.  The  proportion  of  duties  paid  by 
foreigners  on  these,  at  present,  has  never  been  officially  inves- 
tigated. We  judge  it  to  be  from  a  third  to  half  of  the  duty.  In 
that  case,  about  forty  millions  ($40,000,000)  of  our  tariff  revenue 
are  paid  by  foreign  producers.  John  Stuart  Mill  concedes  this 
capacity  of  a  tariff  on  competing  products,  to  collect  revenue  from 
foreigners.  Mr.  Perry,  by  ignoring,  virtually  denies  it.  On  the 
contrary,  he  denounces  those  particular  duties  as  "robbery  of  the 
American  taxpayer,"  which  are  not  paid  by  the  Americans  at  all, 
but  are  a  net  gain  to  them  as  taxpayers.  We  correct  Perry  by 
the  more  judicious  candor  of  Mill,  in  this  regard.  In  vol.  ii. 
page  457,  of  his  "Principles  of  Political  Economy,"  he  says  : 
' '  Those  are  therefore  in  the  I'ight  who  maintain  that  taxes  on 
imports  are  partly  paid  by  foreigner^."  And  again,  on  page  458, 
he  says  concerning  "duties  not  sufficiently  high  to  counter- 
balance the  difference  of  expense  between  the  production  of  the 
article  at  home  and  its  importation"  :  "Of  the  money  which  is 
brought  into  the  treasury  of  any  country  by  taxes  of  this  last 
description,  a  part  only  is  paid  by  people  of  that  country,  the  re- 
mainder by  the  foreign  consumers  of  their  goods."  And  again 
he  says  (same  page)  "a  non -protecting  duty  would,  in  most 
cases,  be  a  source  of  gain  to  the  country  imposing  it,  in  so  far  as 
throwing  part  of  the  weight  of  its  taxes  upon  other  people  is  a 
gain."  And  again,  "  the  only  mode  in  which  a  country  can  save 
itself  from  being  a  loser,  by  the  I'evenue  duties  imposed  by  other 
countries  on  its  commodities,  is  to  impose  corresponding  revenue 
duties  on  theirs." 

The  entire  $123,000,000  of  duties  on  the  imports  of  18G7,  which 
we  have  above  classed  as  "  protective,"  were,  according  to  Mr. 
Mill,  revenue  duties.  They  were  not  so  high  as  to  "  counter- 
balance the  difference  of  expense  between  the  production  of  the 
article  at  home  and  its  importation."  If  they  had  been,  the 
articles,  on  which  the  duty  has  been  actually  collected,  would 
not  have  been  imported.  Hence,  that  duties  were  collected  upon 
them  proves  that  the  duty  was  not  high  enough  to  prevent  their 
importation.  Hence,  they  were  revenue  duties.  Hence,  a  part 
of  tliem  was  paid  by  foreign  manufacturers  and  merchants. 
It  is  easy  to  perceive  the  inducement  which  leads  a  foreign  manu- 


588  ECONOMIC  PHILOSOPHY. 

facturer  or  prodvxcer,  in  certain  states  of  tlie  market  and  of  prices, 
to  pay  the  duty  himself.  He  cannot  always  know,  when  he  pays 
the  duty,  at  what  price  he  can  sell  the  goods.  He  is  as  liable, 
therefore,  to  lose  the  duty  as  he  is  to  lose  any  other  element  of 
cost.  As  he  can  not  be  sure  his  price  will  cover  wages,  rent,  or 
interest,  neither  can  lie  know  it  will  cover  duties. 

A  manufacturer  in  Shefiield,  England,  makes  cutlery,  and 
has  usually  shipped  to  America  knives  which  cost  him  $4  a  dozen, 
to  be  sold  at  $6  a  dozen,  whereby  he  controls  the  market,  as  the 
American  manufacturer  can  not  make  them  less  than  $7.  A  duty 
of  $3  a  dozen  is  laid  on  them.  He  says:  "Now,  I  can  not  sell 
these  knives  for  more  than  $7.50  a  dozen,  for  at  that  price  the 
Americans  can  make  the  same  knives  at  a  profit,  and  if  I 
sell  at  $8,  they  will  cut  me  out  of  the  trade  altogether.  I  will 
therefore  pay  the  duty  of  $3  a  dozen  myself,  sell  them  at  $7.50, 
and  have  fifty  cents  profit,  instead  of  selling  them  at  $G,  with  $3 
profit,  as  I  did  befoi*e  the  American  duty  was  imposed."  The 
effect,  therefore,  is: 

1.  The  price  of  the  knives  to  the  Americati  consumer  is  not 
raised,  hj  the  amount  of  the  duty,  $3,  as  many  free  traders  would 
say,  but  by  only  $1.50. 

2.  The  amount  of  the  duty  is  not  charged  over  by  the  importer 
on  the  consumer,  as  the  free  traders  assume,  and  paid  by  the 
American  purchaser  of  knives.  It  is  paid  one-half  thereof  out 
of  his  previous  profits,  of  which  it  absorbs  three-fourths,  by  the 
British  manufacturer,  and  one-half  thereof  out  of  the  rise  in 
price,  which  latter — one-half  of  the  duty  only — is  paid  by  the 
American  consumer. 

3.  Though  the  price  of  the  article  is  raised  by  $1.50,  yet,  had  the 
tax  been  levied  in  any  other  manner  whatever,  the  price  of  what- 
ever it  was  levied  upon  must  have  been  raised  $3.  American 
consumers,  therefore,  have  not  only  got  rid  of  $1.50  of  tax,  by  col- 
lecting it  out  of  their  British  cousins,  but  have  avoided  $1.50  of 
the  rise  in  price,  which  would  have  resulted  somewhere  else,  and 
on  something  else,  if  they  had  levied  the  tax  where  Americans 
would  have  to  pay  the  whole  of  it. 

4.  American  manufacturers,  who  had  previously  been  under- 
sold by  $1  a  dozen  on  knives,  now  find  they  can  make  them  at  a 
cost  of  $7  a  dozen,  to  start  with,  and  make  a  profit  of  fifty  cents  a 
dozen.  But  as  they  go  on,  and  their  skill,  organization,  and 
capital  increase,  they  constantly  tend  to  produce  them  more 
cheaply,  until,  at  last,  they  can  produce  them  at  $6,  $5,  or  $4  a 


ADDING  DUTY  TO  PRICE.  589 

dozen,  and  the  foreign  manufacturer  is  finally  and  forever  under- 
sold, and  driven  out  of  the  field.* 

207.  Whether  the  Duty  Raises  the  Price  on  the 
Whole  Domestic  Product. — Prof.  Perry  seizes  upon  the  class 
of  articles  which  are  almost  wholly  produced  in  this  country,  and 
in  which,  therefore,  the  tariff  is  in  most  cases  nearly  or  quite 
powerless  to  affect  the  price,  as  being  those  in  which  it  operates 
on  the  largest  scale  as  a  tax  on  consumers.  Thus  he  (nineteenth 
edition  "Political  Economy,"  page  486)  says: 

If  now  we  may  fairly  suppose  that,  on  the  average,  for  each  one  foreign  article  paying 
a  duty  into  the  treasury,  there  were  four  domestic  articles  raised  each  in  price  as  much 
as  the  foreign  article  paid  in  duty,  then  it  follows  that  the  people  paid  in  eaclkof  those 
years  under  chiefly  protective  tariff  taxes  $633,000,000,  or  $12,640,000,000  in  all,  no  penny 
of  which  went  into  the  treasury  of  the  United  States  ;  that  this  is  a  reasonable  supposi- 
tion appears  partly  from  the  known  proportion  between  imported  and  domestic  as  to 
several  leading  articles;  for  example,  of  steel  rails  in  18S0  the  domestic  was  20  times  the 
imported,  and  the  people  paid  19  times  more  under  the  duty  than  the  treasury  got  ;  on 
woolen  blankets  in  1881  the  Treasury  took  in  less  than  $2,000,  while  the  people  paid  in 
the  extra  price  of  blankets  more  than  1,000  times  thatsum  that  year,— and  on  iron  goods 
of  all  kinds  we  have  seen  that  the  average  duty  was  about  77  per  cent., while  the  vast 
bulk  of  iron  consumed  is  known  to  be  of  domestic  production. 

This  pyramid  of  accusation  rests  on  that  small  apex,  the  open- 
ing "if."  Political  economy  cannot  be  built  up  into  a  science, 
on  "if  we  may  suppose."  We  mayn't  suppose  any  of  these 
things,  because  none  of  them  are  true.  "If,"  in  1880,  steel  rails 
sold  below  iron  rails,  at  one-third  the  price  steel  rails  brought 
when  we  were  deiJendent  on  the  importation,  and  at  less  than  pig 
iron  had  sold  for  in  the  two  last  periods  of  low  duties,  viz.,  1857 
and  1837,  the  duty  which  had  so  reduced  prices  would  not  "tax" 
the  American  buyer  of  rails,  even  if  it  should,  by  depriving 
English  makers  of  their  largest  market,  knock  the  English  price 
still  several  points  below  the  American.  "  If  "  the  duty  had  in- 
creased the  x^rice  of  steel  rails,  and  like  duties  had  also  increased 
prices  of  all  commodities,  and  also  the  volume  of  all  means  of 
payment,  it  would  not  be  a  tax.  Railroad  companies  are  not 
taxed  in  buying  steel  rails  at  $10  a  ton  more  than  English  prices, 
if  they  pay  for  the  American  rails  in  transportation,  and  must 
pay  for  the  English  rails  in  money  which  they  haven't  got. 

Nor  are  farmers  taxed  by  the  duty  on  steel  rails,  if  it  appeal's 
that  the  substitution  of  steel  rails  for  iron,  at  whatever  price,  is 
always  a  relief  from  cost  of  transportation,  and  never  an  addition 
to  it  ;  that  farmers  pay  for  transportation,  not  at  all  according  to 
cost,  but  according  to  the  ratio  of  the  quantity  of  goods  to  be 

♦  See  the  figures  and  diagr»m  verifying  this  in  the  case  of  salt,  post,  ch.  10. 


590 


ECONOMIC  PHILOSOrUY. 


transported  to  the  means  for  carrying  them,  and,  finally,  that  by 
Avhatever  argument  a  duty  adds  to  a  price,  the  farmer  is  getting 
4  cents  a  pound  more  for  his  butter,  and  a  like  increase  on  all  his 
other  products,  because  of  the  duty. 

The  Iron  and  Steel  Association  publishes  a  list  of  relative 
prices,  in  store,  of  English  and  American  iron  and  steel  wares  in 
1882,  as  follows  : 


Axes,  No   2,  per  dozen, 
Aiigerg,  cast-steel,  per  dozen, 
Auger  bits,  per  dozen, 
Chisels,  socket  framing,  per  dozen. 
Hatchets^  shingling,  per  dozen. 
Pickaxes,  best  assorted,  per  cwt. 
Saws,  hand,  26  inch,  per  dozen, 

Saws,  cross-cut,  each, 


English  price. 

1  inch,  $4.48;  2  inch,  |12 

1^  inch,  $4,48 

1  inch,  $3.72;  2  inch,  $7 

No.2,  S6 


Planes,  jack,  18  inch,  2%  double  iron 
per  dozen,  ) 

Ftrap  hinges,  light,  per  dozen  pairs, 

Wrought-iron  hasps   and    ttaplee,  8  I 
inch, per  dozen,  ( 

Cofifee  mills,  box,  square.  No.  1,  each, 

Cast-steel  shears,  trimming,  common  | 
8  inch,  per  dozen,  ) 

Shovels,  No.  2,  square,  per  dozen, 

Door-knobs,  mineral, 


Common, «6;  best, $13.48 
j  4  ft.  $2.30;  A%  ft.,  $2.60; 
1      .5  ft.,  $3.12 

$15 

6  inch,  $1.48 

$0.73 

$0.84 

$e 


87.48 
$2.48 


American  price. 

$9  50 
1  inch. $.5.76:  2  in  $11  52 

IK  inch,  %.-4 

1  inch,  $5.76;  2  in.  $8.74 

No.  2,  .$5.25 

$9 

Common.  $5;  g^od,  $15 

4  ft.  $2;  4}/^  ft.  $2.25;  5 

ft.  $3.12 

$10.20 


$0.65 

$0.67 

$4.20 

i5 
1 


These  prices  show  that,  as  to  iron  and  steel  wares  in  1883  (and 
the  facts  were  essentially  the  same  from  1868  to  1880),  the  duty 
did  not  operate  as  any  tax  whatever  on  the  American  consumer, 
since  American  prices  were  as  low  as  the  foreign. 

As  to  woolen  blankets  the  facts  are  similar.  In  1882  the  writer, 
in  a  lecture  before  the  Revenue  Reform  Club  at  Brooklyn,  ex- 
hibited three  woolen  blankets,  one  made  in  Manchester,  one  in 
Minneapolis,  and  one  near  Boston.  The  English  blanket  was  the 
only  one  of  the  three  that  contained  any  shoddy  whatever,  as 
could  be  tested  by  pulling  out  a  pinch  of  the  wool.  Yet  the  manu- 
facturer s  price  on  each  of  the  three  was  68  cents  per  pound. 

As  to  steel  rails,  the  prices  have  been  higher  in  America  than 
in  England,  sometimes  by  the  amount  of  the  duty,  and  sometimes 
by  only  a  varying  fraction  of  that  amount.  As  the  Americans 
have  developed  the  manufacture  of  steel  rails,  until  they  now 
manufacture  more  than  the  English,  it  is  plain  that  prices  in  En- 
gland have  at  all  times  been  much  lower  than  they  would  have 
been,  if  we  had  called  upon  English  makers  to  double  their  total 
production  in  order  to  fill  our  demand.  Under  the  influence  of 
our  competition,  prices  which  were  $165  in  gold  in  1864  have 
fallen  to  as  low  as  $28.50  per  ton. 

If  it  were  true  that  wherever  there  is  any  importation,  how- 


A  REDUCriO  AD  ABSUEDUM.  691 

ever  small,  uuder  a  duty,  the  duty  enhances  the  price  of  the 
whole  domestic  product  by  the  amount  of  the  duty,  the  farmers 
of  America  would  be  the  recipients  of  more  taxes  than  all  the 
governments  of  Europe  combined  collect. 

For  instance,  we  in  1869  imported  6,685,093  pounds  of  butter, 
under  a  tariff  duty  of  four  cents  per  pound,  which  paid  the  rev- 
enue $267,403.75.  This,  on  the  free-trade  theory,  added  four  cents 
per  pound  to  the  price  of  all  the  butter  consumed  in  the  United 
States,  because  the  home  price  was  raised  by  the  duty.  In  1860 
we  produced  460,509,854  pounds  of  butter  ;  and  supposing  our 
production  to  have  increased  by  60  per  cent.,  which  was  our 
average  in  other  products,  we  in  1869  produced  736,256,897 
pounds.  Now,  although  this  was  one  hundred  times  as  much  as 
we  imported,  yet,  as  our  jjroduction  of  coal  was  forty  times  as 
much  as  we  imported,  and  of  lumber  twenty  four  times,  and  of 
pig-iron  twenty-four  times,  it  will  be  seen  that  the  same  principle 
applies  to  all,  viz.,  that  the  importation  is  insignificant  as  a  means 
of  supply,  compared  with  the  domestic  production.  But,  argues 
Prof.  Perry,  that  makes  no  difference.  The  greater  the  amount 
of  the  domestic  supply,  the  more  certainly  its  producers  have 
their  price  increased  by  the  amount  of  the  duty.  Assuming  this 
to  be  true,  butter  paid  four  cents  extra  per  pound  to  the  butter- 
makers  on  account  of  the  duty  being  a  tax  on  the  consumers  of 
butter,  amounting  to  $39,454,275.88  annually. 

Again,  we  imported  190,000  bushels  of  potatoes,  which  paid  a 
duty  of  25  cents  per  bushel,  or  $46,458.81.  Now,  accoi-ding  to 
Prof.  Perry,  the  ' '  potato  monopolists "  had  the  price  of  their 
whole  domestic  product  enhanced  by  25  cents  per  bushel.  Our 
domestic  product  in  1860  was  153,000,000  bushels,  or  in  1870  say 
243,300,000  bushels,  the  consumers  of  which  must  have  paid  for 
them  $60,800,000  more  than  they  would  have  been  compelled 
to  pay  but  for  the  tariff.  For  if  it  be  not  a  rule  that  the  foreign 
price  with  duty  added  fixes  the  price  of  the  home  product,  ' '  free 
trade  "  has  lost  its  grievance. 

Again,  we  imported  grains,  flour  and  meal,  under  an  average 
duty  of  15  cents  per  bushel,  upon  which  we  collected  a  total  rev- 
enue of  $954,616.46.  Our  domestic  production  of  those  articles 
amounted  in  1870  to  about  2,289,270,850  bushels,  which,  if  in- 
creased by  the  average  rate  of  duty  on  the  amount  imported, 
would  have  levied  a  tax  on  the  consumers  in  favor  of  the  "grain 
monopolists"  of  $343,290,637.50,  or  about  equal  to  our  whole 
national  taxation.     On  these  three  articles,  butter,  potatoes,  and 


592  ECONOMIC  PHILOSOPHY. 

grains,  the  consumers  would  be  paying  the  producers  a  tax,  over 
and  above  the  cost  of  production,  amounting  to  1433,544,902. 

Extending  the  same  calculation  to  all  of  the  1,200  articles  on 
which  duties  are  charged,  Prof.  Perry  might  with  the  same  ease 
assume  and  state  that  the  people  are  taxed  in  all  by  the  tariff 
at  least  five  thousand  millions  of  dollars,  or  the  equivalent  of  all 
their  annual  earnings,  leaving  them  absolutely  not  a  crust  nor  a 
bone,  except  as  all  live  on  the  pi-otective  taxes  tliey  collect. 

A  theory  which  results  in  such  startling  conclusions  can  with 
no  more  truth  be  applied  to  pig-iron,  wool,  salt,  coal,  and  lum- 
ber than   to  grain,  potatoes,  and  butter. 

If  it  be  said  that  grain,  potatoes,  and  butter  are  articles  of  ex- 
portation as  well  as  of  import,  so  are  pig-iron,  cotton  goods, 
salt,  iron  and  steel  manufactures,  and  lumber.  Are  our  farmers 
collecting  $483,000,000  of  "private  tax  "on  their  grain,  butter, 
and  potatoes,  over  and  above  the  sum  paid  the  government  on 
the  portion  imported  of  these  articles  ?  If  not,  neither  are  the 
American  manufacturers  of  pig-iron,  salt,  lumber,  and  coal 
collecting  a  tax  on  their  whole  product  equal  to  the  amount  of 
the  duty. 

On  the  contrary,  if  the  true  law  of  prices  is  that  the  price  of 
any  article  depends  on  the  ratio  of  the  whole  supply  to  the  whole 
demand,  and  that  the  foreign  price  only  contributes  to  regulate 
the  domestic  price  in  the  proportion  that  the  foreign  supply  bears 
to  the  domestic  supply,  then  at  what  conclusion  do  we  arrive  ? 
Our  importation  of  coal,  being  adequate  to  supply  only  one- 
fortieth  part  of  our  demand,  contributes  one  part  in  forty  toward 
fixing  the  price.  If  there  is  a  fall  or  rise  of  40  cents  per  ton  in 
coal,  one  cent  per  ton  of  the  fall  or  rise  may  be  credited  to  Nova 
Scotia.  So,  as  we  produce  twenty-four  times  as  much  pig-iron 
and  lumber  as  we  can  import,  our  importation  of  either  only 
affects  by  one  twenty-fourth  the  actual  changes  in  price,  and 
so  on. 

But  if  this  be  so,  then  the  fraction  of  influence  exercised  by  the 
foreign  supply  over  the  domestic  price,  is  so  insignificant  as  to 
make  it  substantially  true  in  the  cases  of  lumber,  coal,  pig  iron, 
grains,  butter,  potatoes,  flour,  and,  in  a  scarcely  less  degree,  of 
rice  and  salt,  that  our  domestic  supply  determines  not  only  our 
own  price  but  the  foreign  price  of  those  producers  abroad  who 
sell  their  products  in  our  markets  ;  for  butter-makers  in  Canada, 
and  coal  miners  in  Nova  Scotia,  will  not  sell  their  butter  and  coal 
to  Canadians  and  Nova  Scotians  except  at  the  price  they  can  get 


WHAT  PRODUCERS  RECEIVE.  593 

for  it  in  the  States.  Now,  in  considering  the  price  they  get  for 
their  article  in  the  States,  they  know  first  that  they  can  get  the 
average  x^rice  of  the  States,  and ,  secondly,  that  out  of  tliis  price 
they  must  pay  the  duty.  If  they  can  afford  to  import  at  the  price 
here  prevailing,  and  pay  the  duty  out  of  ivhat  icould  elsebe  their 
profits,  they  import ;  if  not,  they  stop  importing.  So  that  in  all 
these  cases  where  the  ratio  of  the  amount  imported  to  the  domes- 
tic production  is  small,  and  no  i^articular  quality  in  the  imported 
article  compels  its  importation — viz.,  butter,  grain,  lumber,  coal, 
potatoes,  salt,  and  wool, — the  foreign  producer  pays  the  duty.  It 
can  not  raise  prices.  It  collects  fully  twenty  millions  of  taxes 
out  of  those  foreign  producers  whose  industries  compete  with 
GUI'S,  and  to  whom  free  trade  means  fx'eedom  to  profit  by  our 
high  prices.  This  is  not  the  only  or  the  principal  mode  in  which 
protective  tariffs  collect  our  revenue  out  of  foreigners  ;  but  it 
covers  about  $20,000,000  of  taxes  so  paid. 

Free-trade  observers  are  not  wholly  blind  to  the  actual  work- 
ing of  these  duties  on  Canadian  products.  The  Chicago  Tribune, 
in  discussing  the  gain  the  two  countries,  and  especially  Canada, 
would  derive  from  annexation,  asserted  that  the  Canadians,  as  a 
rule,  pay  the  duties  both  on  what  they  buy  from  Americans  and 
on  what  they  sell  to  the  Americans.  A  Canadian-American 
writes  to  it  to  know,  if  this  be  true,  "then  what  becomes  of  the 
free-trade  theory  that  the  consumer  pays  the  duty  ? "  To  this  the 
Tribune  replies  : 

The  consumer  pays  the  price  of  the  goods  that  are  sold  to  him;  <Aej9j'0<?«c«ron/y  re- 
ceives  what  is  left  after  deducting  tariff  taxes,  freight,  and  middlemen's  profits.  The 
United  States  is  the  greatest  and  best  market  for  Canadian  agricultural  products .  It  is 
in  this  country  they  find  their  best  market  for  their  surplus  oats,  barley,  buckwheat, 
potatoes,  and  other  vegetables,  horses,  fat  cattle,  veal,  mutton,  poultry,  butter,  eggs,  and 
often  for  their  fine  wheat  and  flour,  notwithstanding  the  high  duties  on  all  these  products. 
Remove  the  duties,  and  the  Canadian  farmers  would  get  from  one-fourth  to  one-third 
more  for  all  their  surplus  stuff,  which  would  amount  to  many  millions  of  dollars  a  year. 

This  is  from  the  pen  of  a  veteran  editor,  who  has,  at  times, 
spent  much  time  in  Canada,  studying  the  economic  relations  of 
that  province  to  the  American  States.  Mr.  Medill's  admission 
being  true,  the  Canadians  pay,  on  the  products  they  market  in 
the  United  States,  as  follows : 

On  $8  000,000  worth  of  lumber  sent  from  the  Ottawa  district  into  New 

York  and  New  England, $1,000,000 

On  coal  from  Nova  ScoMa,    ......  4(K),000 

On  brcadstuffs,  barley,  and  malt,      .....  2,750,000 

On  potatoes,  say,         .......  500,000 

$5,340,000 


59-i  ECONOMIC  PIIIL0S0PH7. 

The  Canadians  are  indebted  politically  to  the  United  States  for 
their  virtual  independence  of  England,  and  industrially  for 
markets  which  are  not  only  the  best  in  the  world,  but  are  a  thou- 
sand miles  nearer  to  them  than  they  are  to  the  greater  part  of 
the  American  people.  The  American  tariff  happily  enables  them, 
without  the  embarrassments  of  a  political  connection,  to  pay, 
as  equitably  as  if  they  were  states  in  the  American  Union,  for 
the  involuntary  national  sovereignty  which  has  been  thrust  upon 
them  by  exterior  forces,  in  which  they  had  no  desire  to  take  part, 
and  which  they  are  under  no  military  tax  to  maintain. 

This  is  one  of  those  cases  to  which  the  remark  of  Prof.  Sidg- 
wick  ("Principles  of  Political  Economy,"  p.  576)  applies:  "It 
must  be  admitted  that  the  imposition  of  import  duties  is,  under  cer- 
tain circumstances,  a  method,  at  least  temporarily  effective,  of  in- 
creasing a  nation's  income  at  the  expense  of  foreigners,  though, 
on  various  grounds,  a  dangerous  method  ;  and  the  same  is  true 
of  export  duties,  whenever  a  country  has  a  monopoly  of  any  pro- 
duct keenly  demanded."  The  dangerous  quality  of  such  duties 
is  not  an  economic  but  a  political  and  military  question. 

208.  Getting  Cutlery  by  Making  Buttons.—  Prof.  Perry 
says  : 

Now,  how  can  the  free  interchange  of  commodities  lessen  the  demand  for  lahor  or 
the  rewards  of  labor  f  You  are  employing  a  hundred  men.  You  wish  to  obtain  a  cer- 
tain quantity  of  cutlery.  Does  it  make  any  difference  to  you,  or  to  the  wages  of  your 
men  whether  you  employ  them  directly  in  making  the  cutlery  or  in  making  the  but- 
tons with  which  you  can  purchase  the  cutlery  from  abroad  ?  If.  by  employing  them 
in  making  buttons,  you  can  purchase  more  and  better  cutlery  (and  if  you  cannot,  there 
is  no  temptation  to  an  exchange),  is  it  not  plain  to  reason  that  it  is  better  for  you,  and 
that  you  can  afford  to  pay  them  better  wages,  than  if  you  employed  their  labor  less 
effectively  upon  cutlery  ? 

Prof.  Perry  here  begs  the  whole  question  by  assuming  that  the 
full  hundred  men  remain  in  full  employment  at  full  wages. 
But  how  does  the  case  stand  if  you  need  to  employ  one  hundred 
men,  and  only  seventy-five  of  them  can  find  employment  at  but- 
ton-making, while  the  other  twenty-five  might  find  employment 
at  cutlery  ?  Then,  is  it  not  plain  that  if  you  put  them  all  at  but- 
tons, you  are  working  for  an  over-production  of  buttons,  a  fall 
in  their  pi'ice,  and,  consequently,  a  fall  in  the  wages  of  those  who 
make  them  ?  Or,  if  you  employ  only  seventy-five  at  buttons, 
then  they  must  not  only  support  themselves,  but  also  the  other 
twenty-five  who  are  doing  nothing  because  you  do  not  emploj' 
them  at  cutlery  ?  In  all  international  exchange,  the  latter  is  the 
illustration  that  applies  to  the  facts,  because  in  all  natiQns  there 


BO  UNTIES  BLEED.— D  UTIES  FEED.  5  95 

is  a  fund  of  unemployed  labor  Avhich  a  greater  diversification  %f 
industry  would  employ.  If  all  the  people  in  the  United  States 
could  be  induced  to  raise  corn,  corn  would,  of  course,  fall  in 
price  to,  say,  a  cent  a  bushel,  or  almost  nothing.  The  expendi- 
ture of  effort  required  from  each  corn  producer  to  raise  it,  would 
average  four  or  five  times  as  much  at  it  now  does,  because  we 
raise  corn  only  under  the  most  favorable  conditions.  We 
should  then  raise  it  under  all  possible  conditions,  and  with  labor 
least  adapted  to  it.  Since,  if  our  whole  population  should  go  to 
raising  it,  we  would  sell  it  for  one-twentieth  its  present  price, 
though  ^t  four  times  as  much  labor  per  bushel,  this  would 
prove,  in  Prof.  Perry's  mind,  the  vast  advantage  which  would 
result  from  our  all  raising  corn,  because  we  could  raise  it  so 
much  cheaper  than  if  only  part  of  us  raise  it.  Yet  it  is  plain  that 
the  real  result  would  be  that  we  could  not  sell  our  corn  for  enough 
of  the  necessaries  of  life  to  keep  our  people  from  perishing. 
Hence  it  is  plain  that,  with  sixty  millions  to  find  employment  for, 
and  to  feed,  we  can  more  certainly  employ  them  all,  if  we  pro- 
duce both  our  cutlery  and  our  buttons,  and  also  the  crops  tliey  are 
purchased  with,  than  if  we  produce  either  alone. 

The  actual  experience  of  the  cutlery  trade  in  the  United  States 
is  worth  more  than  theory.  When  Dr.  Francis  Wayland,  in 
1842,  wrote  his  free-trade  text-book  on  political  economy,  Amer- 
ican hardware  was  almost  unknown.  All  production  has  three 
stages,  and  the  free-trade  sophistry  varies  to  adapt  itself  to  these 
stages.  When  a  production  is  not  yet  begun,  to  protect  it  is 
folly,  because  it  can  never  be  made  profitable.  When  the  pro- 
duction is  well  under  way,  the  argument  becomes  that  it  would 
have  advanced  much  faster  if  it  could  have  had  free  raw  materials. 
When  it  has  won  the  battle,  and  is  exporting  products,  of  which 
it  was  once  predicted  there  could  be  no  profitable  production,  the 
argument  is  that  protection  is  re-stricting  the  export  !  In  1842, 
therefore,  Wayland  ridiculed  the  notion  of  expecting  that  we 
should  become  makers  of  cutlery.     He  said  : 

We  pay  a  heavy  duty  on  cutlery  in  this  country,  while  not  a  thousandth  part  of  the 
cutlery  used  is  made  here.  It  would  be  vastly  cheaper  to  pay  a  bounty  sufficient  to  raise 
all  the  cutlery  made  in  this  country  to  its  present  prices,  and  it  would  be,  for  aught 
I  see,  just  as  good  for  the  cnlXar.— Way  land' 8  "Political  Economy, '''  edition  of  1843, 
p.  140. 

A  free-trader  always  wants  a  bounty  to  be  substituted  for  a 
duty,  because  he  loves  the  foreign  manufacturer  better  than  he 
loves  the  National  Treasury.  A  bounty  would  be  more  and  more 


596  ECONOMIC  PHILOSOPHY. 

o^stly  to  the  country  as  the  production  increased.  A  duty  is 
cheapened,  to  the  consumer,  with  every  increase  in  the  home  pro- 
duction. It  repeals  itself  as  a  tax,  as  home  prices  come  down  to 
the  foreign. 

The  British  Parliament's  Select  Committee  on  Scientific  Instruc- 
tion reported  to  the  House  of  Commons,  on  July  15, 1868,  that  the 
manufactures  of  the  United  States  had  wholly  or  largely  super- 
seded those  of  Birmingham,  England,  in  the  common  markets  of 
the  world,  including  the  English  colonies,  in  the  manufacture  of 

Adzes,  Horse-nails, 

Augers,  Kibbling  machines. 

Axes— best  article,  Locks— door,  chest,  cupboard,  and  drawer, 

Brass  ware  (stamped).  Mowing-machines, 

Breech-loading  muskets.  Nuts  and  bolta, 

Buckets,  Penknives, 

Carpenters'  broad-axea,  Petroleum  lamps, 

Clocks,  Plows, 

Clothes-pegs,  Plumbers'  brass  foundry. 

Coffee-mills,  Pumps, 

Coopers'  tools.  Revolvers, 

Com-crnshers,  Rice-hullers, 

Cotton  gins.  Sausage  machines. 

Cultivators.  Scissors, 

Curry-combs,  Sewing  machines. 

Cut  nails,  Shoemakers' tools. 

Door- 1  atches ,  Table  ware. 

Gas-fittings,  Traps— rat,  beaver,  and  fox. 

Gimlets,  Washing  machines, 

Hay-rakes,  Watches— machine  made. 

Hoes— for  cotton.  Weighing  machines. 

This  state  of  our  manufactures,  as  to  cutlery,  had  been  brought 
about  by  eight  years  of  protection.     For  Dr.  Way  land's  advice 
had  been  followed  from  1846  to  1860. 
The  London  Times,  commenting  on  the  above  report,  said  : 

At  this  moment  Birmingham  is  losing  it?  old  markets.  A  few  years  ago  it  used  to 
supply  the  United  States  largely  with  edged  tools,  farm  implements,  and  various 
smaller  wares.  It  does  so  no  longer,  nor  is  the  cause  to  be  sought  merely  in  the  Amer- 
ican tariff.  It  is  found  that  the  manufacturers  of  America  actually  superseded  us,  not 
only  in  their  own,  but  in  foreign  markets  and  in  our  own  colonies,  and  the  Birmingham 
Chamber  has  the  sagacity  to  discover,  and  the  courage  to  declare,  that  this  is  owing  to 
the  superiority  of  American  goods. 

High  as  are  the  wages  of  an  English  artisan,  those  of  an  American  artisan  are  higher 
still,  and  yet  the  manufacturers  of  the  United  States  can  import  iron  and  steel  from  this 
country  at  a  heavy  duty,  work  up  the  metal  by  highly  paid  labor,  and  beat  us  out  of  the 
market  after  all  with  the  manufactured  article.    How  is  that  to  be  explained  f 

The  Americans  succeed  in  supplanting  us  by  novelty  of  construction  and  excellence 
of  make.  They  do  not  attempt  to  undersell  us  in  the  mere  matter  of  price.  Our  goods 
may  still  be  the  cheapest,  but  they  are  no  longer  the  best,  and  in  the  country  where  an 
ax,  for  instance,  is  an  indispensable  implement,  the  best  article  is  the  cheapest,  what- 
ever it  may  cost.  Settlers  and  emigrants  soon  find  this  out,  and  they  have  found  it  out 
to  the  prejudice  of  Birmingham  trade. 


TNVENTIVE  WORKMEN.  69^ 

The  skill,  greater  ingenuity,  intelligence,  and  progressive  capacs 
ity  of  American  workmen  are  due  to  their  higher  average  wage 
indirectly.  Here,  mechanics  and  operatives  receive  so  ample  a 
compensation  for  their  services  that,  for  fifteen  years,  the  chief 
motive  in  forming  labor  organizations  has  been  not  to  secure 
themselves  against  want,  but  to  perfect  some  scheme  by  which 
they  can  either  rule  their  employers'  business,  or  dispense  with 
employers  entirely.  Tliei*e,  a  temporary  loss  of  employment 
drives  them  upon  the  parish  for  relief.  No  man  engrossed  with 
constant  cares,  and  oppressed  with  half-satisfied  wants,  fight- 
ing his  way  from  day  to  day,  or  from  meal  to  meal,  in  the 
dull  struggle  for  subsistence,  can  have  leisure,  inclination,  or 
incentive  to  study  out  improvements  in  the  processes  by  which 
he  earns  his  daily  bread.  Steeped  in  ignorance  and  poverty,  he 
learns  his  trade  by  rote,  without  knowing  the  principles  with 
which  it  is  imbued.  He  is  regularly  handling  the  tools  and 
materials  with  which  new  experiments  are  to  be  tried.  He 
witnesses  regularly  the  operations  of  nature,  whether  in  the 
motions  and  pressures  of  bodies,  or  in  their  chemical  actions  on 
one  another.  But  these  golden  opportunities  pass  without  fruit- 
ful suggestion,  because  they  represent  to  his  mind  only  a  routine 
of  methods  by  which  he  is  able  to  secure  a  scanty  subsistence. 
Few  great  discoveries  have  been  made  by  chance,  or  by  ignorant 
persons.  They  are  generally  accomplished  by  individuals  of  com- 
petent knowledge,  and  who  are  in  search  of  them.  Hence,  while 
English  workmen  are  skillful,  expert,  and  useful,  in  a  more  auto- 
matic way,  their  inventive  faculties  since  1846  are  relatively 
latent.  What  they  formei'ly,  under  more  favorable  circumstan- 
ces, contributed  to  improvements  in  machinery  and  fabrics,  is 
largely  lost  of  late  to  the  avocations  in  which  they  have  been 
trained. 

The  case,  however,  is  very  different  with  the  American  me- 
chanic. Educated,  well  paid,  well  fed,  well  clothed,  well  housed, 
he  is  not  consumed  with  those  large  cares,  which  preclude  close 
application  on  the  part  of  his  employer  to  one  special  line  of 
experiment.  Nor  is  he  borne  down  by  those  cruel  deprivations, 
which  beset  the  life  of  his  English  competitor.  He  is  always  in 
the  way  of  intelligently  perceiving  what  is  wanting,  or  what  is 
amiss,  in  the  old  methods  ;  and  has  a  better  chance  as  well  as  a 
stronger  inducement  to  make  the  needed  improvement.  Our 
successful  inventors  have  been  "i)ushing"  men,  whose  daily 
experience  at  their  work  has  .shown  them  some  defect  in  its  pro- 


598  ECONOMIC  PIIILOI^OPllY. 

cesses,  or  suggested  a  more  pi'oductive  mode  of  reacliing  its 
results.  In  this  way  American  information  and  ingenuity  have 
been  applied  to  the  "edged  tools,  farm  implements,  and  various 
smaller  wares,"  instanced  bj'  the  London  Times,  and  carried  them 
to  such  a  degree  of  superiority  over  like  products  of  English 
manufacture  that  they  are  driving  the  latter  out  of  the  markets 
of  the  world.  Though  not  so  cheap,  measui'ed  merely  by  the  sell- 
ing price,  they  undersell  competitors  in  usefulness,  adaptability, 
and  excellence. 

In  the  opinion  of  the  fathers  of  the  Republic  the  question 
vrhether  we  ought  to  make  both  our  cutlery  and  our  buttons  de- 
pended solely  on  whether  our  country  produced  both  the  ore  of 
■which  to  make  the  steel  and  the  bone  or  other  raw  material  of 
the  button.  In  1810  Jeflferson,  then  President,  wrote  to  Thomas 
Leiper,  of  Philadelphia,  as  follows  : 

"  I  have  lately  inculcated  the  encouragement  of  manufactures  to  the  extent  of  our 
own  consumption,  at  least  of  all  articles  of  which  we  raise  the  raw  material.  On  this 
the  Federal  papers  and  meetings  have  sounded  the  alarm  of  Chinese  policy,  destruction 
of  commerce,  etc.  .  .  .  But  I  trust  the  good  sense  of  our  country  will  see  that  its 
greatest  prosperity  depends  on  a  due  balance  between  agriculture,  manufactures,  and 
commerce,  and  not  in  this  protuberant  navigation,  which  has  kept  us  in  hot  water  from 
the  commencement  of  our  government,  and  is  now  engaging  us  in  a  war."' 

To  Governor  Jay,  a  little  later,  he  wrote  : 

"An  equilibrium  of  agriculture,  manufactures,  and  commerce  is  certainly  become 
essential  to  our  independence.  Manufactures,  sufficient  for  our  own  consumption,  of 
what  we  raise,  the  raw  material — and  no  more.  Commerce  sufficient  to  carry  the  sur- 
plus product  of  agriculture,  beyond  our  own  consumption,  to  a  murket  for  exchanging 
it  for  articles  we  can  not  raise— and  no  more.  These  are  the  true  limits  of  manufac- 
tures and  commerce.  To  go  beyond  them,  is  to  increase  our  dependence  on  foreign 
nations,  and  our  liability  to  war." 

According  to  President  Jefferson,  therefore,  we  ought  to  man- 
ufacture all  the  iron,  steel,  woolen,  and  cotton  goods,  for  which 
we  produce  the  raw  materials,  the  iron,  steel,  coal,  wool,  cotton, 
breadstuffs,  and  provisions.  And  the  fact  that  we  export  a  large 
portion  of  our  cotton  unmanufactured,  and  import  much  of  our 
dr^r-goods,  iron  and  steel  wares,  etc.,  indicates  what  Mr.  JeflFer- 
son  would  style  "an  unbalanced  and  protuberant  agriculture," 
and  "increases  our  dependence  on  foreign  nations,  and  our 
liability  to  war." 

209.  Must  a  Nation  Import  Commodities  in  order  to 
Export  Them,  or  Buy  Them  in  order  to  Sell  Them  ? — In 
actual  life  it  would  be  deemed  absurd  for  a  customer  to  apply  to 
a^  merchant  the  doctrine  that  he  must  buy  a  farmer's  load  of 
pumpkins  or  potatoes,  not  because  he  wanted  them,  but  because 


IMPORTS  AND  EXPORTS.  590 

unless  he  did  so  he  could  never  sell  sheetmgs  or  hardware  to  the 
farmer.     But  Prof.  Perry  says  : 

"  If  we  will  not  buy,  of  course  we  cau  not  Bell.  If  wo  prohibit  importations,  we 
thereby  necessarily  prevent  exportotions  ;  that  is  to  Bay,  we  take  away  the irmarket 
from  those  who  manufacture  or  grow  the  goods  which  would  be  exported." 

The  meaning  of  this  is  that,  if  we  will  not  import  English  iron, 
we  can  not  find  sale  abroad  for  American  grain,  and  our  grain 
will  decline  for  want  of  the  foreign  market. 

The  professor,  in  his  preface,  prides  himself  on  this  point,  as 
being  in  some  sort  his  pet  hobby  and  private  property.  He  at- 
tempts to  correct  President  Garfield's  statement  that  the  fathers 
of  the  republic,  from  1790  to  1816,  argued  the  tariff  question  as 
fully  as  it  has  ever  since  been  argued,  by  saying  that  they  failed 
to  present  this  point.  The  protectionists  of  the  period  referred 
to  include  every  statesman,  in  both  political  parties,  from  1790  to 
1816.  They  did  not  present  this  alleged  point  because  there  were 
none  among  them  who  held  this  view. 

Our  exports  are  all  free  of  duty,  and  our  ability  to  sell  corn 
in  Liverpool  depends  in  no  degree  whatever  on  our  willing- 
ness to  buy  iron  or  any  thing  else— except  gold.  We  sell  our 
corn  for  bills  of  exchange  drawn  against  either  the  products 
which  the  country  to  which  we  export  sells  us,  or  against  pro- 
ducts which  that  country  sells  some  other  country,  and  with  the 
proceeds  of  which  it  pays  us.  If  we  will  sell  more  corn  for  less 
money  than  the  Germans  or  Russians,  then  we  can  sell  our  corn 
in  Liverpool,  and  not  otherwise.  If  it  were  possible  for  one 
nation  steadily  to  produce  all  the  wares  it  needed  for  its  own  con- 
sumption, and  at  the  same  time  to  produce  cheaper  than  all  other 
countries  that  which  they  would  need,  it  would  import  their  gold 
steadily  until  the  rise  in  its  prices,  occasioned  by  this  importation 
of  gold,  would  raise  its  money  cost  of  production  of  goods  to  a 
figure  at  which  foreign  nations  would  cease  to  buy  them. 

The  countries,  against  whose  pi'oducts  our  protective  duties 
discriminate  most,  are  those  which  take  nearly  all  of  our  exports. 
The  countries,  on  wliose  exports  we  impose  no  duties,  take  hardly 
any  of  our  exports.  Between  us,  and  the  countries  against  whose 
exports  our  tariffs  discriminate,  there  is  a  continual  balance  of 
trade  in  our  favor,  and  they  are  sending  us  gold,  while  between 
us  and  the  countries  whose  products  we  admit  free,  the  balance 
of  trade  is  largely  against  us.  For  instance,  all  our  duties  for  the 
protection  of  American  manufactures  rest  on  the  imports  from 
England,  Scotland,  Ireland,  Denmark,  Belgium,  Holland,  Russia, 


600  ECONOMIC  rillLOSOPUY. 

Spain,  Portugal,  Sweden,  Norway,  and  Germany.  Averaging 
the  exports  and  imports  for  the  two  years  1880  and  1881,  so  as  to 
arrive  at  the  mean  })er  year  between  the  United  States  and  these 
countries,  constituting  Europe,  we  find  that  we  sent  to  all  these 
countries  exports  amounting  in  value  to  $717,026,542  per  year, 
and  bought  from  them  imports  amounting  only  to  $360,229,555, 
leaving  a  balance  in  our  favor  of  $356,796,987  per  year.  If  this 
had  been  the  whole  of  their  and  our  foreign  trade,  it  would 
have  constituted  an  actual  net  balance  of  trade  in  our  favor, 
causing  an  influx  of  gold  to  that  amount,  less  such  sum  as  might 
be  required  to  pay  interest  on  our  loans,  and  freights  on  our 
ocean  cai*riage. 

The  countries  which,  we  are  told  by  Prof.  Perry,  can  not  buy 
from  us,  except  as  we  buy  from  them,  buy  from  us  exactly  two 
dollars'  worth  of  our  produce  where  we  buy  one  of  their  mer- 
chandise. 

On  the  other  hand,  the  countries  from  which  we  import  more 
than  we  export  to  them,  are  Italy,  China,  Japan,  British  Indies, 
Dutch  East  Indies,  Cuba,  Porto  Rico,  Dutch  West  Indies,  Cen- 
tral America,  Venezuela,  Brazil,  Uruguay,  and  the  Argentine 
Republic.  To  all  these  countries  our  mean  exports,  averaged,  for 
1880  and  1881,  were  $50,259,064  per  year.  Our  mean  imports  from 
them  during  the  two  years  were  $216,471,440  per  year.  This  left 
a  net  annual  balance  of  trade  against  us  during  these  two 
years  of  $166,112,376,  Avhich  would  have  been  an  actual  bal- 
ance of  trade  against  us  had  it  not  been  canceled  by  our  balance 
of  trade  with  Eui'ope,  leaving  a  net  balance  of  trade  with  the 
world  in  our  favor  of  about  $210,000,000  a  year.  This,  except  so 
far  as  it  was  canceled  by  interest  on  the  European  loans  to  us 
and  the  freights  on  our  ocean  carriage,  was  the  actual  balance  of 
trade  in  our  favor  for  whicli  we  got  a  net  increase  in  our  national 
stock  of  coin. 

The  largest  item  in  our  free  list  is  coffee,  of  which  we  import 
$56,784,391  per  year,  while  England  and  most  of  the  countries  of 
Europe  impose  a  duty  on  it.  Brazil  was  considerably  benefited 
by  the  removal  of  our  duty  on  coffee.  Prices  here  did  not  recede 
by  the  amount  of  the  duty,  when  the  duty  was  removed,  as  was 
expected,  while  the  letter  of  the  Rio  Janeiro  correspondent  of 
the  Commercial  BuUetm,  of  Boston,  September  30,  1880,  de- 
clares that  the  prices  went  up  in  Rio  Janeiro  simultaneously  with 
the  removal  of  the  American  duty. 

Notwithstanding  we  give  Brazil  perfect  free  trade  in  coffee, 


BUYING  AND  SELLING  ARE  TWO.  OUl 

while  England  charges  a  heavy  duty  upon  it,  yet  Brazil  buys 
only  $9,057,749  of  our  merchandise,  while  we  buy  from  her 
$50,051,955.  We  would  buy  about  the  same  amount  of  her  prod- 
ucts if  the  Brazilians  did  not  buy  a  pennyworth  of  ours.  The 
American  merchants  who  import  coffee  from  Brazil  have  no 
connection  of  acquaintance,  sympathy,  or  interest  with  the 
American  merchants  who  send  our  products  to  Brazil.  The  per- 
sons and  firms  in  the  import  trade  do  not  even  know,  as  a 
rule,  of  the  existence  of  an  export  trade  as  a  fact  bearing  on  their 
own  business,  except  as  it  may  affect  rates  of  exchange  and 
freights.  Of  a  total  of  $140,670,021  of  imports  from  China, 
Japan,  British  India,  East  Indies,  Central  America,  Venezuela, 
Brazil,  Uruguay,  Argentine  Republic,  and  Dutch  West  Indies 
there  were  only  duties  on  $24,191,450,  the  remainder  being  on  the 
free  list.  And  yet  Americans  export  to  all  these  countries  only 
$30,746,244  to  offset  an  importation  of  $140,670,021.  Eleven- 
fourteenths  of  our  purchases  from  these  countries  are  paid  for  by 
shipments  of  merchandise,  chiefly  manufactures  from  Europe, 
which  we  in  turn  pay  Europe  for  with  our  surplus  of  exports  of 
food  and  cotton  to  Europe  over  imports  of  goods  from  Europe. 

It  is  the  three-cornered  character  of  the  world's  international 
trade,  which  gives  so  important  a  position,  financially,  to  London, 
as  its  center.  Its  adjustments  are  made  by  means  of  bills  of  ex- 
change, almost  wholly  without  the  use  of  coins.  So  far  from  any 
principle  of  barter  entering  into  it,  as  between  the  aggregate 
populations  of  two  nations,  barter  cuts  an  infinitely  less  figure 
in  it  than  it  does  in  the  ordinary  purchase  of  merchandise  in 
cities.  Whoever  should  try  the  experiment,  therefore,  of  inducing 
one  of  our  retail  dry  goods  merchants  to  accept  a  "  load  of  pump- 
kins," or  a  fat  hog,  in  exchange  for  a  silk  dress  or  a  camel's  hair 
shawl,  would  appreciate  how  supremely  ridiculous  is  the  assertion 
that  international  trade  is  carried  on  by  barter,  either  in  appear- 
ance or  in  effect.  The  difficulty,  of  trading  a  fat  hog  for  a  silk 
dress  would  certainly  not  be  removed  if  the  owner  of  the  hog 
resided  in  one  country  and  the  owner  of  the  silk  dress  in  another. 
And  yet  this  economic  error  that  international  trade  is  conducted 
by  barter,  instead  of  by  money,  has  a  wide  following  among  those 
who  suppose  themselves  to  have  given  some  attention  to  political 
economy. 

The  fact,  that  the  aggregate  quantities  of  goods  bought  by  a 
nation  equal  the  quantities  sold,  and  tliat  tlio  bills  drawn  against 
goods  sold  are  set  off  against  those  drawn  for  goods  purchased. 


002  ECONOMIC  nilLOSOPHT. 

does  not  convert  the  whole  into  barter,  or  exchange  of  goods  for 
goods. 

210.  The  Theory  of  Barter  does  Not  Aid  the  Free- 
Trade  Criticism. — To  suppose  that  international  ti*ade  is  in 
effect  barter,  when  logically  traced  to  its  conclusions  becomes  only 
tlie  most  formidable  of  all  objections  to  the  free-trade  criticism. 
For  free  trade  is  always  a  mere  criticism  and  never  an  actual 
practice  between  nations.  If,  however,  it  were  true  that 
international  trade  wei'e  barter,  and  that  England  were  pre- 
pared to  give  us  actual  free  trade,  it  would  still  devolve  upon  us 
to  consider  whether  we  could  barter  our  crops  for  manufactured 
products  as  profitably  in  dealing  with  English  as  with  home 
manufacturers.  To  all  barter  with  foreign  producers,  the  cost 
of  transportation  operates  as  a  restriction  and  prohibition  on  all 
bulky  and  stationary  products,  limiting  our  capacity  to  barter, 
not  according  to  the  scale  of  our  entire  capacity  to  produce,  but 
strictly  according  to  the  scale  of  our  capacity  to  produce  com- 
modities which  are  highly  transportable,  i.e.,  which  combine 
great  value  and  much  labor  with  small  bulk.  The  only  agricul- 
tural products  which  do  this  are  wheat,  cotton,  preserved  meats, 
and  fruits,  rice,  tea,  cofPee,  and  a  few  others  of  which  we  can 
produce  cheaply  only  the  first  three.  In  barter  with  European 
producers  our  hay,  straw,  wool,  building  stone,  ice,  heavy  lumber, 
land,  labor,  fresh  meats,  live  stock,  vegetables,  farm  and  garden 
fruits,  indeed  thirty-nine  fortieths  of  our  agricultural  products 
are  wholly  unavailable,  directly  or  indirectly,  because  like  pro- 
ducts can  be  obtained  by  foreign  producers  nearer  to  their  own 
homes,  and  usually  at  their  very  doors.  Hence  when  we  tran>s- 
late  connnerce  into  a  barter  of  commodity  for  commodity,  instead 
of  a  sale  of  commodities  for  money  of  account,  a  powerful  objec- 
tion to  buying  abroad  that  which  we  can  produce  at  home  arises 
in  the  fact  that,  at  home,  we  can  barter  for  it  thirty-nine  fortieths  * 
of  all  the  bulky  products  a  new  country  is  capable  of  producing, 
while  abroad  we  can  barter  for  it  only  such  commodities  as  will . 
stand  transportation,  viz.,  one-fortieth  of  the  agricultui'al  prod- 
\xcts  which  the  land  will  produce. 

In  this  sense  the  trade  between  producers  of  bulky  products  of 
small  value,  and  that  between  producers  of  small  products  of 
great  value,  can  never  be  made  free,  in  fact,  or  equal.  For  tbe 
former  are  oppressed  by  a  transportation  tax  which*  keeps  their 

♦American  exports  are  usually  less  than  one-fortieth  of  American  products, 


WHAT  ARE  PUBLIC  INTERESTS.  603 

products  at  home  in  any  event,  while  the  latter  can  send  their 
product  to  the  antipodes  at  a  cost  which  hardly  diminishes  per- 
ceptibly the  profits. 

211.  Private,  Special,  and  Public  Interests. — A  favor- 
ite position  of  free  traders  is  that  protection  is  brought  about 
through  the  influence  of  special  and  private  interests.  Prof.  H. 
C.  Adams,  of  Michigan,  in  refemng  to  the  claim  that  petitions 
for  the  adoption  of  a  protective  policy  have  at  various  times  in- 
fluenced Congress,  says  :  *  "  Government  by  petition  is  govern- 
ment by  special  interests,  and  for  that  reason  one  must  be  very 
careful  in  accepting  requests  for  special  legislation  as  evidense  of 
public  sentiment."  Does  Prof.  Adams  hold  that  there  is  or  can 
be  any  such  thing  as  a  "general  interest,"  which  will  not  arise 
out  of  the  interest  the  general  public  take  in  a  matter  which  is 
primarily  of  special,  local,  or  private  interest  ?  We  know  of 
none.  The  taking  of  human  life  was  at  first  regarded  as  of  special 
interest  to  the  person  whose  life  was  taken,  and  to  those  depend- 
ent upon  him.  It  interested  others  only  so  far  as  they  chose  to 
take  an  interest  in  it.  When  Cain  was  asked,  "  Where  is  Abel  ?  " 
his  answer,  "Am  I  my  brother's  keeper?"  is  equivalent  to 
saying,  "  That  is  a  matter  merely  of  private  interest."  If  the 
State  of  Maine  were  invaded  by  a  public  enemy,  the  affair  would 
be,  physically,  a  matter  of  private  interest  only  to  people  in  the 
route  of  the  invading  army.  It  would  be  only  a  matter  of  public 
interest,  to  those  of  the  public  who  were  sufficiently  charged  with 
the  national  feeling,  to  take  an  interest  in  it.  When  the  Southern 
States  seceded,  a  few  attempted  to  say:  "That  is  only  a  fight 
between  the  abolitionists  and  the  slave-holders.  It  does  not  inter- 
est the  people  generally,  or  me  in  particular."  The  defence  of 
life,  liberty,  and  property  are  assailed.  Their  translation  into 
matters  of  public  interest  depends  not  on  their  intrinsic  quality, 
but  on  the  degree  in  which  the  public  is  charged  with  the  disposi- 
tion to  be  interested  in  it.  All  matters  of  public  interest,  there- 
fore, are  mere  matters  of  private  interest  publicly  considered. 
Hence  to  ask  that  the  public,  generally,  shall  decline  to  consider 
a  matter  which  primarily  affects  a  private  interest,  is  in  effect  to 
abolish  the  whole  sphere  of  public  interests,  by  eliminating  from 
it  every  one  of  the  matters  now  included  under  its  consideration. 

But  is  it  true  that  free  trade,  as  that  term  has  been  currently 
used,  covers  any  less  a  class  interest  or  private  interest  than  pro- 

*"  Taxation  in  the  United  States,  1V89  to  1810,"  p.  33. 


604  ECONOMIC  PHlLOtiOrilY. 

tection  ?  A\\  political  and  social  economy  has  to  do  with  ques- 
tions which  are  in  their  first  instance  of  private  and  special 
interest,  i.e.,  they  niustaffect  individuals,  and  through  individuals 
only  the  public.  A.  danger  which  could  affect  all  parts  of  the 
country  and  all  classes  of  the  people,  at  once  and  equally,  might 
possibly  be  found  in  a  collision  of  the  earth  with  some  other 
celestial  body,  but  no  such  i^henomenon  comes  within  the  do- 
main of  human  government.* 

In  America  the  free-trade  criticism  has  centered  in  the  importing 
class  as  definitely  as,  in  England,  it  has  emanated  from  the  manu- 
facturers. Petitions  have  been  printed,  lobbies  have  been  sup- 
ported, journals  have  been  founded  and  subsidized,  and  free-trade 
leagues  have  been  formed  through  a  stimulus  invariably  insjiired 
from  New  York  city,  and  having  its  seat  and  motive  in  the  tem- 
porary increase  of  profits  which  would  accrue  to  the  importing 
class  if  reduction  in  duties  on  competing  articles  could  be  effected. 
Though  the  utterance  has  been  in  the  name  of  the  consumer,  the 
oration  has  almost  invariably  been  inspired  or  paid  for  by  the 
importer.  The  publication  by  the  New  York  Tribune  in  1868-70 
of  the  lists  of  contributors  to  the  funds  of  the  Free  Trade 
League  showed  that  the  money  which  ran  the  league  w^as  con- 
tributed by  persons  directly  interested  in  the  business  of  import- 
ing, or  foreign  manufacturing,  and  by  no  others.  That  league 
circulated  extensively,  through  the  American  News  Company, 
a  sheet  entitled  the  People's  Pictorial  Taxpayer,  purporting  to 
illustrate,  by  various  cartoons  and  pictures,  the  baleful  effects 
of  levying  a  tax  on  such  foreign  products  as  compete  with 
our  own.  Its  arguments  were  surrounded  by  the  cards  of 
Wm.  Jessup  &  Sons,  manufacturers  of  steel  and  unporters  of 
iron,  Sheffield,  England;  of  Congreve  and  Son,  of  New  York, 
agents  of  the  Toledo  Steel- works  of  Sheffield,  England;  of  A. 
B.  Sands  &  Co.,  importers  of  drugs,  one  of  whose  members, 
Mahlon  Sands,  served  the  Free  Trade  League  disinterestedly 
as  secretary;  of  John  Clark,  Jr.,  &  Co.,  foreign  manufacturers  of 
spool  cotton;  of  Van  Wart  &  McCoy,  the  New  York  agents 

♦Richard  Cobden,  addressing  the  people  of  Manclirster  in  favor  of  free  trade, 
October  9,  1843  (Speeches,  p.  49),  said:  '"I  am  afraid,  if  wc  must  confess  the  truth, 
that  most  of  us  entered  upon  this  struggle  with  the  belief  that  we  had  some  distinct 
class  interest  in  the  question,  and  that  we  should  carry  it  by  a  manifestation  of  our 
will  in  this  district  against  the  will  and  consent  of  other  portions  of  the  community. 
I  believe  that  is  our  impression."  Ou  page  52  he  says  they  were  told  "  that  our  object 
is  to  bring  agricultural  laborers  into  the  manufacturing  districts  in  order  to  reduce 
wages  there." 


IMPORTERS  INSPIRE.  605 

of  Van  "Wart,  Son  &  Co.,  of  Birmingham,  and  of  a  dozen  other 
English  manufacturing  firms  ;  of  F.  W.  Harrold,  hardware, 
Birmingham,  England;  of  Sampson  &  Bro.,  importers  of  foreign 
iron;  W.  &  G.  Dutcher,  of  Sheffield,  England,  file  and  tool  manu- 
facturers ;  of  Spear  &  Jackson,  of  Sheffield,  England,  steel  saw- 
makers;  and  of  Wm.  Irving,  of  New  York,  agent  for  two  foreign 
cutlery  and  edge-tool  firms;  and  of  Wm.  Schiefflin,  importer  of 
drugs.  Besides  these  there  were  the  cards  of  several  foi-eign 
insurance  companies,  but  not  of  a  single  American  producer  of 
any  kind.  If  it  were  not  that  the  importers  in  many  cases 
share  largely  the  burden  of  the  duties,  foreign  houses  would  not 
so  usualh'  establish  agencies  in  New  York  on  purpose  to  evade 
duties.  What  evidence,  for  instance,  would  a  consignment  from 
Jones,  Robinson  &  Co.,  of  Birmingham,  England,  to  Robinson, 
Jones  &  Co.  (the  same  parties)  in  New  York,  afford  of  the  actual 
prices  of  the  consigned  goods,  if  a  true  statement  of  their  foreign 
prices  involved  the  payment  of  fifty  per  cent,  duties,  while  an 
under-statement  involved  the  payment  of  less  ?  Mr.  David  A. 
Wells,  in  one  of  his  reports,  states  that  many  of  these  American 
agencies  of  English  firms  are  established  on  purpose  to  evade  the 
revenue,  and  that  in  many  lines  of  goods  their  smuggling  almost 
defeats  the  collection  of  the  duties.  The  Committee  of  Congress 
on  Manufactures  reports  that  the  smuggling  and  evasion  of  duties 
by  false  invoicing,  through  the  English  consignors  and  American 
consignees  being  one  firm  or  partner  or  agents  of  each  other, 
amounts  to  twenty  per  cent,  of  the  fair  duties.  The  effort  to 
enlist  American  farmers  and  citizens,  generally,  in  the  free-trade 
movement,  has  hitherto  been  conducted  with  as  little  spon- 
taneous native  aid,  and  by  methods  as  distinctly  foreign,  as  the 
effort  to  promote  the  importation  of  opium  into  China  or  the 
spread  of  Christianit}^  in  Turkey.  It  finds  some  advantage  in  the 
fact  that  we  take  strongly  to  English  fashions  wherever  they 
are  admissible.  The  free-trade  criticism  seizes  upon  many  points 
of  attack,  some  of  which  must  at  times  present  an  appearance  of 
plausibility  on  a  superficial  examination.  Its  economic  state- 
ments, however,  without  a  solitary  exception,  all  rest  finally 
upon  falsehood,  either  of  fact  or  of  inference,  or  grow  out  of  the 
tendency  to  mistake  protection  in  a  disguised  form  for  free  trade. 
It  remains  a  criticism,  not  a  polic3^  A  policy  succeeds  when  it 
accomplishes  desired  results.  A  criticism  may  succeed  in  merely 
obstructing  a  policy.  Protection  stands  as  the  sole  policy  of 
nations. 


60G  ECONOMIC  PHILOSOPHY. 

212.  Protection  Universal.— "Free  foreign  trade"  is,  on 
its  face,  a  term  of  complaint,  Avhicli  implies  the  pre-existence  of 
some  legislative  policy  which  is  charged  with  restrictuig  foreign 
trade.  The  argument  between  tariff  protection  and  free  foreign 
trade,  therefore,  opens  with  protection  in  possession,  i.  e.,  embodied 
in  the  statutes  and  jurisprudence  of  the  following  nations,  viz.  r 

Popiiljition. 

The  United  States  of  America          .        .  62,000,000 

France 42,000,000 

Germany 42,000,000 

Austro-Hungary 42,000,000 

Russia 90,000,000 

Italy 28,000,000 

Spain 18,000,000 

English  Colonies 9,000,000 


Total 333,000,000* 

Free  foreign  trade  (so  called)  has  dominated  England  for  only 
forty  years,  out  of  the  three  hundred  and  fifty  years  in  which 
England  has  had  an  international  trade.  During  these  forty 
years,  the  proportion  of  revenue,  collected  by  duties  on  foreign 
trade  in  England,  has  been  greater  than  in  any  other  country, 
except  the  United  States.  Fully  half  the  amount  of  revenue 
collected  by  England  is,  as  we  have  seen,  protective  of  the 
domestic  manufacturer  (of  tobacco,  gold  leaf,  and  the  like), 
and  peremptorily  destructive  to  the  producer  of  domestic  leaf 
tobacco.  A  tariff  which  forbids  one  industrj^,  and  protects  another 
by  a  duty  whose  strictly  protective  portion  is  three  or  four-fold 
the  value  in  foreign  countries  of  the  article  on  which  it  rests,  is 
very  far  from  being  a  non-interference  with  industry. 

Pi'otection  holds  that  "  possession "  of  all  countries,  which  is 
"  nine  points  "  not  only  in  law  but  in  logic.  This  universality  of 
protection  proves  it  to  be  a  "natural"  element  in  government — 
just  as  profit  is  in  trade.  With  the  same  readiness  with  which 
we  would  predict  that  "  given  two  producers,  each  of  whom  has 
a  surplus  of  what  the  other  needs,  they  will  trade,"  so  we  may 
also  affirm  that,  ' '  given  two  nations,  whose  people  trade  with 

*  If  to  these  we  add  the  nations  which  would  gladly  enact  protective  tariffs  if  per- 
mitted by  English  bayonets  to  do  po,  the  list  would  be  doubled  by  the  addition  of 
China,  Japan,  and  India.  And  if  to  these  we  add  those  countries  the  chief  part  of 
whose  commercial  ascendency  was  won  under  and  through  protective  policies,  it  would 
add  the  Netherlands  and  Great  Britain.  If  we  add  those  which  si  ill  practice  partial 
tariff  protection  to  home  industry  and  armed  military  protection  to  foreign  trade,  Great 
Britain  would  stand  chief  a,nd facile princeps  among  protective  nations. 


ALL  NATIONS  PROTECT.  607 

each  other  in  competing  commodities,  each  nation  will  seek, 
by  duties,  to  protect  its  own  producers  in  its  own  markets, 
to  the  extent  of  deriving  a  revenue  from  taxes  on  the  impor- 
tation of  the  commodities  of  their  rivals."  Protective  tariffs 
between  nations  whose  manvifacturers,  traders,  fai'mers,  or  other 
producei'S  compete,  are  as  natural  as  trade  itself  is  between  per- 
sons or  nations  whose  productions  differ.  A  free  foreign  trader 
can  only,  with  the  same  logic,  charge  a  protectionist  with  obstruct- 
ing the  natural  laws  of  trade,  as  a  protectionist  can  charge  every 
free  trader  with  seeking  to  obstruct  the  natural  principles  of 
government.  The  uniform  action  of  all  other  nations  in 
levying  protective  tariffs,  sustained  by  nine-tenths  of  the  record 
of  Great  Britain  herself,  proves  "  protection  "  to  be  as  natural, 
inevitable,  and  necessary  an  element,  in  government,  as  exchange 
is  in  Industry.  On  a  question  of  this  kind  the  universal  man 
knows  more  than  the  one  man,  and  universal  usage  establishes 
natural  law.  Just  as  it  is  a  law  of  nature  that  all  governments 
shall  practice  coercion  towards  the  disobedient,  and  that  all 
peoples  shall  render  homage  to  those  in  power,  so  is  it  a  law  of 
nature  that  all  nations,  whose  people  have  international  trade  in 
competing  mei'chandise,  shall  pi-otect  their  own  people  by  dis- 
criminating duties.  They  have  always  done  so,  and  they  always 
will.  None  should  be  so  grateful  to  them  for  doing  so  as  those 
whose  function  is  criticism,  since  if  it  were  possible  that  govern- 
ments could  cease  to  levy  protective  tariffs,  the  function  of  those 
economists,  who  reduce  criticism  or  fault-finding  to  a  system, 
would,  so  far  as  this  question  is  concei'ned,  be  gone.  Those 
who  live  by  finding  fault,  like  those  who  live  l)y  finding  dia- 
monds, should  be  grateful  for  what  they  find. 

This  chapter  should  have  made  apparent  to  the  student  the  dis- 
tinction between  criticism  as  a  force  in  society,  and  Policy, 
Action,  Human  Nature,  or  whatsoever  we  choose  to  call  the  exist- 
ing and  governing  social  forces.  The  enactment  of  protective 
statutes  represent  the  latter,  the  clamor  of  free-trade  pedants  and 
theorists  for  the  abolition  of  these  statutes  the  former. 

Protection  is  the  mountain.  It  is  eternal.  Free  trade  is  the 
mirage.  If  it  advances  it  dissolves.  It  can  only  make  with  pro- 
tection the  same  kind  of  an  issue  as  the  non-existing  and  im- 
possible makes  with  the  universal,  nntm-al,  and  inevitable.  It  is 
a  fight  between  something  and  nothing.  Protection  is  an  econ- 
omy; free  trade  is  a  give-away,  a  waste.  Protection  is  con- 
structive ;  free  trade  is  destructive.     Free  trade  may  be  talked, 


608  ECONOMIC  PHILOSOPHY. 

while  one  is  out  of  office.     Protection  must  be  practiced,  the  in- 
stant one  comes  into  office,  or  inevitable  disaster  ensues. 

Protection  investigates,  consults,  harmonizes,  unites.  Free 
trade  disintegrates,  divides,  slanders,  besmirches,  and  disorgan- 
izes. Protection  collects  facts.  Free  trade  is  oracular,  pompous, 
and  issues  dogmas.  This  chapter  opened  with  several  refresh- 
ing extracts  from  free-trade  criticisms.  It  closes  with  a  note 
containing  the  overweening  criticism,  by  an  English  manu- 
facturer, of  great  wealth,  eloquence,  and  social  power,  upon  the 
stupidity  of  Americans,  in  pursuing  that  policy  which,  in  England, 
renders  a  John  Bright  possible.*  The  silent  but  effective  answer 
to  Mr.  Bright's  urgency  that  Congress  should  be  "  wise  and  right- 
eous" is  found  in  the  practical  illustration  which  British  free 
trade  affords  of  wisdom  and  righteousness,  in  its  career  at  home 
and  in  India,  Ireland,  Turkey,  China,  and  Japan.  If  Americans 
had  600,000,000  of  barbarians  where  we  could  train  our  guns 
upon  them,  if  they  demanded  the  right  to  trade  with  their  coun- 
trymen in  preference  to  buying  of  ourselves,  then  we  too  might 
aspire  to  teach  "  wisdom  and  righteousness*'  in  the  English  way. 
In  the  absence  of  these  barbarian  aids,  we  have  to  be  quite 
humble.  British  righteousness  and  British  wisdom,  both  of 
which  blend  in  British  free  trade,  are  beyond  our  present  reach. 

*  Mr.  L.  U.  Keavis  of  St.  Louis  recently  received  from  Rt.  Hon.  John  Bright  of  En- 
gland the  following  letter : 

One  Ash,  Rochdale,  Feb.  6,  1888. 

Dear  Sir  :  ....  As  to  the  disputes  between  labor  and  capital,  surely  your  mon- 
strous tariff  provokes,  if  it  does  not  justify,  your  strikes  and  labor  insurrections. 

If  your  Co  grcss  insists  on  burdening  your  whole  population  to  give  profit  to  your 
manufacturers,  sun  ly  the  workmen  may  as  justly  insist  on  protection  to  their  labor. 

Whilst  your  tariff  is  in  force  you  need  not  expect  your  workmen  to  be  wise.  Pro- 
tection, which  means  robbing  somebody,  will  not  content  itself  with  enriching  manu- 
facturers, but  will  be  called  in  to  give  higher  wages  and  shorter  hours  of  labor  to  your 
workmen. 

Congress  should  become  wise  and  righteous,  before  it  can  expect  the  artisans  and 
laboring  classes  to  make  progress  in  that  direction. 

Yours  very  truly, 

John  Bright. 

Mr.  L.  U.  Reavis,  St.  Louis,  Mo.,  U.  S.  America. 


CHAPTER  XY. 
Economy  of  Protection. 
213.  How  a  Tariff  May  Protect  Producers. 

DUTIES  ON  IMPORTS  MAY  PROTECT  THE  PRODUCERS,  TRADERS, 
TRANSPORTERS,  BANKERS,  LAND-OWNERS  AND  LABORERS  OF  THE 
COUNTRY,  IMPOSING  THE  DUTIES  IN  FIVE  WAYS,  WHICH  ARE  THE 
FIVE  POINTS  OF  PROTECTION,  VIZ. :  FIRST,  WHEN,  WITHOUT  RAIS- 
ING THE  PRICE  OF  THE  ARTICLE,  THEY  SHUT  OUT  IN  WHOLE  OR 
IN  PART  THE  FOREIGN  COMPETING  ARTICLE,  THEREBY  SECURING 
TO  DOMESTIC  PRODUCERS  THE  EXCLUSIVE  RIGHT  TO  SUPPLY  THE 
ARTICLE  TO  DOMESTIC  CONSUMERS. 

This  occurs  when  the  article  is  so  largely  produced  at  home 
that  domestic  producers  are  fully  competent  to  supply  it  at  as  low 
prices  as  it  can  be  imported,  yet  would  lose  a  portion  of  their 
market  if  free  competition  from  abroad  were  allowed.  As  the 
cheapness  with  which  an  article  can  be  marketed  often  depends 
on  the  certainty  of  a  market,  it  is  obvious  that  this  class  of 
duties,  by  insuring  to  American  producers  a  certain  market,  tends 
immediately  and  in  the  first  instance  to  cheapness.  The  test  of 
the  cheapness  of  the  American  market  relatively  to  the  foreign  is 
found  in  our  ability  to  export,  since  no  article  will  go  abroad  ex- 
cept to  obtain  a  price  higher,  by  cost  and  profits  of  transportation, 
than  it  can  find  at  home. 

The  following  schedules  of  protected  articles  which  we  both 
export  and  import  shows  how  large  is  the  volume  of  merchandise, 
.  tlie  duties  upon  which  do  not  enchance  the  price  in  the  Ameri- 
can market.  Yet  they  protect  that  market,  containing  63,000,000 
customers,  to  American  producers,  absolutely  as  to  the  portion 
of  foreign  goods  excluded  by  these  dutes,  and  relatively  as  to 
the  portion  admitted.  Since,  by  the  terms  of  the  proposition, 
the  American  price  is  the  same  or  lower  than  the  foreign,  tlie 
whole  duty  on  competing  goods  must  be  paid  by  the  foreign 
competing  producers.  . 


(JlU 


ECONOMIC  PHILO^OPIIT. 


•«8^ 

Protected  Products 

Value  of 

which  we  export. 

Exjmrts. 

w  many 
tries  ex- 
ed 

Dnty  on  Importation. 

Implements  of  iron,  steel. 

1 

and  wood  (agricultural) 

$2,976,371 

48 

45  per  cent. 

Pot  and  pearl  ash 

31  ,.362 

14 

20  per  cent,  to  3  cents  per  lb. 

Tanning  bark 

97,442 

12 

Raw,  free  ;  ext.,  20  per  cent. 

Beer,  ale,  and  porter 

384,196 

41 

20  to  35  cents  per  gal. 

Bells  and  bronze 

26,377 
42,095 

17 

23 

3  cents  per  lb. 
35  per  cent. 

Billiard-tables 

Blacking 

187,403 

44 

25  per  cent. 

Books 

831,132 

47 

25  per  cent. 

1%  cents  per  lb.  to  45  per  cent. 

Brass  and  manufactures.. 

322,439 

39 

Bread  aud  breadstuffs 

182,670,528 

68 

20  cents  per  bushel  to  20  per  cent. 

Bricks.     

50,870 

12 

20  per  cent. 

Brooms  and  brushes 

241,403 

50 

25  to  30  per  cent. 

Candles        

226.687 
1,439,003 

39 
50 

20  per  cent. 
35  per  cent. 

Carriagf  s,  carts,  etc 

Cars  (railroad) ... 

1,393.059 

18 

35  per  cent. 

Clocks 

1,402,.362 

53 

30  per  cent. 

Coffee  and  spices     

93,390 

44 

Free  to  20  cents  per  lb. 

Coal 

3,692,785 

29 

Free  to  75  cents  per  ton. 

Combs 

18,622 

14 

30  per  cent. 

Copper  and  manufactures 

6,58,941 

34 

214  to  4  cents  per  lb.  to  35  per  cent. 

Cotton  goods 

13,222,979 

56 

10  cents  per  lb.  to  40  per  cent. 

Drugs  and  medicines 

3,517,149 

59 

Free  to  10  per  cent,  to  25  per  cent. 

Dyestuffs 

939,929 

32 

10  per  cent. 

Earthen,  stone,  and  china 

ware  

180,773 

45 

25  per  cent,  to  60  per  cent. 

Fancy  articles 

8.52,1.30 

49 

Average  40  per  cent. 

Fruits 

1,750,398 

48 

Average  40  per  cent. 

Furs  and  fur-skins 

4,747  944 

9 

Free  to  30  per  cent. 

Gas-fixtures 

30,862 

18 

45  per  cent. 

Ginseng 

483.171 

2 

Free  to  25  to  50  per  cent. 

Glass  and  glassware.   . . . 

864,235 

52 

Average  45  per  cent. 

Glue 

46,274 

25 

20  per  cent. 

Hair 

307,1.33 

24 

25  to  35  per  cent. 

Hats,  caps,  and  bonnets. . 

275,904 

28 

30  to  30  per  ceut. 

Hay 

190,175 

29 

$2  per  ton. 

Hemp  and  manufactures. 

735,893 

47 

|l0  per  ton  to  40  per  cent. 

Hides  and  skins 

1,499.737 
1,456,786 

30 
30 

Raw,  free  ;  dressed,  20  per  cent. 
8  cents  per  lb. 

Hous 

India-rnbher  goods 

510,716 

47 

25  to  30  per  cent. 

Iron  and  steel  wares 

17,571,.332 

68 

Average  40  per  cent. 

Jewelry 

313,245 
3.50,009 

35 

47 

25  per  cent. 

Lamps 

40  per  cent. 

Lead  wares  

178,779 
8999,627 

30 
,55 

2  to  3  cents  per  lb. 

Leather  and  m'ufacturee 

15  to  30  per  cent. 

Lime  and  cement 

100,109 

35 

10  per  cent. 

Matches 

161,466 

36 

.35  per  cent. 

Mathematical  ins'ments.. 

599,.397 

37 

35  per  cent. 

Musical  instruments 

1 .267,450 

39 

25  per  cent. 

Naval  stores. 

3,370,.307 

63 

20  per  cent. 

Oils  of  all  kinds 

53,279,6.32 

68 

25  per  cent. 

Powder  and  ball 

909,755 

45 

6  to  10  cents  per  lb. 

Paints  and  colors 

424,991 

49 

3  cents  per  lb. 

Paintings  and  engravings 

406,153 

35 

25  per  cent. 

Paper  and  stationery..  . 

1,618,883 

5P 

15  to  25  per  cent. 

Perfumery  

285,000 

4'. 

50  per  cent. 

Plated  ware 

396,595 

47 

35  per  cent. 

Printing  presses  and  type 

211,292 

42 

45  per  cent. 

Provisions  (bacon,  hams. 

fresh  and  salt  beef,  but- 

ter, cheese,  milk,  eggs. 

fish,  lard,  mutton,  oys- 

ters,    pickles,     sauces, 

pork,  onions,  potatoes). 

117,765,471 

88 

20  to  40  per  cent. 

SHE^AnMAN  OX  DUTIES. 


611 


Protected  Products 
which  we  export. 

Value  of 
Expcnts. 

To  how  many 
countries  ex- 
ported ..   . . 

Duty  on  Importation. 

Quicksilver 

I  lags 

959,128 

11,000 

10,109 

18,265 

304,446 

4,219,600 

2,647,515 

667.993 

1,989,038 

361,471 

1,872,182 

4,015,798 

198,608 

21,430,869 

192,9.52 

2,025 

187,000 

90,213 

9,846 

121.470 

32,325 

695,.398 

67,000 

24,011,228 

445,431 

124,648 

1,013,900 

5,421,529 

15 
2 

17 
21 
45 
16 

46 
47 
40 

51 
41 
48 
54 
43 
11 
39 

29 

1? 
48 
32 
60 
33 
14 

37 

46 

10  per  cent. 
10  per  cent. 
lJ^to2J<  cents  per  lb. 
8  to  12  cents  per  cwt. 
2J^  cents  per  lb. 
20  per  cent. 
45  per  cent. 
20  per  cent. 
?2  per  gal. 
2  cents  per  lb. 

1  4-10  to  'i]A  cts.  per  lb. ;  4  to  8  Cts,  per  gal, 

1  cent  per  lb. 

1  to  2  cent.?  per  lb. 

15  cents  to  $1  per  lb. 

30  per  cent. 

35  percent. 

40  per  cent. 

20  to  40  per  cent. 

71^  cents  per  gal. 

25  per  cent. 

20  per  cent. 

Average  35  per  cent,  and  35  cents  per  lb. 

5  cents  per  pint  to  $2.25  per  gal. 

20  to  40  per  cent. 

13  cents  to  50  cents  per  lb. 

J4  cent  to  2>^  cents  per  lb. 

Average  40  per  cent. 

Average  40  per  cent. 

Rice 

Salt 

Scales  and  balances 

Seed,  hay  and  cotton 

Sewing-machines 

Soap 

Spirits 

Starch 

Sugar  and  molasses.chief- 

ly  refined 

Tallow 

Tin  wares 

Tobacco,  cigars,  etc . 

Trunks  and  valises 

Umbrellas  and  parasols. . 
Varnish 

Vessels  and  steamers 

V  ne^ar 

Watches 

Wax 

Wearing  apparel 

Wine 

Wood.lumb'r,  tlmb'r,  etc. 

Zinc  

Unmanufactured  articles 
not  mentioned 

mentioned 

Total 

$702,777,091 

In  certain  of  these  articles,  viz. ,  sugar  and  molasses,  iron  and 
steel,  wearing  apparel  and  woolens,  we  import  the  crude  article 
in  a  form  in  which  it  needs  further  manufacture,  and  export  the 
products  of  the  same  article  in  a  more  finished  form.  In  such 
cases  the  crude  article  bears  a  higher  price,  and  the  more  finished 
article  as  low  (or  lower)  a  price,  as  in  foreign  countries.  This  is 
specially  true  of  crude  iron  and  steel,  relatively  to  the  implements 
made  from  them. 

American  manufacturers  of  wares  pay  the  whole  duty  on  im- 
ported pig,  scrap,  and  bar  iron,  and  yet  sell  the  finished  products 
made  of  them,  both  here  and  in  all  foreign  countries,  as  low  as 
their  foreign  competitors.  An  acute  free  trader,  Mr.  Thomas  G. 
Shearman,  issued  to  the  American  manufacturers  a  tract  explain- 
ing to  them  that,  including  the  manufacturers  of  railroads,  they, 
as  a  class,  pay  97  to  99  per  cent,  of  all  the  duties  paid  on  im- 
ported products .  The  manufacturers,  however,  passed  the  tract 
over  to  the  farmers  as  a  means  of  correcting  the  statement,  so  fre- 


C12  ECONOMIC  PUILOSOPHY. 

quently  made  by  tlie  less  candid  free  traders,  that  the  farmers  pay 
the  whole  duty.  On  the  whole,  it  was  found  that  Mr.  Shearman's 
address  to  the  manufacturers  was  too  strong  meat  for  the  free- 
trade  propagandism.  It  was  deemed  safer  to  return  to  the  "  sin- 
cere milk  of  the  woi*d,"  viz.,  that  manufacturers  are  the  cormo- 
rants, and  those  who  buy  no  goods  (except,  at  times,  sugar)  that 
are  increased  in  price  by  the  duty  are  their  victims. 

214.  When  Duties  on  Imports  Protect  from  Taxa- 
tion. 

DUTIES  ARE  PROTECTIVE  WHEN,  BY  COLLECTING  A  REVENUE  FROM 
IMPORTERS,  WITHOUT  INCREASE  OP  PRICE  ON  THE  THING 
IMPORTED,  THEY  SAVE  THE  BODY  OF  AMERICAN  TAXPAYERS 
FROM  TAXATION. 

Duties  on  imports  operate  protectively,  in  behalf  of  the  whole 
body  of  the  taxpayers  of  the  counti-y  imposing  them,  when,  with- 
out increasing  the  price  of  the  conmiodity  on  which  they  rest, 
and  hence  without  operating  as  a  tax  on  Amei'ican  consumers  in 
any  degree  whatever,  they  collect  a  considerable  revenue  out  of 
the  foreign  producers  and  importers  of  competing  products, 
thereby  shielding  the  body  of  American  taxpayers  from  taxation 
to  the  extent  of  the  sum  so  collected.  Such  duties  may  perform 
the  double  function  of  protecting  our  body  of  taxpayers  against  a 
given  sum  of  taxation,  and  protecting  certain  groups  of  domestic 
producers  in  a  portion  of  the  domestic  markets.  Each  mode  of 
protection  ends  exactly  w^here  the  other  begins,  i.e.,  on  the 
goods  admitted  we  get  a  revenue  paid  by  foreigners,  which  is  a 
form  of  protection  to  our  taxpayers  against  taxation.  To  the  ex- 
tent of  the  goods  which  would  come  in  but  for  the  duty,  but  are 
excluded  by  the  duty,  we  get  no  revenue,  but  an  exclusive  mar- 
ket for  domestic  producers,  instead  of  a  market  divided  between 
them  and  foreign  producers.  Both  these  results  being,  in  the 
cases  supposed,  without  increase  of  cost  to  consumers,  the  duty, 
as  to  consumers,  is  not  a  tax.  In  short,  while  fi"ee  trade  divides  our 
American  markets  between  our  producers  and  the  foreign,  and 
leaves  us  to  pay  the  entire  duties',  protection  divides  the  burden  of 
Ijaying  the  duties  between  American  producers  and  the  foreign, 
and  leaves  the  former  to  enjoy  the  whole  American  market. 

SCHEDULE  OF  DUTIES  WHICH  CAN  NOT  BE  CHARGED  OVER  WHOLLY 

ON  CONSUMERS. 

Below  is  a  schedule  of  articles  which  we  both  export  and 


HOW  DUTIES  AFFECT  PRICES. 


613 


import,  and  which,  therefore,  must  preserve  very  nearly  like 
values  at  home  and  abroad.  I  do  not  say  exactly  like  values, 
but  I  affirm  that  the  values  can  not  vary  much,  since  the 
grades  we  export  under  each  name  must  be  enough  higher 
abroad  than  here  to  pay  for  exportation,  and  the  grades  we  im- 
port must  be  producible,  enough  cheaper  abroad  than  here,  so 
that  when  tlie  foreign  producer  has  added  his  share  of  the  duty 
to  the  cost  of  his  production,  he  will  still  usually  have  a  margin 
of  profit.  But  if  one  grade  of  a  given  article  is  higher  priced 
here  than  abroad,  while  another  grade  of  the  same  article  is  lower 
priced,  both  and  all  grades  of  that  article  can  not  keep  very  far 
from  equivalent  values  in  the  two  countries. 

In  the  case  of  every  article  included  in  this  schedule,  there 
arises  an  irresistible  presumption  from  the  fact  that  the  article  is 
in  some  form  and  degree  one  of  export,  that  prices  being  about 
at  a  level  in  the  two  countries,  a  very  considerable  portion,  or  the 
whole  of  the  duty,  is  paid  by  the  foreign  pi'oducer.  That  pre- 
sumption needs,  however,  to  be  tested  in  each  case,  in  conform- 
ity with  a  principle  which  will  be  stated  and  if  proved,  furnish 
a  substantial  proximate  rule,  more  accurate  than  has  hitherto 
been  in  use,  for  calculating  the  portion  of  revenue  paid  by 
foreigners. 

The  following  is  the  schedule  : 


Articles  which  we  both  Export  and  Imjtort. 


Beer,  ale,  and  porter 

Books,  blank-books,  and  music. 

Brass  (manufactured) 

Breadstuffs,  Krain,  and  rice 

Bricks  and  tiles 

Bristles,  bruslies,  and  brooms 

Candles  and  tapers 

Carriages,  and  parts  of 

Chemicals,  drugs,  and  medicines 
Clocks,  watches,  and  parts  of  . . . 

Coal 

Coke 

Cocoa,  coffee,  and  substitutes  for 

Copper,  chiefly  crude 

Cotton  goods     

China  and  earthenware 

Fancy  articles 

Fish  (exports  $4,187,338) 

Fruits  and  nuts 

Furs  and  maiiufactureB  of 

Class "  "  

Hair  "  "  

ITats,  bonnets,  and  hoods 

Hay 

Ilcmp  and  manufactures  of 

Hides  and  skins  .   . 


Imports. 

Revpnue. 

1882. 

1882. 

$a3~,8n6..59 

$117,202.09 

3,on2.(;9(i.76 

745.402  30 

008. 136.3.5 

180,315.87 

lC,4VS.r,96  33 

4,1.53,827.30 

1.53.0.33.33 

34,705.99 

1,547,81329 

330,070,14 

0.078.00 

1,.586.93 

140, 122.67 

49,174  92 

14  101,115.97 

4,981,453  14 

3,0.39,047.97 

804,483.89 

2,193.089.23 

021,099.25 

53,244.03 

13,311.01 

60,015..50 

4,026  90 

317.172  34 

109.496.50 

31,285,300.19 

12.327,103  04 

6.873,075  95 

2,905,978.84 

9,0.54,978.88 

3,913,345  05 

1,332,017.37 

414,915.03 

18,047,937.2  i 

4,427.135.45 

.5.210.3.33.19 

1,1.3.5,139.91 

6,753.537  11 

3,847,28.061 

831  085.32 

228,317.91 

1,020.218.77 

41.3,211.41 

891,. 521).  35 

].53,]96.07 

12.382,.380.48 

2,4 14,080.. 50 

27,702,970.01 

4,992.00 

U14 


ECONOMIC  PHILOSOPHY. 


Articles  which  w«  both  Export  and  Import. 


Hops 

India-rubber  goods 

Iron  and  eteel,  and  manufactures  of 

Jewelry  (not  in  (  iamondj^  and  watches). 

Lead,  and  manufactures  of 

Leather  "  "  

Lime 


Marble  (exports  $614,400) 

Matches 

Metals,  bronze,    German  silver,  nickel,  platina, 

britannia,  etc 

Musical  in>^trument8 

Oils,  Mineral,  etc 

Anmal.. 

Vegetable,  fixed 

"       volatile 

Gunpowder  and  fulminates 

Paints  and  colors    

Painting  and  statuary 

Paper,  pulp,  and  manufactures  of 

Pens  and  pencils 

Perfumeries 

Pickles,  capers,  and  sauces  (exports  $25,635) . .  . 

Potatoes 

Provisions  (bacon,  beef,  butter,  cheese,  eggs,  lard, 

meats,  milk,  etc) 

Saddlery 

Salt 

Sand 


Seeds  (flax,  hemp,  garden,  etc) 

Soap 

Spirits  and  wines  

Starch 

Stone,  other  than  marble 

Straw 

Sugar  and  molasses 

Tallow 

Tar  and  pitch 

Tin  cans  and  manufactures 

Tobacco,  cigars,  etc 

Umbrellas,  parasols,  and  materials. 

Varnish 

Vegetables 

Vinegar 

Wax 


Wood,  lumber,  timber,  etc. 

Wool 

Woolen  manufactures 

Zinc  


Imports. 

1882. 


Revenues. 

1882. 


288,344.00 

69,964.64 

300,445.65 

97,293  65 

53,998.266.74 

24,196,037.62 

398,796.44 

99,862.22 

211,9.34  99 

126.301.70 

12,215,203.48 

3,794,564.62 

.30878.99 

3,687.90 

575.144  60 

3,54,165.54 

2,233.95 

'  781.88 

1,429,918.17 

425,188.24 

1,514,762.43 

455,040.0s 

29,625.00 

6,001.00 

102,873,18 

21.157.23 

868.201.58 

389.800.56 

300,975.77 

98,180.60 

23,822  25 

9. .542.08 

1,217  407.35 

411,331.52 

2,.574  815.91 

263,270.86 

2,011,645.21 

689,041.32 

209,909.73 

120.685.94 

500,867  08 

302,415  57 

350,444.22 

122.673.03 

4,056,368.50 

1,318,246.35 

2,046,533.27 

434,545..34 

1.57,.565.09 

55,147.78 

1,561,131  .74 

715  243.13 

23,640.P0 

2,364.00 

1.455,175.18 

281,696  24 

316,061.49 

143,495.45 

9,453.593.49 

6,789,023.04 

82.672.68 

73.276.28 

223,397.96 

52,192.83 

41,683  37 

13,477.57 

94,523,797.29 

49,216,335.56 

6,469..50 

733  05 

27,608.75 

5,521.77 

67,681.34 

8,216,132.12 

6,047,560  09 

83,.354.00 

41,628.60 

112.781  29 

52,759.24 

1,182,203.60 

223.006  96 

26,030.60 

11, .342. 39 

6,455.95 

1,421.00 

8.907.200.69 

1,697,431.91 

10,333..358.54 

3,8.56,678  06 

37,284,823.88 

25,439,102.52 

949,041.92 

377,159.01 

Total I  $415,759,545.00      i    $174,562,6.30.98 


It  appears,  therefore,  that  out  of  the  total  of  $505,491,966.66  of 
imported  goods  paying  duties  in  1882,  four-fiftlis,  or  $415,759,- 
545,  are  goods,  some  forms  and  grades  of  which  we  export  to 
the  amount  in  all  of  about  $700,000,000,  which  was  shown  by 
the  first  schedule  to  be  the  amount  of  our  protected  ex- 
ports ;  also,  that  out  of  a  total  of  $215,617,669.62  of  revenue 
collected  on  imports,  an  irresistible  presumption  arises  that 
a  like  proportion  of  four- fifths,  viz.,  $174,562,630.98,  is  either 
over    upon    American    consumei's    at   all,    oi' 


not    chargeable 


DISPLACING  WITHOUT  IXCREA8ING.  615 

is  divided  so  that  a  definite  and  large  portion  of  it  is  not  so 
chargeable. 

IN  CASES  WHEREIN  THE  IMPORTATION  DISPLACES  A  PORTION  OF 
AN  ALREADY  SUPERABUNDANT  SUPPLY  THE  FOREIGN  PRODUCER 
PAYS  THE  WHOLE  DUTY. 

Among  the  articles,  on  which  the  duty  is  not  chargeable  on 
the  American  consumer  in  any  degree  whatever,  are  breadstuffs, 
coal,  fish,  hay,  paper,  potatoes,  provisions,  sand,  starch,  stone, 
straw,  tallow,  tar,  and  pitch,  vegetables,  vinegar,  and  wood, 
lumber,  and  timber.  In  breadstuS's  the  import  for  1882  was 
$16,478,596.33,  almost  exactly  one-hundredth  as  much  as  our 
domestic  production,  which  for  1881  (short  crop)  was  worth 
$1,570, 218, oil,  and  one-eleventh  as  much  as  our  exports,  viz., 
$182,670,528.  The  American  price  was  fixed  by  the  ratio  of  the 
whole  demand  upon  America,  foreign  and  domestic,  to  the  whole 
available  supply.  If  Eurojiean  sources  of  supply  and  demand  a)'e 
included,  the  driblet  from  Canada  which  constitutes  our  importa- 
tion would  be  one  part  in  250.  If  American  sources  only  are 
counted  it  would  be  one  part  in  100.  But  when  we  are  sending 
abroad  eleven  times  as  much  breadstuffs  as  we  import  from  Can- 
ada, it  is  obvious  that  the  importation  from  Canada  simply  dis- 
places its  equivalent  in  American  bieadstufi's,  increasing  by  so 
much  our  national  surplus  for  export.  Hence  Canada,  being 
nearer  the  point  of  demand  than  our  far  "West  producers,  lessens 
by  so  much  the  quantity  of  American  produce  that  can  find 
market.  The  degree  in  which  it  lessens  the  quantity  of  our  own 
far  West  breadstuffs,  that  can  pi'ofitably  be  juai-keted,  exactly 
ofFsets  the  addition  it  makes  to  our  exports.  It  is  like  a  pint  of 
water,  poured  into  a  barrel  of  water  that  is  already  running  over. 
It  effects  no  change  of  level,  nor  increase  in  quantity,  but  only  a 
substitution  of  atoms  in  an  unchangeable  quantity. 

Plainly  the  import  of  breadstuffs  from  Canada  exerts  no  influ- 
ence whatever  over  the  American  price,  but  merely  displaces 
part  of  our  American  product,  i^artly  by  lessening  the  quantity 
marketed,  and  partly  by  increasing  the  quantity  exported. 

A  Canadian  can  not,  on  bringing  his  wheat  into  oui-  market,  if 
our  wheat  is  selling  at  $1.25,  say  :  "I  want  $1.45  for  this  wheat, 
because  I  had  to  pay  twenty  cents  a  bushel  import  duty."  He 
must  sell  for  the  American  price.  He  need  take  no  less,  and  ho 
can  get  no  more.  Hence,  if  he  pays  a  duty,  it  figui-es  merely  as 
an  additional  item  in  his  cost  of  production,  /.  e.,  a  deduction 


016  ECONOMIC  PHILOSOPHY. 

from  liis  profits,  just  as  if  it  were  a  sum  paid  for  phosphates  or 
manure. 

The  opposite  theory  would  involve  the  absurd  corollary  that 
all  the  breadstulfs  produced  in  the  United  States,  though  one 
hundred  times  as  great  in  quantity  as  the  trifles  imported  from 
Canada,  must  have  been  made  twenty  per  cent,  higher  by  the 
mere  duty  on  this  importation  from  Canada,  or  that  a  tax  of 
$312,000,000  could  be  iixiposed  on  consumers  of  American  bread- 
stuflFs,  and  paid  over  to  American  farmers,  as  the  consequence  of 
collecting  a  twenty-five  per  cent,  duty  on  $16,000,000  worth  of 
breadstuffs  coming  in  from  Canada  and  going  out  to  Europe. 

Hence,  we  have  to  admit  that  the  whole  duty  collected  on 
breadstuffs,  entering  the  United  States  from  Canada,  is  paid  by 
the  Canadians.  Here,  therefore,  is  a  saving  to  the  whole  body  of 
American  taxpayers  of  $4,152,827.36  per  year,  through  the  duty 
on  imported  breadstufl's.  No  American  resident,  citizen,  or  tax- 
payer pays  one  cent  of  this  revenue  in  the  form  of  increased 
price.  Yet,  as  the  Canadian  is  seen  to  pay  it  into  the  Treasury,  it 
is  necessary  to  prove  that  the  American  price  is  increased  by  the 
amount  of  the  duty,  in  order  to  escape  the  conclusion  that  the 
Canadian  sustains  the  final  burden  of  the  tax. 

Of  coal,  we  import  $2,192,689.23  worth,  against  an  export  twice 
as  large,  and  against  a  production  of  $94,287,923.  Every  ton  im- 
ported is,  therefore,  a  displacement  of  a  j)ortion  of  domestic  j)rod- 
uct,  partly  l)y  diminishing  the  quantity  of  the  latter  which  can 
be  profitably  marketed,  and  partly  by  compelling  a  portion  of 
the  latter  to  be  exported.  Neither  of  the  processes  tends  to  lower 
or  raise  the  price,  since  in  both  cases  the  importation  only  dis- 
places a  portion  of  the  domestic  sujiply  without  increasing  the 
aggregate  supply.  By  so  much  as  the  importation  from  Nova 
Scotia  is  more,  the  domestic  product  will  be  less.  All  the  facts, 
which  make  the  duty  on  breadstulfs  a  collection  of  revenue  ex- 
clusively from  foreign  producers,  apply  to  coal.  Hence,  of  the 
$621,099.25  annually  collected  on  coal  not  one  cent  is  collected 
from  American  consumers  of  coal. 

Lumber  and  manufactures  of  Avood  are  exported  from  the 
Northwest,  i.  e.,  from  Michigan,  Wisconsin,  and  Minnesota,  into 
Western  Canada  and  Manitoba,  to  the  amount  of  $2,475,636  an- 
nually, thus  showing  that  it  is  cheaper  in  the  Northwest  than  in 
any  part  of  Canada.  It  is  imported  from  the  Ottawa  district  of 
Canada  into  New  York  and  New  England  to  the  amount  of 
^8,967,290.60,  thus  showing  that  it  is  dearer  in  New  York  and 


COMPETITION  REPEALS  THE  "  TAX."  617 

New  England  than  in  most  parts  of  Canada.  Finally,  we  ship 
from  our  ocean  ports  upwards  of  $24,000,000  worth  to  foreign 
countries.  The  total  value  of  our  lumher  product  is  $233,268,- 
729,  or  say  thirty  times  as  much  as  we  import,  and  our  importa- 
tion is  less  than  one-third  of  our  export. 

Here  again  the  Canadian  gets  the  American  price  ;  his  impor- 
tation is  a  displacement,  partly  felt  in  diminishing  our  domestic 
product,  and  partly  in  increasing  our  export.  Hence  the  $1,697,- 
431.91,  collected  from  Canadian  lumber  producers,  protects  tlie 
body  of  our  taxpayers  from  just  so  much  tax  which  they  would 
otherwise  have  to  pay. 

Summing  up  the  revenue  derived  from  the  articles  on  which 
the  importation  serves  clearly  only  to  displace  a  small  portion  of 
our  domestic  production,  partly  by  lessening  the  portion  of  our 
domestic  product  that  can  be  profitably  marketed  and  partly  by 
forcing  another  portion  to  be  exported,  we  find  that  on  these  sev- 
eral articles,  viz.,  breadstuffs,  coal,  fish,  hay,  paper,  potatoes,  i^i-o- 
visions,  sand,  starch,  stone,  straw,  tallow,  tar  and  pitch,  tobacco, 
vegetables,  vinegar,  wood,  lumber,  etc.,  we  collect  duties  from 
foreign  producers  to  the  amount  of  $15,919,878.03,  apparently 
without  a  possibility  of  any  tax  on  the  American  consumer. 

215.  When  Protection  Promotes  Production. — The 
third  class  of  cases,  in  which  duties  on  imports  operate  protec- 
tively, is  when,  being  imposed  on  articles  of  which  the  American 
production  is  inadequate  to  supply  the  American  demand,  they 
enhance  the  price  sufficiently  to  stimulate  the  production  up  to  a 
condition  of  adequacy  to  supply  the  demand.  When  this  point 
of  adequacy  of  domestic  supply  is  reached,  domestic  prices  will 
have  fallen  to  a  dead  level  with  foreign  prices.  While  the 
domestic  production  is  rising  toward  this  condition  of  adequacy, 
tlie  enhanced  price,  or  "  tax  "  occasioned  by  the  duty,  lessens  pari 
passu  with  the  approach  of  the  domestic  production  toward  ade- 
quacy to  supply  the  domestic  demand.  In  no  case,  therefore, 
where  there  is  a  large  domestic  production,  can  the  domestic  price 
stand  as  high  as  the  foi'eign  price  with  the  duty  added. 

If  tlie  law,  by  which  the  duty  recedes  from  its  full  effect  on 
the  price,  could  be  reduced  to  mathematical  certainty,  an  exact 
count  of  the  temporary  cost  of  protective  duties,  and  an  account 
current  of  this  cost  against  their  profit  in  enhanced  production 
and  increased  internal  trade,  could  be  arrived  at. 

But  fluctuations  in  markets  greatly  embarrass  it,  and  down  to 
the  present  time  the  Government  of  the  United  States  has  neg- 


618  ECONOMIC  PlIILOSOPIIY. 

lected  to  collect  sucli  statistics  as  would  furnish  most  aid  in 
establisliiiig  the  universality  of  such  a  mathematical  formula. 
It  has  to  be  left  to  sound  business  judgment. 

Upon  no  point  are  the  American  people  so  ill-informed,  and  so 
subject  to  imposition  on  the  part  of  the  unscrupulous,  as  on  that 
of  the  relative  prices  of  consumable  commodities  of  nearly  all 
kinds  in  Europe  and  in  America. 

Subject  to  variations,  which  may  be  separately  noted,  the  proxi- 
mate law  of  the  receding  effect  of  duties  under  an  increasing  do- 
mestic production  is  that,  pari  passu  as  the  domestic  production 
becomes  adequate  to  supply  the  demand,  the  tariff  tax  declines. 

For  instance,  on  crude  sugar  we  import  ten-elevenths  of  our 
supply.  Presumptively,  therefore,  ten -elevenths  of  our  duty,  on 
the  raw  materials  or  forms  of  our  sugar,  falls  as  a  taxation  on 
our  manufacturers  and  refiners  of  sugar.  The  existence  of  an 
export  of  refined  sugar,  though  only  to  the  extent  of  one-fiftieth 
in  value  of  our  imijortation  of  crude  sugar,  would  suffice  to 
prove  that  prices  are  as  low  in  our  markets  as  abroad,  were  it  not 
that  the  export  is  aided  by  payment  of  a  rebate  of  the  duty 
collected  on  the  importation  of  the  crude  sugar  used  in  its  manu- 
facture. In  fact,  how^ever,  refined  sugar  has  at  times  been  lower 
in  the  United  States  than  abroad,  and  is  usually  higher  by  only  a 
third  or  half  the  duty.  To  this  extent  the  tax  is  continued  against 
our  consumers.  The  assumption  that  raw  sugar  is  taxed  depends 
also,  for  its  trutli,  on  the  condition  that  the  repeal  of  our  duty 
would  cause  no  change  in  the  tariff  policy  of  the  countries  which 
sell  us  the  sugar.  If,  however,  they  should  put  on  an  export  tax 
simultaneously  with  our  taking  it  off,  as  Brazil  and  China  did  on 
the  occasion  of  the  repeal  of  our  duties  on  tea  and  coffee,  then  we 
would  be  simply  presenting  to  foreign  nations  our  present  sugar 
duties,  amounting  to  about  $50,000,000  annually. 

Collateral  causes  other  than  the  tariff,  such  as  patents,  which 
limit  the  competition  among  domestic  manufacturers,  may  con- 
spire to  prevent  prices  receding,  under  domestic  competition,  in 
the  degree  our  rule  calls  for.  The  history  of  steel  rails  may  illus- 
trate. When  they  were  altogether  supplied  from  abroad,  neither 
duties  nor  patent  monopoly  were  much  complained  of.  The  price 
was  so  high  that  even  the  duty  of  $28.50  per  ton  was  only  equiv- 
alent to  20  per  cent,  ad  valorem,  though  the  fall  in  price  so  raised 
its  ad  valorem  rate  that  had  it  continued  it  would  have  become  a 
duty  of  100  per  cent.  In  1864  as  high  as  $375  in  currency  was  paid 
for  steel   rails.     In  1882  our  demand   had  expanded  to  1,912,921 


"  GROWING  RICH  AS  TAXES  RISE."  615> 

tons  annually,  under  reduced  prices  and  expanded  production, 
and  we  ourselves  produced  1,688,794  tons  a  year,  leaving-  only 
224,057  tons  to  be  imported.  If  the  law  of  receding  tax  had 
worked  unfettered,  it  should  have  resulted  as  follows: 

Whole  demand,  J  (  Deficit,  )  (  Whole  duty,  )         i  Tariff 

1,912,921         \    :     ]  224,057^     ::    ]        $28.50         \     :    )   Tax, 
tons.  )  (    tons.     )  (      per  ton.       )         ( $3.16 

In  short,  in  1882,  in  view  of  the  ratio  of  our  domestic  produc- 
tion to  our  importations,  the  price  of  steel  rails  should  have 
been  only  $3.16  per  ton  higher  in  America  than  in  Europe, 
whereas  it  was  from  $15  to  $18  higher,  the  duty  being  then 
$28.50  per  ton.  This  failure  of  the  price  to  recede,  at  an  equal  pace 
with  the  expansion  in  the  domestic  production,  was  due  to  the 
patents  which  limited  the  right  to  manufacture  here  to  eleven 
companies,  all  acting  under  one  arrangement  as  to  their  patents, 
and  whose  patents  continued  to  run  after  the  English  i)atents  had 
expired.     Had  there  been  no  patent  monopoly,  i.  e. ,  had  all  Ameri-  *■ 

cans  been  free  to  make  Bessemer  rails  after  1870,  it  is  probable 
that  forty  instead  of  eleven  makers  might  have  competed.  In 
that  case  the  American  price  might  not  have  been  higher  than 
the  foi'eign  price  by  more  than  the  ratio  assigned,  $3.16  per  ton, 
plus  freight  and  charges.  Still  the  fact  that  America  is  the 
ultimate  mai-ket,  for  consumption,  of  about  as  many  rails  as  all 
the  rest  of  the  world  combined,  necessarily  causes  iron  and  steel 
rails  to  tend  toward  higher  prices  in  America  than  elsewhere. 

The  duty  recedes  from  its  effect,  as  a  tax,  in  projiortion  as  the 
domestic  production  becomes  adequate  to  supply  the  domestic 
demand.  Hence  the  portion  of  the  dvity  which  is  a  tax  on 
domestic  consumers,  bears  always  the  same  proportion  to  the 
share  which  is  paid  by  foreign  producers,  as  the  deficit  in  the 
domestic  supply  bears  to  the  whole  domestic  demand.  If  this 
law  be  applied  to  the  foregoing  schedule  of  duties,  to  the  amount 
of  $174,562,630.98,  it  will  furnish  us  Avith  the  fairest  standard 
for  ascertaining  the  gross  cost  of  protective  duties,  in  the  first 
instance,  i.  e.,  before  offsetting  the  profits  which  ensue  to  the 
country  at  large  from  enhanced  production,  and  the  increased 
prosperity  of  all  kinds  of  industries.  The  problem  which  has 
excited  the  candid  wonder  of  many  ingenious  persons  is.  Why, 
under  protective  duties,  do  we  grow  rich  in  just  the  degree 
that  taxes  are  higli?  The  secret  of  the  puzzle  is  that  foreign 
producers   pay  so    large   a  share  of  the  duties   that  American 


620  ECONOMIC  PHILOSOPHY. 

consumers  actually  are  presented  in  part  with  their  im- 
ported commodities.  This  is,  in  part,  why  Chancellor  Bis- 
marck attributes  the  unwonted  prosperity  of  America,  during  the 
twenty-three  years  past,  to  the  only  operative  cause  peculiar  to 
that  period,  as  compared  to  other  periods,  viz.,  our  protective  du- 
ties. It  will  also  both  exjjlain  and  justify  tlie  fact  that  the  last 
English  work  on  political  economy,  by  Professor  Henry  Sidg- 
wick,  of  Cambridge  University,  says  (p.  576)  :  "/f  must  he  ad- 
mitted that  the  imjjosition  of  import  duties  is,  under  certain  cir- 
cumstances, a  m,ethod  at  least  temporarily  effective  of  increas- 
ing a  nation''s  income  at  the  expense  of  foreigners-'''' 

In  stating,  as  a  proximate  rule  for  estimating  the  decline  in  the 
tariff  tax,  which  results  from  the  advance  in  the  domestic  pro- 
duction, that,  pari  passu  as  the  domestic  pioduction  becomes  ade- 
quate to  supply  the  domestic  demand,  the  tax  declines,  I  use  the 
word  proximate  in  its  broadest  sense.  For  instance,  while  the 
American  manufacture  of  silks  now  supplies  the  country  with 
about  one-fourtli  of  the  silk  worn  in  this  country,  the  deficit 
being  still  three-fourths,  the  rule  above  set  forth  would  require 
that  the  current  selling  American  price  should  be  one-fourth  of 
the  duty  below  the  French  price  with  duty  added,  supposing  the 
French  price  itself  not  to  have  been  reduced  by  the  American 
manufacture.  In  short,  that  the  current  American  prices  ought 
to  be  three-fourths  only  of  the  French  price,  plus  the  duty.  This 
is  not  far  from  the  fact.  French  manufacturers  sevei'al  years 
ago  refused  to  fill  American  orders  except  through  their  New 
York  houses.  They  alleged  as  the  reason  that,  if  they  should  sell 
to  i^merican  customers  at  current  French  prices,  the  latter,  on  pay- 
ing  the  duty,  would  find  the  American  price  so  much  lower  than 
the  French  x)rice  witli  duty  added,  that  they  could  not  sell  at  all. 
This  is  only  another  mode  of  saying  that  the  French  producers 
of  silks  are  paying  a  portion  of  our  revenue.  The  formula  I  have 
given  would  fix  that  portion  proximately  at  about  a  fourth  of 
the  price  ;  -whicli,  if  the  duty  be  60  per  cent.,  would  be  two-thirds 
of  the  duty.  The  accidents  of  trade  might  cause  this  to  fluctuate 
between  a  tenth  and  tliree-tenths,  and  differently  on  different 
kinds  of  silks,  according  to  the  degree  in  which  our  domestic 
manufacture  is  superseding  the  French,  in  each  kind,  in  our  mar- 
kets. The  actual  law  which  determines  the  price  being  the 
ratio  of  the  whole  supply,  foreign  and  domestic,  to  the  whole 
demand,  domestic  and  foreign,  it  follows  that  the  recession  of 
price  must  bear  a  permanent  relation  to  this  greater  equation, 


HIGHER  DUTIES  MAKE  CHEAPER  CROCKERY.      621 

and  only  a  subordinate  relation  to  the  less  one  of  the  ratio  of  the 
domestic  to  the  foreign  supply.  Still,  if  a  competent  government 
investigatiou  were  made,  I  think  it  would  prove  that  for  several 
years  past  the  American  price  for  silks  has  been  from  one  to 
three  tenths  below  the  French  price  and  duty,  thus,  in  effect, 
showing  a  payment  by  the  French  silk  manufacturers  of  from 
two  to  four  tenths  of  our  revenue  from  silks. 

English  manufacturers  of  cutlery  and  crockery  also  make  dif- 
ferent price  lists  to  American  customers  from  those  they  sell  at  to 
Australian  and  to  English,  putting  their  product  enough  lower 
here  than  elsewhere,  to  virtually  pay  as  much  of  the  American 
duty  as  they  can  afford  to  pay,  without  losing  their  entii'e 
profit.  ■ 

In  crockery  the  proximate  rule  above  given  is  borne  out 
with  essential  accuracy.  The  American  manufacture  produces 
about  $5,000,000  worth  a  year,  as  against  an  importation  of  about 
$7,000,000  worth.  Our  total  annual  consumption  being  $12,000,- 
000,  and  our  domestic  production  having  become  adequate 
to  supply  five-twelfths  of  the  demand,  it  ought  to  be  found  that 
our  foreign  competitors  are  bearing  five-twelfths  of  the  tariff 
tax.  As  the  effect  of  a  duty  is  partly  to  raise  prices  in  the  coun- 
try imposing  it,  but  partly  also  to  depi'ess  pi-ices  in  the  country 
producing  the  product  on  which  it  is  imposed,  a  comparison  of 
present  relative  prices  in  the  two  countries  is  not  always  more 
satisfactory  than  a  comparison  of  present  prices  with  past  prices 
in  the  same  country.  Davenport  &  Bro.,  a  New  York  import- 
ing house  in  crockery,  china,  and  earthenware,  report  that  in 
1852  a  crate  of  assox'ted  crockery  would  sell  to  the  American  con- 
sumer at  $95.30,  under  the  30  per  cent,  duty,  and  a  like  crate 
sold  in  1883  under  a  50  per  cent,  duty,  at  $57.80.  The  goods  had 
sold  67  per  cent,  higher  under  a  duty  40  per  cent,  lower.  The 
books  of  Oscar  Cheeseman,  another  importer  and  jobber  of 
crockery  in  New  York,  show  that  assortments  of  crockery  which 
sold  for  $108.68  in  1860  under  a  24  per  cent,  duty  sold  in  1883 
under  a  50  per  cent,  duty,  for  $63.81.  Although  the  duty  has 
since  been  raised  to  60  ])er  cent.,  inquiry  of  these  firms  shows 
that  the  goods  in  question  sell  very  much  lower  now  than  when 
these  statements  were  made. 

Nine  heavy  firms  of  dealers  in  plumbing  and  sanitary  hard- 
ware in  New  York  certilied,  in  the  winter  of  1883,  that  the  prices 
on  their  class  of  earthenware  were  40  per  cent,  lower  then  than  in 
1872,  when  the  business  of  tlieir  manufacture  was  first  undertaken 


622  ECONOMIC  PHILOSOPHY. 

in  this  country,  though  the  currency  in  which  these  prices  were 
stated  was  worth  33  per  cent,  more  in  coin  in  1882  than  in 
1873.  They  say:  "  We  are  of  tlie  opinion  that  the  manufacture 
of  these  goods  liere  has  been  the  main  cause  of  this  reduction,  and 
also  that  the  development  of  home  manufacture  has  always  the 
tendency  to  reduce  prices  to  the  consumer."  In  crockery,  there- 
fore, 40  per  cent,  increase  in  the  duties  has  caused  the  Ameri- 
can production  to  expand  until  it  supplies  five-twelfths  of  the 
American  demand,  and  has  reduced  the  net  price  to  American 
consumers  by  a  percentage  greater  than  the  whole  duty.  With- 
out this  reduction  in  price,  the  annual  consumption  for  which  we 
nowpay  $13,000,000  would  have  cost  us  $19,200,000,  an  annual 
saving  of  $7,200,000,  which  is  more  than  the  invoiced  value  of  all 
that  we  import,  viz.  (for  1882),  $0,873,075.95.  In  view  of  such 
facts,  and  of  the  fierce  struggle  made  by  foreign  potters  to  hold 
the  American  market,  it  is  safe  to  say  that  of  the  rev^enue  col- 
lected on  pottery,  viz.  $2,965,978.81,  one-half  has  been  paid  by 
the  importers,  and  only  one-half  by  the  American  consumers. 

Certain  newspapers,  in  1868-70,  denounced  the  duty  on  paper 
as  a  tax  on  knowledge.  The  fear  that  knowledge  was  going  to 
be  taxed,  so  great  was  their  stock  on  hand,  naturally  made  them 
"fast  and  furious." 

The  tax  on  "  knowledge  "  was  continued,  with  the  gratifying 
result  that  knowledge  so  increased,  on  all  hands,  that  most  of 
tho.se  who  had  not  known  that  the  duty  on  paper  helps  to  make 
it  cheap,  instead  of  dear,  found  it  out.  The  facts  are,  that  the 
United  States  makes  535,000,000  pounds  of  paper  annually,* 
while  Great  Britain  makes  only  350,000,000  pounds,  so  that  our 
supply  is  slightly  greater  per  capita  than  the  English.  They 
could  only  have  more  for  exjiort,  than  we,  by  using  less.  As 
recently  as  1873,  we  imported  foreign  paj)er  to  the  value  of  $580,- 
000.  In  three  years  the  importation  fell  to  $30,000.  At  the  same 
period  our  export,  which  in  1869  was  only  $3,650,  grew,  in  seven 
years,  to  $810,000,  and  in  1882  was  $1,618,883.  while  our  imports 
of  materials  for  making  paper  grew  to  $0,024,773.63.  In  paper, 
therefore,  we  became  importers  of  the  raw  materials  and  ex- 
porters to  fifty-one  countries  of  the  finished  product  of  all  grades, 
England  being  our  largest  purchaser,  and  the  British  possessions 
in  Africa  one  of  our  smallest,  because  little  paper  is  used  there. 

Since  1883  our  imports  of  paper  have  gained  slightly  on  ovu' 

*  Census  of  1880, 


HOME  MARKETS  FIRST.  623 

exports,  but  the  domestic  production  is  sixteen  times  greater  tliati 
the  importation.  According  to  our  formula,  it  is  sixteen-fold 
more  potential  in  securing  permanently  cheap  paper.  Though 
the  paper  manufacture  maintains  a  larger  supply,  and  in  most 
grades  at  as  low  prices  as  the  English,  an  assault  along  its  lines 
under  a  system  of  low  duties  would  shatter  it  in  all  its  parts. 

The  conditions  relating  to  hosiery  and  dress-goods,  of  all  except 
the  extremely  expensive  kinds,  resemble  those  above  outlined 
as  to  crockery.  The  revenue  on  these,  therefore,  is  divided.  Mr. 
Marshall  Field,  the  leading  importer  and  dry-goods  merchant  of 
Chicago,  stated  in  1882  that  in  all  oi'dinary  woolen  and  cotton 
goods,  for  common  wear  by  the  business  men  and  working  classes, 
the  American  market  (though  surrounded  by  an  average  45 
per  cent,  tariff)  is  the  cheapest  market  in  the  world.  Six- 
sevenths  of  the  goods  of  this  class  consumed  here  ai'e  now  made 
in  America.  Our  cotton  sheetings  and  cotton  prints  ai'e  selling 
in  Manchester  and  Liverpool,  as  well  as  in  every  port  on  the 
globe.  It  does  not  follow  that  they  ai-e  not  helped  by  protec- 
tion, for  our  duty  secui-es  to  our  cotton  producers  an  exclusive 
American  market,  in  addition  to  whatever  foreign  markets  may 
be  open  to  them.     A  large  trade  makes  a  low  price. 

If  the  principles  above  outlined  be  applied  to  our  entire  tariff 
list,  it  would  show  that,  of  the  $212,000,000,  or  less,  of  duties  on 
imports  usually  collected,  the  pi'oportion  collected  from  foreign 
producers  and  not  chargeable  over  to  American  consuniers  varies 
with  the  fluctuations  in  the  state  of  foreign  and  domestic  prices, 
never  coming  below  $40,000,000,  and  seldom,  perhaps,  rising 
above  $60,000,000. 

Few  writers  are  more  passionately  British,  or  more  dogmati- 
cally indifferent  to  facts,  than  Mr.  Mill.  By  some  fortuitous 
accident,  however,  lie  did  make  the  discovery,  which  be  thus 
candidly  admits  (vol.  ii.  p.  457):  "Those  are,  therefore,  in  the 
right  who  maintain  that  taxes  on  imports  are  partly  paid  by 
foreigners."  His  application  of  tlie  principle  in  practice  shows 
less  knowledge  of  the  laws  and  conditions  of  trade  than  would 
be  expected. 

216.  Protection  Promotes  Wages. 

The  fourth  mode  in  which  duties  on  imports  operate  to 
protect  the  industries  of  the  country  imposing  them  is 
when,  by  increasing  the  number  of  occupations  and  en- 
terprises that  can  be  carried   on  within  a  country  to 


624  ECONOMIC  PHILOSOPHY. 

the  profit  of  the  man  who   risks  his   capital   in  them 
(the  "entrepreneur"),  they  increase  the  fullness  and 
diversity    with    which    the    natural    resources  of    a 
country  are  developed  and  used,  thereby  causing  more 
employers  to  compete  for  the  hire    op   labor,  and  so 
raising  the  rate  of  wages,  or  the  number  of  workers 
that  can  find  work  at  that  rate,  or  both. 
I  have  shown  that  no  duty  caii  iiici-ease  tlie  price,  if  it  rests  on 
the  importation  of  an  article  of  which  our  domestic  production  is 
adequate  to  supply  the  demand.     Such   is  the  case  of   wheat. 
If  the  duty  raises  the  price,  without  starting  the  domestic  pro- 
duction, it  is  a  revenue  duty,  since  the  whole  duty  paid  goes  to 
the  treasury,  and  there  are  no  domestic   producers  to  protect. 
Such  is  the  case  of  tea,  and  such,  until  recently,  was  that  of  silk 
goods.     The  duties  which  are  protective  are  limited,    therefore, 
to  those  which  are  stimulating  a  domestic  production   not  yet 
adequate  to  supply  the  domestic  demand.     If  there  are  fifty  or 
five  thousand  such   that  enhance  prices,  that  means  that  there 
are  fifty  or  five  thousand  new  sets  of  employers  competing  with 
each  other  for  the  hire  of  labor,  loho  icould  not  be  in  this  com- 
petition for  the  hire  of  labor,  loere  it  not  for  those  particxdar 
duties    which    are    thus    enhancing   jyrices.      Sujjpose  a  new 
country  like  Australia  has  hitherto  imported  clothing,  and  had 
but  five  occupations,  viz.,  raising  sheep,   shearing  sheep,    trans- 
porting wool  to  market,  and  importing  and  selling  clothes  and 
groceries   for    the  wool-growers.      If    the  protective  duties  on 
woolen  goods  start  the  occupations  of  scouring,  dyeing,  spinning, 
weaving,  and  tailoring,  the  number  of  occupations  will  be  in- 
crea.sed  from  five  to  nine,  and  the  number  of  competitoi'S  for  the 
hire  of  labor  in  like  proportion.     At  least,  the  degree  of  competi- 
tion for  the  hire  of  labor,  which  was  caused  abroad  by  the  manu- 
facture of  the  cloth  abroad,  will  be  transferred  to  Australia,  and 
added  to  the  previous  competition  for  the  hire  of  labor  there, 
together  with  the  added  competition  involved  in  building  the 
new  factories  and  introducing  machinery. 

Labor  obtains  employment,  only  on  condition  that  the  employer, 
or  enterpriser,  can  sell  the  product  of  the  labor  at  a  profit,  after 
paying  wages  and  the  interest  on  his  capital.  An  enterpriser  or 
employer  is  generally  a  man  or  corporation  who  borrows  his 
capital.  In  this  country  it  is  so  usually  true,  that  the  enterprisers 
keep  the  workers  busy,  that  workingmen  fall  into  the  habit  of 
thinking  that  work  comes  by  some  inevitable  necessity  like  sun- 


THE  MEN  WHO  RAISE  WAGES.  625 

rise  or  the  tides.  Mauy  workingmeu  imagine  that  it  is  the  great 
corporations  and  employing  capitahsts  who  cause  their  wages  to 
be  as  small  as  the}-  are,  rather  than  that  it  is  to  these  that  they  owe 
the  fact  that  they  can  earn  any  wages  at  all.  But,  in  fact,  it  is 
the  competition  of  the  enterprisers  with  each  other  that  advances 
wages.  It  is  the  extent  and  number  of  the  enterprises  that  can 
be  made  profitable,  that  increases  the  competition  of  the  enter- 
prisers, and  protection  determines  the  extent  and  number  of  the 
enterprises  that  can  be  made  profitable,  when  such  enterprises 
have  to  be  begun  against  the  competition  of  older,  or  stronger, 
foreign  competitors.  Without  protection,  therefore,  American 
labor  cannot  at  present,  as  against  foreign  labor,  be  kept  fully 
employed.  With  adequate  protection  at  all  points  it  can.  Nothing 
else  can  do  it  ;  for  where  the  "  boss"  cannot  make  a  profit,  labor 
must  go  out.  India  and  China  are  examples  of  countries  where 
the  enterprisers  are  far  behind  the  labor  supply,  because  every 
man  who  gets  a  petty  competency  sufficient  to  cover  his  wants  for 
the  rest  of  his  life  stops  work.  They  have  not  there  the  great 
corporations,  large  fortunes,  and  vast  "monopolies,"  as  we  call 
them,  which  have  distinguished  Roman,  English,  and  American 
civilization,  because  they  have  not  the  same  power  of  combination. 
Hence  their  wages  of  labor  are  low — two  or  three  cents  a  day. 
For  in  order  that  there  may  be  an  exhaustless  demand  for  the 
labor  of  wages- workers,  there  must  be  an  exhaustless  ambition  in 
those  who  can  employ.  Apart  from  the  greed  of  the  competent, 
there  can  be  no  relief  to  the  need  of  the  incompetent.  Not  only 
does  the  wage-worker,  who  feels  that  he  has  got  enough,  stop 
working,  but  the  capitalist  who  discovers  that  he  has  got  enough 
stops  investing,  and  to  cease  investing  in  new  enterprises  is  to 
cease  employing  new  men.  Hence  what  the  poor  most  need,  in 
any  country,  is  men  able  to  employ,  i.e.,  i-ich  in  present  means, 
and  who  never  know  when  they  have  got  enough,  and  in  fact 
never  get  enough.  The  curse  of  China  and  India,  which  keeps 
them  poor  and  at  famine's  verge,  is,  that  so  little  capital  satisfies 
their  money-making  men,  and  retires  them  from  the  field  of  en- 
terprise. Millions  compete  for  employment,  but  no  employers 
compete  for  labor.  The  surplus  capitals  of  the  rich,  employed  in 
reproduction,  and  competing  with  each  other  for  the  labor  of  the 
unemployed,  are  the  cause  of  rise  in  rates  of  wages.  Wealth  not 
needed  for  pi'esent  consumption,  and  therefore  invested  in  build- 
ing houses  for  rental,  causes  rents  to  fall.  Wealth  to  lend  lowers 
rates  of  interest. 


626  ECONOMIC  PHILOSOPHY. 

The  whole  cost  of  all  commodities  and  enjoyments  resolves 
itself  finally  into  one  or  another  of  three  forms  of  compensation 
for  labor,  viz.  :  1.  Wages  of  labor,  which  covers  merely  the  cost 
of  employing  all  those  workmen  whose  toil  pei'fects  the  com- 
modity, and  perfects  each  raw  material  tliat  enters  into  the 
commodity,  after  others  have  supplied  the  capital,  including-  the 
land,  and  undertaken  the  risk  essential  to  the  creation  of  the  raw 
material  and  the  employment  of  the  labor.  2.  Profits  of  enter- 
prise, which  are  the  compensation  for  the  risk  of  loss  of  the 
whole  capital  involved  in  the  undertaking,  and  for  that  form  of 
labor,  care,  and  courage  which  assumes  the  risk  of  the  demand  for 
the  commodity,  when  it  shall  be  brought  into  existence,  being  suf- 
ficient to  compensate  for  the  cost  of  production,  on  sale  of  the 
commodity  in  open  competition  with  all  others  who  produce  it, 
atid  to  leave  a  margin  of  profit.  This  compensation  or  profit 
amounts  to  the  whole  excess,  of  tlie  returns  created  by  the  demand, 
over  the  cost  of  production,  including  wages,  rent,  interest,  and 
capital  sunk.  3.  Interest  and  capital,  which,  in  the  case  of 
created  capital,  is  the  compensation  for  the  use  of  labor  pi-eviously 
hoai'ded  or  stored  in  coinmodities.  In  the  case  of  land  (rent)  it 
is  the  compensation  for  the  use  of  labor  previously  hoarded,  or 
stored,  in  the  form  of  the  sum  paid  on  the  pui'chase  of  land,  for 
the  value  which  it  has  derived  from  the  aggregate  movement  of 
society,  i.e.,  from  its  nearness  to  centers  of  social  and  industrial 
movement.  In  some  cases,  in  cities,  this  value  arises  from  its 
having  been  withheld,  at  considerable  cost,  for  interest  and  taxes, 
from  the  inferior  uses  which  would  have  lessened  its  value. 
Thus  wages,  rent,  profit,  and  interest,  are  all  but  differing  forms 
of  compensation  for  labor — i.e.,  of  wages.  The  price  of  com- 
modities is  but  wages,  some  of  which  are  once,  some  twice,  and 
some  thrice  removed.  So  much  of  the  price,  as  was  paid  in  wages 
for  the  last  process  of  production,  is  evidently  wages.  For  in- 
stance, in  making  pig-iron  the  census  returns  but  a  fifth  of  the 
cost  as  bei:ig  paid  for  wages,  i.e.,  for  evident  Avages,  or  wages 
of  the  last  process  involved.  The  ore,  lime,  and  coal  are  raw 
materials,  and  a  large  element  in  the  cost  of  these  is  labor,  or 
wages,  of  production  and  transportation.  The  furnace,  and  fund 
from  which  wages  are  paid  till  the  iron  is  marketable,  are 
counted  as  capital,  but  these  are  only  past  labor  stored,  in  plant 
and  money.  All  capital,  rent,  interest,  and  profits  therefoi'e 
resolve  themselves  finally  into  wages.  If  tliey  are  not  wages  in 
the  first  instance,  they  are  wages  paid  for  the  abstinence  from  the 


^OW  DUTIES  PMOTECT  WAGES.  627" 

pleasures  of  consuming-  previous  wages.  Or  if  there  lias  been 
no  abstinence,  but  only  invention  and  enterprise,  in  perceiving 
avenues  to  wealth  where  others  failed  to  see  them,  then  the 
profits  of  such  inventive  energy  or  enterprise  are  the  wages 
which  society  justly  awards  to  the  man  who  can  teach  it  what  is 
both  new  and  valuable.  There  are  no  sources  of  value  save 
in  labor  and  the  desire  of  that  which  labor  obtains. 

If,  therefore,  there  are  1,500  protective  duties  affecting  prices, 
there  must  be  1,500  domestic  productions  inadequate  to  supply  the 
domestic  demand.  Hence  there  must  be  1,500  nuclei  of  industry 
at  which  new  employers  are  bidding  against  each  other  for  the 
employment  of  workmen  ;  hence  1,500  centers  of  increased  de- 
mand for  labor  from  which  higher  wages  for  labor  radiate  on 
every  side  ;  hence  1,500  centers  of  enterprise  where  capital  is  at 
risk  for  new  profits,  labor  is  making  new  products,  rents  and 
raw  materials  and  wages  are  rising,  and  the  prices  of  the  finished 
product  are  falling.  The  statistics  which  prove  the  increased 
employment  of  labor  and  higher  rates  of  wages  in  the  United 
States  under  protection  than  under  low  duties  are  simply  endless. 
Free  tradere  try  to  ascribe  the  higher  wages  existing  in  this 
country  to  land,  climate,  inventive  sagacity.  But  there  was 
more  land,  and  it  was  more  fertile,  in  our  colonial  period  than 
now,  and  yet  labor  was  then  worth  but  a  shilling  a  day  ;  luxuries 
now  common  to  the  poor  were  then  rare  among  the  rich.  Our 
climate  merely  rivals,  without  excelling,  that  of  Europe,  and  in- 
ventive sagacitj''  stores  itself  into  machine  power,  of  Avhich  En- 
land  has  rather  more  than  we,  the  product  of  three  hundred  years 
of  protection.  High  wages  are  due  to  such  an  organization  of 
isdustnes  as  keeps  the  whole  people  employed,  and  to  attain  the 
greatest  possible  diversity  we  must  not  only  tolerate  those  which 
we  cannot  avoid  having,  but  we  must  insist  on  having  those 
which,  at  the  outset,  fi*ee  foreign  competition  would  be  both  in- 
terested and  able  to  destroy.  And  we  must  do  this  honestly,  in 
order  to  multiply  the  fields  of  employment  for  labor,  and  keep 
wages  at  the  maximum,  so  far  as  human  legislative  effort  can. 

217.   Protection  Promotes  National  Unity  and  Peace. 

DUTIES  ON  IMPORTS  PROTECT  THE  DOMESTIC  INDUSTRIES  OF  THE 
COUNTRY  IMPOSING  THEM  WHEN,  BY  BRINGING  INTO  EXISTENCE 
AND  DEVELOPING  INTO  A  CONDITION  OF  SELF-SUSTAINING  PROFIT 
INDUSTRIES  ESSENTIAL  TO  AN  ACTIVE  INTERNAL  COMMERCE 
DURING  PEACE,  AND  TO  THE  NATIONAL  DEFENSE  DURING  WAR, 
THEY    INCREASE    THE    PROBABILITIES    OF    BOTH    DOMESTIC  AND 


628  PJCONOMIC  PIIIL0S0PU7. 

INTERNATIONAL   PEACE,   AVERT    OR  GREATLY  MODIFY    FINANCIAL 
CRISES,  AND  RENDER  WAR  LESS  FREQUENT  AND  LESS  EXHAUSTING. 

Tlie  Cobdeu  Club  adopts  as  its  motto,  "  Peace,  good  will  among 
the  nations,"  *  but  every  sunrise  is  announced  by  the  reveille  of 
English  drums,  awakening  English  soldiers  to  back  with  the 
bayonet  some  new  intrusion  on  the  rights  of  barbarian  races,  in 
order  to  secure  to  British  factories  the  profits  of  selling  breech- 
clouts  and  wooden  gods  to  some  new  tribe  of  heathen,  to  the 
prejudice  of  the  local  manufacture.  Ten  thousand  Englishmen 
were  slaughtered  in  1884  in  the  Soudan  as  part  of  this  jiro- 
gramme.  England  has  her  nose  in  every  quarrel  on  the  face  of 
the  earth.  She  is  not  wholly  out  of  war  one  mouth  in  twenty- 
five.  Indeed,  it  is  doubtful  if  she  has  been  at  absolute  peace  for 
a  day  since  18-16.  Free-trade  in  men  and  in  commodities  was  the 
war-cry  of  our  Southern  Eebellion.  It  cost  us  one  million  lives 
and  ten  thousand  million  dollars.  It  had  its  face  set  backwards 
towards  feudalism,  baronialism,  paucity  of  employments,  poverty 
of  laborers,  the  lash  as  legal  tender  for  a  day's  work,  civil  war  as 
a  substitute  for  economic  discussion,  caste  instead  of  currency, 
bullets  instead  of  banknotes,  and  bullying  in  place  of  statesman- 
ship. The  Avhole  origin  of  our  late  costly  war  was  economic 
error,  and  eveiy  fibre  of  its  economic  errors  is  gathered  up  and 
woven  into  the  detestable  shibboleth  of  England's  American 
implements  and  tools — "Free  Foreign  Trade."  While  the  free 
trade  argument  in  America  has  been  identified  wdth  disentegra- 
tion  and  disunion  from  the  first,  the  desire  to  secure  a  national 
revenue  through  a  protective  tariff  was  the  motive  which  welded 
the  feebly  united  States  of  the  Confederation  into  the  present 
national  Union,  f 

While  the  foreign  trade  j)olicy  is  hourly  breeding  war  among 
the  nations,  protection  to  home  industry  develops  within  every 
nation  the  most  gratifying  results  of  peace,  and  the  best  effects  of 
commerce.  It  says  to  each  nation,  "  Mind  your  own  business. " 
It  teaches  each  that  the  best  conquest  it  can  make  over  its  rivals 
is  to  absorb  their  pursuits,  their  arts,  their  populations,  and  their 
power,  by  active  invention  and  peaceful  innnigration.  We  have 
room  in  the  United  States  for  300,000,000  of  people,  and  we  must 
prepare  for  their  coming.  But  they  cannot  all  farm.  To  keep 
them  busy  every  pound  of  our  cotton  must  be  spun  and  woven 

*  "  Free  trade,  peace,  good  will  among  nations." 

t  See  Mason's  "  Short  Tariff  History  of  the  United  States,"  and  "  Twenty  Years  of 
Congress,"  by  James  U.  Blaine. 


PRO  TECTIOy  IS  PEA  CE.  <  ■-  2  0 

on  our  soil,  tlius  saving  wages  and  profits  to  the  amount  of  $400,- 
000,000  annually.  We  nnist  produce  all  our  sugar,  whether  from 
tiie  beet,  from  sorghum,  or  from  the  cane,  thus  stopping  an  out- 
flow of  $100,000,000  annually,  virtually  in  coin.  We  must  so 
expand  our  urban  and  agricultural  industries,  as  to  render  the 
foreign  market  unimportant  to  us  for  any  purpose.  This  alone 
is  the  policy  which  will  keep  us  at  peace  with  each  other  and  with 
all  the  world — will  enable  us  to  hold  together  this  gigantic  union 
of  states,  which,  from  the  first,  has  exhibited  so  many  of  tlie 
tendencies  toward  forming  itself  into  two  nations  instead  of  one. 
To  maintain  the  Union  by  peaceful  means,  in  preference  to  the 
bayonet,  is  the  first  problem  in  American  statesmanship.  It  can 
not  be  done  unless  the  two  sections,  North  and  South,  have  a 
commerce  with  each  other  five-fold  greater  than  they  now  liave, 
and  to  this  end  the  commerce  of  both  sections  with  England 
must  be  relatively  less.  Hence  the  maintenance  of  the  Union 
now,  as  in  1832  to  18G0,  hinges  upon  the  maintenance  of  the  pro- 
tective policy. 

South  Carolina  virtually  won  disunion,  when  it  bullied  Con- 
gress into  the  Compromise  Tariff  of  1833.  The  same  contest  is 
again  upon  us,  and  involves  the  same  consequences.  As  surely 
as  the  pi'otective  policy  shall  be  abandoned,  just  so  surely  will 
the  Nortli  be  compelled  to  fight  again,  within  thirty  years,  for 
political  union  with  the  South. 

Thus,  before  us,  lie  the  two  forks  in  our  road,  as  in  1833. 
To  the  left  lie  free  foreign  trade,  and  domestic  dissension  and 
disunion  ;  to  the  right  lie  pi'otection,  the  prosperous  expansion 
of  our  industries,  and  foreign  and  domestic  peace. 

Had  tlie  South  begun  the  development  of  her  manufacturing 
industries  in  1780  to  1883,  as  at  first  urged  by  Jefferson,  Washing- 
ton, Madison,  (Villioun,  Clay,  Benton,  .Tackson,  and  other  of  her 
most  eminent  statesmen,  she  would  have  fought  for  union,  instead 
of  for  disunion,  in  1861.  But  if  a  manufacturing  South  could  be 
supposed  capable  of  desiring  disunion,  that  result  could  not  have 
been  defeated  by  arms.  Free  trade  bred,  in  the  South,  botli  tlie 
errors  that  sought  secession,  and  the  industrial  incapacity  tliat 
rendered  the  effort  a  faihire.  Protection,  if  continued  twenty 
years  longer,  will  end  the  desire  of  the  South  to  be  either  a 
separate  nation,  or  a  retrogressive  force  in  the  present  nation, 
wliile  developing  in  that  section  a  power  and  self-sufficiency, 
which  would  render  either  desire  omnipotent,  if  it  could  exist. 

The  United  States  have  illustrated,  on  a  tragic  scale,  the  disin- 


630  ECONOMIC  PIIILOSOPITY. 

tegrating  tendency  of  a  policy  of  free  ti'ade  with  foreign  nations, 
which  liad  Anally  to  be  overcome  by  military  force,  and  the 
national  union,  which  was  formed  chiefly  to  enact  a  protective 
tarifl^  on  imports,  was  maintained  successfully  only  through  the 
financial  and  industrial  solidarity  imjDarted  by  the  same  tariff. 
Protection  to  domestic  industry  was  the  vital  principle  of  Kos- 
suth's movement  in  1848  for  the  vindication  of  Hungarian  unity, 
and  which  afterwards,  under  Von  Beust,  in  1866,  found  expres- 
sion in  the  unity  of  the  Austro-Hungarian  empire.  The  same 
pi'inciple  xinderlay  the  reconstruction  of  United  Italy  through  the 
dash  of  Garibaldi,  the  radical  penetration  of  Mazzini,  and  the 
clear  statesmanship  of  Count  Cavour.  In  France  the  national 
unity  is  never  weak,  because  the  sentiment  of  protection  to  home 
industry  is  innate.  Thus  everywhere  the  two  phases,  National 
Unity  and  Protection  to  Industry,  are  seen  to  be  only  different 
names  for  the  same  essential  truth.  On  the  other  hand,  the  sole 
tendencies  toward  disintegration,  in  that  Germany  which  Napo- 
leon I.  found  it  so  easy  to  convert  into  the  battle-ground  of 
Europe,  were  identified  with  a  free  foreign  trade.  The  tendencies 
toward  German  unity  which  crowned  the  late  William  emperor 
of  a  revived  German  empire,  in  Paris,  after  the  victories  of  Metz 
and  Sedan,  were  the  fruits  of  protection.  The  disintegration  of 
Ireland  from  England,  and  the  continually  proclaimed  dis- 
loyalty of  the  former,  are  a  fruit  of  the  "sharp  bargain"  known 
as  British  free  trade.  Other  dependencies  of  England  are  only 
loyal  because  permitted  to  be  protective. 


CHAPTER  XVI. 

STATE  ACTION  IN  RELATION  TO   SPECIAL  INDUSTRIES, 

218.  Silk. — The  eiforts,  by  government  aid,  to  compel  the 
culture  of  silk  in  Mexico,  the  West  Indies,  and  the  United  States, 
date  from  the  very  settlement  of  these  several  parts  of  the  conti- 
nent, viz. :  from  1522,  under  Cortez,  in  Mexico;  from  1610,  under 
King  James,  at  Jamestown,  in  Virginia,  and  as  early  as  1604,  in 
the  West  Indies.  The  attempted  culture  of  silk,  in  these  three 
portions  of  America,  had  a  long  and  disappointing  history  in  this 
period,  when  only  the  rudest  industries  and  those  most  directly 
connected  with  food,  shelter,  and  the  needed  raiment  of  the  pro- 
ducers, could  survive.  This  shows  that,  however  sound  the 
principle  of  state  intervention  and  stimulus  may  be,  when  applied 
to  right  cases,  it  becomes,  like  private  enterprise  and  industry 
itself,  equally  fantastic  and  mischievous  when  foolishly  applied. 

The  production  of  silk  requires  the  patient  and  skilled  labor  of 
a  peaceful  and  contented  people,  not  so  much  for  the  tending  and 
feeding  the  worms,  and  the  preservation  and  hatching  of  the  eggs, 
as  for  the  reeling  of  the  silk  from  the  cocoon,  and  the  separation 
from  it  of  all  objectionable  matter.  Yet,  from  the  first,  the  notion 
prevailed  in  England  that  not  only  could  colonists,  thrust  into 
immediate  conditions  of  danger,  harassment,  and  turmoil,  carry 
on  this  industry  favorably,  but  that  it  could  and  should  be  made 
a  happy  means  of  converting  Indian  savages  to  the  true  faith,  by 
exhibiting  to  them,  in  the  wonderful  operations  of  the  silk-worm, 
proofs  of  the  existence  of  a  Creator.  It  was  extolled  as  admirably 
adapted  to  the  negro,  owing  to  his  indolence.  It  was  even 
calculated,  by  one  philanthropist,  that  England  could  save  the 
entire  cost  of  her  paupei'  maintenance,  by  sending  the  paupers 
to  Virginia,  Carolina,  and  Georgia,  to  feed  silk-worms.  Their 
presumed  shiftlessness  was  set  down  as  the  prime  qualification 
which  would  assure  success  in  the  enterprise.  In  the  25  years 
from  1731  to  1755,  about  251  ])ounds  of  raw  silk,  in  all,  were  sent 
from  the  Carolinas  to  Great  Britain,  and  about  8,829  pounds  were 
sent  from  Georgia  in  the  same  period.     This  was  under  a  parlia- 


632  ECOSOMK '  rUlLOSOPll Y.  " 

mentary  bounty  of  three  shillings  per  pound.  In  1 766  the  bounties 
were  reduced  one-half.  As  late  as  1790  raw  silk  was  still  pro- 
duced, in  a  very  small  quantity,  for  export.  In  1725  Pennsylvania 
had  sent  a  small  quantity  of  silk  to  England.  Prior  to  the  war 
for  independence,  Franklin  and  other  leaders  of  thought  were 
greatly  intei**sted  in  introducing  the  silk-worm  and  the  mulberry 
tree.  From  the  period  of  the  first  war  with  Great  Bi'itain  to  1826, 
there  was  a  scattered  and  unsuccessful  attention  given  to  the  sub- 
ject by  individuals. 

In  1826  Gideon  B.  Smith,  of  Baltimore,  and  Dr.  Felix  Pascalis, 
of  New  York,  brought  the  Morus  Multicalis  tree  to  the  attention 
of  the  public.  Nearly  all  the  States,  from  Maine  to  Georgia  and 
Indiana,  offered  bounties,  on  the  mulberry  trees,  on  the  cocoons, 
and  on  the  i-eeled  silk ;  counties,  fairs,  and  stock  companies  inter- 
ested in  silk-growing  followed  with  further  offers.  The  United 
States  granted  a  farm  of  262  acres  at  Greenbush,  N.  Y.,  to  one 
Clark,  on  condition  that  he  should  plant  at  least  100,000  mul- 
berry trees.  National  and  State  silk  conventions  were  held. 
Stock  silk-growing  companies  were  formed.  America  was  under 
the  influence  of  the  speculative  fever  prevailing  in  England  and 
France,  in  connection  with  the  general  inflation  from  182-4  to 
1839,  and  a  portion  of  the  financial  craze  expended  itself  upon 
silk  culture.  The  leaders  of  society,  philosopliy,  industry,  and 
science  all  wrote  treatises  on  silk  culture.  The  mystery  and 
poetry  of  it  were  fascinating.  Men  had  no  railway  shares  to 
speculate  in,  and  they  speculated  in  multicaulis  buds,  silkworms, 
eggs,  and  mulberry  trees.  Prices  rose  to  $1,  $5  per  tree,  and 
profits,  of  six-fold  the  investment,  were  made  in  a  single  year, 
raising  trees.  In  1839  the  bubble  burst,  and  tlie  trees  were  good 
only  for  pea  brush.  Only  slight  attempts  to  manufacture  silk 
were  made,  though  as  early  as  1837  Massachusetts  was  making 
sewing-silk  to  the  value  of  $150,477,  and  employing  157  hands. 
Many,  if  not  most,  of  the  present  successful  silk  houses  trace 
their  rise  to  the  humble  manufacture  of  sewing-silk  then  carried 
on.  In  1840  the  total  production  of  American  silk  is  estimated 
at  40,000  povmds.  From  this  time  to  the  present,  the  culture  of 
silk  in  xlmerica  has  formed  an  inappreciable  element  in  the  sup- 
ply, and  the  manufacture  has  been  dependent  on  the  imported 
raw  silk.  As  respects  silk  culture,  therefore,  experience  has 
shown  that  private  enterprise  is  as  likely  to  be  injudiciously  and 
wastefuUy  applied  as  government  aid.  Both  must  fail  where  a 
vast  number  of  persons  allow  their  imaginations  to  get  the  better 


FAILURE  OF  SILK  CULTURE.  033 

of  theii*  jiulgmeuts,  so  as  to  believe  that  an  industry  must  prove 
profitable,  merely  because  its  processes  are  fascinating  in  a  scien- 
tific point  of  view,  and  its  product  is  attractive  in  an  lestlietic 
sense.  Lately,  i)romising'  efforts  have  been  made  to  cultivate  raw 
silk  in  Kansas.  It  is  asserted  that  the  woi-ms  thrive  as  well  on  the 
Osage  orange  leaves  as  on  the  mulberry.  As  the  manufacture 
increases,  the  cultui'e  of  silk  may,  in  time,  become  feasible.  In 
1850  the  silk  manufacture  in  the  United  States,  obtaining  its  raw 
silk  fi'om  Italy  and  China,  employed  1,723  persons  ;  in  1860, 
5,435  ;  in  1870,  6,649,  and  in  1880,  34,521.  The  value  of  the 
products  expanded  as  follows  :  In  1850,  $1,809,476  ;  in  1860, 
86,607,771  ;  in  1870,  $12,210,662;  and  in  1880,  $34,519,723. 

Inasmuch  as  the  culture  of  raw  silk  has  proved  a  failure,  it 
may  be  conceded  that  whatever  duties  were  collected  on  raw  silk 
prior  to  1846  (since  that  date  it  has  been  free  of  duty),  as  well  as 
the  bounties  paid  to  promote  its  production,  and  the  losses  in- 
curred in  its  attempted  culture,,  have  netted  no  other  return  than 
the  happiness  which  always  attends  an  enthusiasm,  and  the  wis- 
dom which  often  follows  a  defeat.  The  experimenters  sowed  for 
experience,  and  they  gathered  in  the  crop. 

The  present  silk  manufacture  had  its  beginnings  in  a  manufac- 
ture of  sewing-silk,  which  was  not  greatly  assisted  by  the  attempts 
at  silk  culture.  It  owes  its  present  dimensions  largely  to  that 
universal  emulation  after  equality  with  the  best,  among  American 
women,  which  causes  every  such  woman  in  whatever  station 
to  desire  to  possess  at  least  one  silk  dress.  This  condition  of  senti- 
Tuent  among  American  women  was  itself  produced  by  the  higher 
average  of  material  comfort  accorded  to  American  women,  than 
to  those  of  any  other  people,  through  our  higher  average  returns 
in  industry.  This  created  the  demand  only.  That  demand 
would  have  continued,  to  this  date,  to  be  supplied  wholly  by 
foi'eign  manufacturers,  had  the  duty  of  30  per  cent,  imposed 
for  revenue,  under  the  tariff  of  1846  to  1861,  continued  to  the 
present  time.  It  was  the  raising  of  this  duty,  from  30  or  40  to  60 
per  cent,  in  1864  which  brought  its  revenue  function  into  subor- 
dination to  its  protective  function,  and  created  the  silk  manufac- 
ture in  the  United  States.  The  rise  in  the  American  manufacture 
has  been  attended  by  a  general  decline  in  the  selling  prices  of 
silk  goods  in  America,  cf)mpared  \\\i\\  the  prices  which  prevailed 
under  the  30  per  cent,  duty  of  1846  to  1872,  of  about  one-third. 

The  value  of  the  silk  manufactures  imported  in  1880  is  almost 
identical  with  the  value  imported  in  1853,  being  slightly  upwards 


634  ECONOMIC  PlIILOSOPHT. 

of  $33,000,000.  During  the  war  of  1861-5,  the  importation  fell  to 
about $11, 000, 000  worth,  but  forfifteen  years  past  it  has  been  twice 
or  tlirice  as  great,  and  it  still  exceeds  the  domestic  production. 

The  tariff  legislation  concerning  silk  has  been  as  follows  : 
From  1790  to  1832,  raw  silk  was  free.  In  1832  a  duty  of  12^  per 
cent,  was  laid,  which  in  1841  was  raised  to  20  per  cent.,  and  in 
1843  to  50  cents  per  pound.  In  1846  this  was  reduced  to  15  cents 
per  pound,  and  since  1857  ii>  has  been  free.  Silk  manufactures 
came  under  a  duty  of  7^  per  cent,  in  1790,  raised  to  12^  and 
15  per  cent,  in  1804-8— doubled  to  30  percent,  in  1812-15.  In  1842 
the  duty  was  made  $2  per  pound  on  silk  twist,  25  per  cent,  on 
silk  for  manufacture,  $1.50  per  pound  on  pongees  and  plain  white 
for  printing  and  coloring,  and  from  1832  to  1836  manufactures 
from  beyond  the  Cape  of  Good  Hope  w^ere  charged  from  10  to  20 
per  cent. ,  while  those  from  Europe  came  in  free — a  very  extraor- 
dinary^ attempt  apparently  to  discriminate  against  oriental  in  favor 
of  European  silks.  From  1861  tlie  duty  on  manufactured  silks 
became  40  per  cent.,  and  from  1864,  60  per  cent.  The  revenue 
obtained  has  been  from  $11,000,000  in  1867  to  $15,615,000  in 
1882.  This  effectually  refutes  the  a  priori  dictum  of  Mr.  Mill 
that  no  duty  can,  at  the  same  time,  produce  protection  and  revenue. 
The  heavy  protective  duties,  on  actively  competing  products,  seem 
to  affect  the  national  treasury  much  as  a  tight  roof  affects  the 
family  cistern.  While  the  inmates  of  the  household  are  protected 
from  the  exterior  damps,  fogs,  rains,  sleets,  and  chills  which  they 
would  derive  from  too  free  an  exchange  of  their  vitality  for 
nature's  influences,  the  family  cistern  withal  is  filled  with  good 
water.  For  the  same  dampness  which  is  fatal,  when  imported 
"free"  through  the  roof,  is  a  very  useful  adjunct  to  the  house- 
keeper, when  collected  in  the  cistern. 

219.  Decline  of  Silk  Manufacture  in  England.— Eng- 
land left  her  silk  manufactures  entirely  unprotected  in  1860, 
after  having  given  them  a  steady,  and  at  times  a  vigorous,  pro- 
tection, since  the  reign  of  James  I.  The  visible  decline  set  in 
from  1861.  The  number  of  her  spindles  employed  in  the  silk 
industry  fell  from  1,338,544  in  1861  to  842,538  in  1878,  and  the 
number  of  persons  employed  declined  from  117,989  in  1861  to 
63,577  in  1878.*     The   imports  of  raw  silk  into  Great  Britain, 


*  Robert  P.  Porter  found  in  Coventry  in  May,  1883,  that  the  wages  in  the  silk-weaving 
art  had  so  declined  that  for  making  one  class  of  goods  known  as  22-in.  "mock  grq^ 
grains  "  the  weavers  could  now  only  earn  about  6^.  4d.  ($1  56)  per  week. 


ENGLISH  SILK- MAKERS  GO  OUT.  635 

which  had  averaged  6,191,691  pounds  ia  1867-70,  fell  to  an  annual 
average  of  3,460,073  pounds  in  1879  to  1882,  including  a  decline  of 
one-half  in  the  raw  material  for  manufacture.  Deducting  the 
amount  re-exported,  tlie  quantity  remaining  for  manufacture  in 
Great  Britain  declined  from  3,560,226  pounds  annual  average  in 
the  years  1867  to  1870  to  2,424,287  pounds  in  the  years  1879  to  1882, 
while  in  the  year  1880  the  import  of  raw  silk  into  the  United  States 
rose  to  2,562,236  pounds,  being  slightly  in  excess  of  the  British 
use  of  raw  silk  in  manufacture.  In  1829,  2,000,000  pounds  of 
India  silk  came  to  England;  in  1882  only  44,549  pounds.* 

Mr.  Robert  P.  Porter  describes  the  decline  of  the  silk  industry 
in  England  as  follows : 

"Before  the  suicidal  policy  of  free  trade  ruined  the  British  silk 
industry  it  flourished  in  all  these  centers.  In  Congleton,  twenty- 
five  years  ago,  5,186  operatives  were  employed,  and  to-day  only 
1,530 ;  in  Coventry  40,600  people  were  dependent  on  this  industry; 
to-day  not  moi'e  than  a  quarter  of  the  number  are  engaged  in  the 
ribbon  trade.  In  Derby  6,650  were  engaged  twenty-five  years 
ago,  to-day  only  2,400.  In  the  most  prosperous  time  of  the 
industry  in  London  60,000  were  employed,  to-day  only  4,000. 
Between  1841  and  1851  over  15,000  hands  were  employed  in  this 
industry  in  Macclesfield,   to-day  much  less  than  this  number. 

•  Japan  in  1883  sent  of  raw  silk 

To  England    2,983  bales. 

"  Europe  (excluding  England)  10,2.36    " 

"  United  States 6,154    " 

—Textile  Record. 
Meanwhile,  the  importation  of  foreign  silks  for  English  consumption  ((i.e.,  in  excess 
of  the  foreign  silks  re-exported)  is  shown  by  the  following  figures  to  about  equal  the 
English  production,  as  might  be  expected  from  the  displacement  of  one-half  the  silk 
weavers  of  England  : 

IMPOBTATIOK    OP   SILKS. 

Year  1880.  Year  1881. 

Dress  and  piece  goods |23,738,.318  $20,615,413 

Hosiery 412,016  424,977 

Other  mannfs.  Of  silks 11,343,883  12,413,113 

Totals $35,494,217  $33.453..')03 

Decrease ' |2,040,714 

BXPORTATIOK   OF   SILKS. 

Year  1880.  Year  1881. 

Foreign  silks  re-exported 8379,887  $246,1.71 

Precis  ly  as  we  have  heretofore  shown  that  the  quantity  of  corn  imported  ;ifter  the 
repeal  of  the  corn  laws  was  not  an  addition  to  the  total  supply,  but  only  a  dinplacenieiit 
of  the  domestic  production,  leaving  the  supply  the  same;  so  the  free  importation  of 
foreign  Milks  is  balanced  by  a  withdrawal  of  domestic  silk  weavers  from  ilie  industry, 
cxaclly  equivalent  to  tlie  force  required  to  produce  the  imported  silks,  had  their  impor- 
tation been  prevented  by  protective  duties. 


636  ECONOMIC  PUILOSOPIIY. 

The  5,000  employed  in  Middleton  in  1850  have  decreased  to  about 
400  in  1884. 

"Basle  and  St.  Etienne  send  their  goods,  free  of  duty,  into  tlie 
English  home  market,  and  compete  with  Coventry.  Germany 
and  St.  Chamond  send  in  their  braids  and  displace  those  of  Leek. 
Eoubaix,  Lyons,  Crefeld,  and  Milan  have  exterminated  the  once 
flourishing  industry  of  Spitalfield.  Germany,  Switzerland,  Italy, 
and  France  are  pushing  the  Macclesfield  goods  out  of  the  home 
market.  Germans  are  undersellaig  the  Middleton  district  in  gal- 
loons, and  Calais  undersells  Nottingham  in  lace  and  hosiery. 
The  effects  of  the  French  treaty,  which  Mr.  Cobden  negotiated 
in  18G0,  were  most  disastrous.  From  that  moment  the  industry 
began  to  decay.  I  ask  any  fair-minded  free  trader  to  reply  to  the 
facts  which  I  give  below  and  which  can  not  be  contradicted. 

' '  At  Congleton  the  ribbon  trade  left  the  town.  Throwing  trade 
gradually  declined,  particularly  in  Italian  silks.  In  Coventry  it 
ruined  the  trade.  In  Derby  it  greatly  reduced  silk-throwing.  In 
Leek  it  injured  the  serge  trade.  In  London  it  brought  ruin  to 
many.  A  gradual  reduction  of  Macclesfield  production  followed 
its  enaction,  while  it  destroyed  the  trade  of  Middleton,  and  in 
Manciiester  the  silk  trade  practically  died  out.  Nottingham  was 
alone  the  exception  with  regard  to  the  bad  effect  on  the  silk  trade 
of  the  French  treaty  of  1860.  It  may  even  have  derived  a  slight 
benefit  from  it,  because  the  products  are  of  such  a  nature  as  to 
command  a  demand  for  them  abroad.  Never  was  a  more  wanton 
and  cruel  blow  aimed  at  a  flourishing  industry.  In  1857,  a  few 
years  prior  to  the  ratification  of  the  treaty,  tlie  import  of  raw 
silk  into  England  aggregated  12,077,931  pounds.  Since  then  it 
has  dwindled  year  by  year,  as  foreign  manufactured  goods  have 
forced  their  w\ay,  free  of  duty,  into  the  home  market,  until  the 
last  six  years  it  has  hardly  averaged  3,000,000  pounds  per  annum, 
in  1883  being  3,178,593  pounds,  and  in  1881  sinking  to  2,904,580. 
On  the  other  hand,  the  imports  of  manufactured  goods  have 
gradually  increased  in  value  from  about  $10,000,000  in  1857  to 
$102,620,000  in  1883.  A  duty  of"  15  or  25  per  cent,  on  this  luxury 
would  have  held  this  important  industry  for  England."  * 


*  A  commission  recently  appointed  by  Parliament,  to  ascertain  the  causes  of  this 
decline,  addressed  a  letter  to  the  Boards  of  Trade  of  the  several  silk  centers  of  the 
country,  and  received  the  follovvins  replies  : 

Congleton  :  "  Withdrawal  of  protection." 

Coventry  :  "  Free  imports  of  French  and  German  goods,  comhined  with  high  duties 
imposed  by  other  countries  on  our  goods." 

Derby  :  "  Withdrawal  of  protection." 


M ' CULLO CH  REL  UCTANT.  637 

Of  the  silk  manufactuves  still  imported  into  the  United  States 
about  $7,000,000  worth  came  from  Germany,  and  nearly  the  entire 
balance  from  France.  Tlie  free  trade  of  England,  in  silks,  is  fast 
declining  to  "no  trade." 

Leek  :  "  Se\ving-«ilk  trade  maintained  itself." 

London  :  "Withdrawal  of  protection." 

Macclesfield  :  "  Free  importation  of  French  and  German  goods,  especially  black 
silks,  velvets,  and  mixed  goods." 

Manchester  :  "  The  French  Treaty." 

Middleton  :  "  The  French  Treaty  of  1860,  coupled  with  the  adulterated  dyes  intro- 
duced into  England." 

Nottingham  :  "  No  decline,  owing  to  the  large  increase  in  the  use  of  siik  lace." 

The  replies  to  the  parliamentary  inquiry  in  relation  to  the  collapse  of  the  British 
silk  industry  in  the  nine  principal  centers  of  the  trade  are  brief,  direct,  and  tinged  with 
sadness. 

J.  R.  McCuIloch,  while  prematurely  boasting  in  1863  (in  note  to  Adam  Smith's 
"  Wealth  of  Nations,"  p.  201),  that  the  silk  trade  of  England,  two  years  after  the  repeal, 
was  more  prosperous  than  ever,  still  says  that  a  duty  of  10  or  1.5  per  cent  should 
have  been  retained.  Why,  if  free  trade  were  a  sound  basis  ?  and  why.  if  the  silk 
manufacture  was  more  prosperous  than  ever  after  the  repeal  of  iis  protection  ?  Such 
an  admission  shows,  first,  that  McCulloch  truly  saw  that  the  repeal  of  the  duty  would 
prove  destructive  to  the  industry,  and  also  that  he  knew  the  industry  was  not  then 
more  flourishing  than  ever.  There  seems  to  be  a  potent  spe!l  in  the  word  free  trade 
that  has  the  power  to  make  an  English  economist  say  what  he  know s  to  be  fdl.-e,  every 
time  he  alludes  to  it.  Mr.  McCulloch's  rote  so  palpably  convicts  him  of  hiding  a  pro- 
tectionist belief,  and  indeed  knowledge,  behind  a  free-trade  profess'on,  that  we  publish 
it  entire.  It  shows  ihat  McCulloch  perceived  that  silk  would  be  seriously  affected  by 
foreign  competition  ;  but  he  justifies  allowing  it  to  be  sacrificed  forsooth,  because  it 
was  only  a  sixth  or  a  seventh  of  the  whole  of  British  manufactures.  And  after  ad- 
mitting that  free  trade  would  seriously  affect  it,  and  that  10  or  15  per  cent,  duty 
should  have  been  maintained,  he  still  does  his  best  to  eke  out  a  case  for  free  trade.  He 
said  in  1803 :  "  The  value  of  the  manufactured  goods  annually  produced  in  Great 
Britain  has  been  estimated  at  about  125  millions  sterling,  including  the  raw  material. 
But  linen  ami  silk  are  the  only  manufactures  that  could  be  at  all  seriously  affected  by 
the  freest  intercourse  with  other  countries;  and  the  aggregate  value  of  both  these 
branches,  inclusive  of  the  raw  material,  does  not  probably  exceed  18  or  20  millions,  or 
from  a  sixth  to  a  seventh  part  of  our  whole  manufactures  ;  and  cannot,  therefore,  be 
supposed  to  afford  employment  to  more  than  a  corresponding  portion  of  our  manufac- 
turing population. 

"  In  point  of  fact,  however,  t'le  free  importation  of  foreign  linens  and  silks  would 
only  supersede  a  very  small  part  of  these  manufactures.  There  is  no  reason  for  sup- 
posing that  any  of  the  principal  branches  of  the  linen  manufacture  would  be  materially 
injured  by  the  gradual  reduction  of  the  exi^^ting  duties  on  the  importation  of  linens. 
And  although  the  French  excel  in  the  manufacture  of  lighter  silk  fabrics,  we  are 
superior,  or  at  least  equal,  to  them  in  the  manufacture  of  gloves  and  hosiery,  and  in 
that  of  poplins,  and  all  those  mixed  fabrics  of  which  silk  is  the  basis  ;  and  we  are  also 
rivalling  them  in  the  brightness  of  our  colors,  and  the  durability  of  our  dyes.  It  has 
been  a  common  practice  to  insure  the  safe  delivery  of  French  silks  in  any  part  of 
London  for  from  10  to  1.")  percent.  i)reuiium  ;  so  thiit  it  was  not,  as  commonly  siip- 
l)()sed,  so  much,  perhaps,  to  prohibitory  regulations  as  to  our  own  ingenuity,  that  our 
t-ilk  maiHifa'-tures  were  indehfcd  for  that  monopoly  of  the  market  they  so  long  (enjoyed. 
But  their  supposed  dependence  on  customs  regulations  made  them  indifferent  to  im- 
provements ;  and  to  such  an  extent  did  this  operate,  that  they  were  decidedly  inferior, 


638  ECONOMIC  nilLOSOPHY. 

220.  Evolution  of  Glass  Mannfactiire. — All  other  of  the 
fine  arts  are  imitative  of  nature,  or  improvements  on  lier  work, 
except  music.  Music  is  essentially  the  creation  of  the  human  mind. 
So  all  other  metallic  substances,  except  glass,  are  the  modification 
of  a  metal  or  an  ore.  Glass,  while  one  of  the  most  ancient,  and 
decidedly  the  most  beautiful  of  them  all,  has  been  created  rather 
then  discovered  or  improved,  by  human  art.  Without  it,  we 
could  not  have  known  the  truth  of  the  Copernican  system  in 
astronomy,  that  the  earth  daily  rotates  upon  its  axis,  and  annu- 
ally revolves  around  the  sun.  Without  it  the  king's  palace  was 
a  pompous  but  comfortless  barn,  and  the  transparency  of  water, 
the  sparkle  of  wine,  the  infinite  beauties  of  the  microscojjic  world, 
the  transcendent  majesty  of  the  planetary  and  stellar  universe, 
the  composition  of  matter  in  distant  worlds,  and  indeed  nearly 
the  entire  scope  and  field  of  modern  science,  art,  and  invention 
would  have  remained  unknown  to  men. 

Specimens  of  glass  ornaments  are  found  buried  with  Egyptian 
mummies,  and  inscribed  with  the  name  of  a  monarch  who  reigned 
1,500  years  before  Christ.  The  Egyptian  use  of  glass  ante-dates 
the  story,  that  Phoenician  sailors  discovered  it  accidentally  among 
the  ashes  of  a  fire  they  had  kindled  on  the  sand,  and  into  which 
some  soda  had  fallen,  which,  fusing  Avith  the  sand,  produced  the 
crystal.  The  latter  is  doubtless  apocryphal.  Among  the  ancients, 
however,  glass  was  an  article  of  jewelry  and  ornament,  a  substi- 
tute for  f)earls  and  j)recious  stones.  A  few  highly  wrought  ves- 
sels and  plates  were  formed  of  it,  some  of  which  have  come  down 
to  us  in  tombs,  and  in  the  ruins  of  PomjJeii.     In  modern  Europe, 

even  in  respect  of  machinery,  to  either  the  French  or  Germans.  Mr.  Huskisson  had 
sagaciiy  to  perceive  the  cause  of  this  inferiority,  and  courage  to  undertake  the  intro- 
duction of  a  new  system.  In  1825  he  reduced  the  duties  on  raw  silk  to  a  nearly  nominal 
amount,  and  materially  diminished  those  on  thrown  or  organzined  silk  ;  while,  at  the 
same  time,  the  prohibition  of  foreign  silk  goods  was  repealed,  and  they  were  allowed  to 
be  entered  for  home  consumption,  on  paying  an  import  duty  of  30  per  cent,  ad  \KLlorem. 
This  change  of  system  was  violently  opposed,  and  many  predicted  that  it  would  ruin  the 
manufacture.  But  these  minister  auguries  proved  to  be  wholly  fallacious.  The  measure 
in  fact,  was  signally  successful.  The  manufacturers,  no  longer  depending  on  custom- 
house regulations,  put  forth  all  their  energies  :  and,  having  called  the  various  resources 
of  science  and  ingenuity  to  their  aid,  the  manufacture  was  more  improved  and  ex- 
tended during  tlie  dozen  years  ending  with  1837,  than  it  had  been  during  the  previous 
century. 

"  The  duty  of  .30  per  cent,  on  imported  silks  being  so  high  as  to  give  a  considerable 
stimulus  to  smuggling,  was  reduced  by  Sir  Robert  Peel  to  15  percent.,  at  whicli,  or  10 
per  cent.,  it  should  have  continued.  It  was,  however,  wholly  repealed  in  1800,  under  a 
clause  of  the  French  treaty  of  that  year.  The  duties  on  foreign  linens  are  now  also 
wholly  repealed.  And  yet  these  manufactures  are  (1803)  in  a  flourishing  condition,  and 
aie  f-r  more  extensive  than  at  any  former  period." 


HAMILTON  ON  GLASS.  639 

the  mauufacture  was  begun  at  Mui'ano,  near  Venice,  and  carried 
to  such  a  success  that  glass  mirrors  began  to  take  the  place  of 
the  miri'ors  of  polished  metal.  Colbert,  the  father  of  the  protect- 
ive policy  of  France,  brought  the  manufacture  from  Venice  to 
France,  contemporaneously  with  those  of  Sevres  china,  Flemish 
carpets,  and  Gobelin  tapestry,  in  the  splendid  reign  of  Louis  XIV. 
In  1614,  the  first  French  window  glass  was  made,  though  it  had 
been  made  in  England  in  1557,  and  in  Scotland  in  1610,  but  to  an 
extent  that  only  admitted  of  glazing  a  part  of  the  windows  of  the 
royal  palaces.  Not  until  1630  did  the  use  of  glass  for  windows 
reach  the  common  people.  Owing  to  the  fabulous  value  of  glass 
beads  in  trade  with  the  Indians,  artisans  were  sent  to  Virginia  to 
make  glass  as  early  as  1609,  eleven  years  before  Plymouth  Rock 
received  the  Pilgrims.  In  Salem,  Massachusetts,  in  1639,  the  first 
glass  factory  was  encouraged  by  a  grant  of  several  acres  of  land. 
Three  years  after,  the  General  Court  authorized  the  town  to  loan 
the  proprietors  thirty  pounds,  to  be  repaid, ' '  if  the  work  succeeded, 
when  they  were  able."  In  Scotland  ten  years  after,  the  first  glass 
house  was  erected,  and  the  importation  of  foreign  glass  was  pro- 
hibited. Scattered  enterprises  were  undertaken  in  New  York, 
New  Jersey,  and  Maryland  ;  but  as  late  as  1783  very  little  glass 
was  made  in  America,  except  an  inferior  window  glass  and  bot- 
tles. In  1795-97,  General  James  O'Hara,  Isaac  Craig,  and  Stephen 
Bayard  began  the  first  glass  works  at  Pittsburgh,  the  town  hav- 
ing been  laid  out  in  1784.  Among  General  O'Hara's  papers  at  his 
death  was  found  a  memorandum,  as  follows  :  "To-day,  we  make 
the  first  bottle,  at  a  cost  of  thirty  thousand  dollars." 

While  it  could  easily  have  been  shown  to  him  that  he  could 
have  imported  the  bottles  at  a  cost  of  one  cent  from  England,  he 
would  have  deemed  that  fact  quite  irrelevant  to  his  purpose, 
which  was  to  leave  to  his  adopted  country  one  moi'e  industry 
than  he  found  in  it. 

Prior  to  Alexander  Hamilton's  celebrated  report  to  the  first 
Congress,  in  1790,  on  manufactures  and  the  duty  of  protection  to 
American  industry,  the  duty  on  glass  was  two  and  a  half  per 
cent.  He  reported  that  the  materials  for  its  manufacture  were 
everywhere  found  throughout  the  United  States  ;  that  the  sands 
and  stones  called  tarso,  which  include  flinty  and  crystalline  sub- 
stances generally,  and  the  salts  of  various  kinds,  particularly  of 
the  seaweed  kali  or  kelp,  are  the  essential  ingredients  ;  that  fuel 
was  abundant,  and  that  the  manufacture  only  needed  large  capi- 
tal, and  would  afford  employment  for  much  manual  labor.    He 


640  ECONOMIC  PHILOSOPUT. 

recommended  a  bounty  on  window  glass  and  bottles.  In  1794, 
the  dnty  on  window  glass  was  raised  to  fifteen  per  cent,  and  on 
certain  elaborate  glass  wares  still  higher.* 

In  1803,  General  O'Hara  sent  to  England  for  more  workmen, 
enlarged  his  works,  and  began  the  manufacture  of  white  and  flint 
glass.  In  1806  Congress,  in  resentment  of  British  outrages  on 
American  commerce,  prohibited  the  introduction  of  most  kinds 
of  British  manufactures,  including  glass.  Though  Congress  soon 
after  suspended  the  operations  of  the  act,  yet  the  issue  of  the 
Berlin  and  Milan  decrees,  prohibiting  all  commerce  with  tlie 
British  Islands,  while  it. seriously  impaired  our  ti'ansporting  and 
shipping  interests  and  lessened  our  foreign  trade,  gave  so  great 
a  stimulus  to  domestic  manufactures  as  to  increase  with  unex- 
ampled rapidity  our  domestic  commerce. t 

In  1807,  O'Hara's  white  glass  works  at  Pittsburgh  were  reported 
as  producing  glass  to  the  value  of  $18,000  per  annum,  and  a  green 
glass  factory  had  been  erected  on  the  opposite  bank  of  the 
Monongahela.  In  1808,  the  first  flint  glass  factory  w^as  estab- 
lished in  Pittsburgh  by  Bakewells  &  Co.  They  met  with  the 
greatest  difficulty  in  procuring  trained  workmen  and  the  proper 
materials,  but  at  length  established  a  profitable  business. 

In  1810  Secretary  Gallatin  reported  ten  glass  manufactories  in 
the  country,  employing  140  glass-blowers,  and  making  27,000 
boxes  of  window  glass  of  100  square  feet  each ;  that  of  Boston 

*  It  18  interesting  to  note  tliat,  in  the  same  year  in  which  this  tariff  act  was  passed,  its 
great  author,  Alexander  Hamilton,  formed  an  incorporated  "  Society  for  the  Establish- 
ment of  Useful  Manufactures,"  with  certain  privileges,  including  a  city  charter  over  a 
district  six  miles  square,  at  the  Palls  of  the  Passaic,  N.  J.,  which  they  named  Paterson. 
It  is  now  one  of  the  largest  manufacturing  cities  in  the  country.  Three  years  afterward 
the  "Hamilton  Manufacturing  Society  "  was  incorporated  and  became  proprietor  of  an 
extensive  glass  works,  10  miles  west  of  Alabany,  which  its  members  had  nine  years  be- 
fore set  in  operation.  The  change  of  name  was  a  tribute  to  the  Father  of  American 
protection,  to  wliose  doctrines,  relative  to  the  supremacy  and  coercive  powers  of  the 
National  Government,  as  well  as  relative  to  economical  questions,  the  country  has  been 
forced  to  return,  to  avoid  dissolution. 

t  Under  the  protective  tariff,  framed  by  Hamilton  in  1794,  we  were  at  this  period, 
collecting  so  larue  a  revenue  that,  after  paying  off  upwards  of  $23,000,000  of  the  national 
funded  debt  in  four  and  a  half  years,  President  Jefferson  reports  to  Congress  that  there 
will  be  a  surplus,  unless  the  rate  of  payments  is  increased.  He  inquired  whether  it 
would  do  t">  remit  the  tariff  on  salt,  which  the  salt  importers  were  clamoring  for  then 
as  nov?.  Said  ho  :  "  Shall  we  suppress  the  impost  and  give  that  advantage  to  foreign 
over  domestic  manufactures?"  He  expressed  the  belief  tliat  "on  most  articles  the 
patriotism  of  the  people  would  prefer  its  (1  tie  tariff's)  coniinuance,  a'lci  appucaiion  to 
the  great  purposes  of  public  education,  roads,  rivers,  canals,  and  s\ich  other  obje<t8  of 
public  improvement  as  it  may  be  thought  proper  to  add  to  the  constitutional  enumera- 
tion of  the  federal  powers." 


FR  UITS  OF  THE  GLASS  D  UTIES  641' 

made  crown  glass  equal  to  any  imported,  all  the  others  green  or 
German  glass  worth  fifteen  per  cent,  less;  that  of  Pittsburgh  vised 
coal,  all  the  others  wood  for  fuel.  The  importations  of  window 
glass  were  also  27,000  boxes,  the  extension  of  the  domestic  manu- 
factux'e,  which  supj)lied  precisely  one-half  the  consumption, 
being  retarded  by  want  of  workmen. 

In  1810,  three  glass  works  in  Pittsburgh  produced  flint  glass  to 
the  value  of  $30,000,  and  bottle  and  window  glass  worth  $40,000. 
In  the  same  year,  a  German,  named  Eichbaum,  "formerly  glass 
cutter  to  Louis  XVI.,  late  king  of  France,"  established  busi- 
ness in  Pittsburgh,  and  cut  the  first  six-light  chandelier,  with 
prisms  of  his  cutting,  ever  cut  in  the  United  States.  It  was  sus- 
pended as  a  triumph  of  art  in  the  house  of  Mr.  Kerr,  innkeeper, 
for  public  admiration.  In  1812,  large  flint  glass  works  were 
built  simultaneously  in  Pittsburgh  and  in  Boston ;  in  1814,  a  glass 
factory  was  built  in  Keene,  N.  H.,  where  it  is  still  a  principal 
business.  In  1815  two  were  projected  at  Cincinnati.  In  1818,  the 
New  England  Glass  Co.  established  at  Cambridge  one  of  the 
most  extensive  flint  glass  manufactories  in  the  country.  With 
two  flint  furnaces,  and  twenty-four  glass  cutting  mills,  operated 
by  steam,  and  a  red  lead  furnace,  they  produced  the  finest  work, 
Grecian  lamps,  chandeliers  for  churches,  vases,  antique  and 
transparent  lamps,  and  began  to  export,  in  competition  with  En- 
gland, to  the  West  Indies  and  South  America.  Capital  $80,000; 
annual  product  $65,000.  Tlie  Hamilton  taiifF  was  thus  develop- 
ing its  fruits,  substituting  an  export  for  an  import  ti-ade. 

In  the  next  year,  however,  a  series  of  influences  which  had 
been  accumulating  ever  since  the  peace  of  1815  suddenly  broke 
upon  the  country,  with  a  power  that  could  be  realized  only  by 
those  who  experienced  them. 

In  1810,  under  the  joint  influences  of  the  Hamilton  tai-iflP  and 
the  JeiTerson  non-intercourse  policy  against  England,  our  manu- 
factures had  rapidly  increased,  and  our  agriculture  and  internal 
commerce  were  pi'osperous.  With  a  population  of  7,239,903,  the 
census  of  that  year  returned  our  manufactures  at  $127,G94,(502, 
and  trustworthy  estimates  increased  tlie  total  to  $172,762,676,  or 
about  $21  per  capita.  This  was  only  about  one-fourth  our  pres- 
ent I'atioper  capita,  but  it  had  neai'ly  all  been  the  growth  of 
fifteen  years  of  encouragement.  * 

*  President  Madison  in  the  same  year,  in  his  message,  congratulated  the  country  upon 
the  extension  of  useful  manufactures  and  the  substitution  of  domestic  for  foreign  sup- 
plies, and  said  :  "  In  a  national  view  the  cliajige  if  justly  regarded  as  of  itself  more  thau 


642  ECONOMIC  PHILOSOPHY. 

The  in'gent  recommendation  of  Mr.  Madison,  that  Congress 
should  not,  on  the  return  of  peace,  permit  the  restoration  of  com- 
merce with  England  to  break  down  "  the  manufactures  which 
hav'e  sprung  into  existence,  and  attained  an  unparalleled  matur- 
ity throughout  the  United  States,  during  the  period  of  the  Euro- 
pean wars,"  was  one  with  which  Congress  agreed,  but  which  it 
wholly  failed,  through  lack  of  the  required  foresight  of  changes 
in  the  conditions  of  industry,  to  carry  into  effect.  A  commercial 
ti'eaty  was  adopted  on  the  third  of  July  at  London,  by  which 
'■'■the  duties  on  tonnage  and  imports  were  equalized,  so  that  the 
produce  or  manufactures  of  the  one  country  could  be  imported 
into  the  other,  in  the  ships  of  either,  upon  equal  terms."  This 
inaugurated,  in  principle,  a  free  carrjdng  trade  between  the 
United  States  and  a  country  whose  shipping  was  soon  to  be 
changed  from  wood  to  iron,  and  from  sails  to  steam.  The  rate 
of  duties  was  designed  to  be  protective,  but  the  great  surplus 
stocks  held  abroad  neutralized  this  design.  The  result  was  in- 
evitable, and  the  disaster  complete,  and  almost  unparalleled  in 
the  misery  it  produced.  The  imports  suddenly  swelled  to  ISS^^ 
millions  of  dollars  in  1816,  and  the  country  was  for  the  hour 
flattered  by  their  enormous  quantity — the  duties,  despite  the 
lowness  of  the  tariff,  rising  to  thirty-six  millions.  English  manu- 
facturers competed  with  each  other  in  piling  heavy  consign- 
ments of  goods  into  the  American  market,  to  be  sold  at  a  loss, 
under  a  policy  which  Mr.  Brougham  at  the  time  justified  in 
Parliament  in  the  following  terms  :  "  It  is  even  wox-th  while  to 
incur  a  loss  upon  the  first  exportations,  in  order  by  the  glut  to 
stifle  in  the  cradle  these  rising  manufactures  in  the  United 
States,  which  the  war  had  forced  into  existence  contrary  to  the 
natui'al  course  of  things."  The  importers  and  auctioneei'S  made 
heavy  profits  for  a  year  or  two.  In  1816-17-18,  the  manufac- 
ui'ers  of  the  country  one  after  another  were  discharging  their 
men.  Sixty  thousand  opei'atives  were  discharged,  and  240,000 
persons  dependent  on  them  were  reduced  to  distress.  In  1824, 
after  eight  years  of  free  trade,  the  depression  had  extended  to  all 
branches  of  industry.  The  country  had  reached  that  unfortu- 
nate condition  in  which  Gen.  Jackson  wrote  that  unless  px'otec- 


a  recompense  for  our  privations  and  losses,  resulting  from  foreign  injustice,  which 
furnishea  the  general  impulse  required  for  its  accomplishment.  How  far  it  might  be 
expedient  to  guard  the  infancy  of  this  improvement  in  the  distribution  of  labor,  by- 
regulation  of  the  commercial  tariff,  was  a  subject  which  could  not  fail  to  suggest  itself 
to  the  patriotic  reflections  of  Congress." 


TEACHING  GLASS-MAKiXG.  643 

tion  from  coiniDetitiou  with  the  cheap  caj)ital  and  paupei'  labor  of 
Europe  were  restored,  "  we  should  soon  be  paupers  ourselves." 

In  1824,  the  tariff  was  made  professedly  protective  as  to  some 
branches.  In  1831,  the  committee  in  Congress  on  glass  and  manu- 
facture of  clay  (for,  instead  of  one  general  committee  on  manu- 
factures as  now,  each  leading  industry  then  had  its  committee) 
reported  twenty-one  flint-glass  furnaces  in  the  United  States,  of 
which  six  wei'e  in  and  near  Boston,  and  twenty  three  manufac- 
tories of  cylinder  window  glass,  of  which  four  were  at  Pittsbui'gh, 
four  at  Burnsville,  Pa.,  and  two  at  Wheeling,  Ya.  The  New 
England  Crown  Glass  Company,  and  one  of  the  kind  near  New 
York,  were  all,  in  that  line.  The  total  annual  product  was 
$3,000,000,  employing  3,140  persons,  subsisting  10,800,  paying  in 
wages  $720,000. 

In  1834,  the  manufacture  of  pressed  glass,  by  means  of  metallic 
moulds,  in  imitation  of  cut  glass,  an  American  invention,  was  in- 
troduced into  England,  a  proof  among  many  that  even  for  Eng- 
land Lord  Brougham's  policy  of  breaking  down  American  manu- 
factures was  short-sighted.  Within  two  years  pressed  glass  had 
become  a  very  prominent  branch  of  the  manufacture  in  all  manu- 
facturing nations.  From  this  period  until  1860,  the  growth  of 
the  glass  manufacture  was  steady.  Owing  to  the  skill  required 
in  the  manufacture,  the  abundance  of  our  i*aw  materials, 
the  partial  protection  afforded  by  its  friabilitj^  and  the 
consequent  losses  by  breakage  sustained  in  shipping  it  across 
the  ocean,  it  has  been  less  affected  than  most  industries  by 
hostile  or  fluctuating  legislative  measures.  In  1860,  the 
census  returned  112  manufactories  of  glass  of  all  kinds,  em- 
ploying    .$6,133,666    of    capital,*  consuming    $2,914,303   worth 

♦The  statistics  above  given  of  "capital  invested,"  and  "hands  employed,"  were 
not  collected  with  the  system  and  care  necessary  to  make  them  trustworthy. 
Whether  "  capital  invested  "  means  the  value  of  the  original  investment  on  which  the 
business  was  started,  without  regard  to  losses  or  additions,  or  whether  it  means  the  ac- 
tual cash  value  of  the  whole  property  employed  at  the  time  the  census  was  taken,  or 
the  cash  value  thereof,  less  incumbrances  and  debts,  or  the  nominal  par  of  the  stock 
of  companies  engaged,  or  the  selling  value  of  their  aggregate  stock,  was  not  deter- 
mined by  the  law,  and  each  marshal  in  taking  the  census,  and  perhaps  each  manufac- 
turer in  making  his  statements,  wan  left  free  to  take  either  basis.  A  manufacture 
might  have  been  started  with  only  $10,000,  actual  capital,  which,  being  paid  out  for 
$50,000  of  property,  would  make  the  capital  employed  $10,000  or  $50,000,  as  one 
chooses  to  put  it.  If  then  in  ten  years  the  busine-s  increases  in  profits  so  as  to  pay 
ten  per  cent,  on  $100,000,  and  the  company  is  stocked  on  $100,000  capital,  and  its 
stock  sells  at  par,  it  may  be  said  to  have  $100,000  of  "  capital  employed."  let  one- 
half  of  this  on  analysis  is  not  capital  but  good-will.  In  this  respect,  therefore,  the  cen- 
eui  flgurei  form  a  v«ry  imperfect  guide  to  capital  invested.     So  of  hands  employed. 


044  ECONOMIC  PHILOSOPHY. 

of  raw  materials,  employing  9,016  hands,  of  whom  251  were 
females,  paying  $2,903,833  in  annual  wages,  and  producing 
$8,775,155  worth  of  glass  annually.  Our  imports  for  the  same 
year  amounted  to  only  $2,105,493.  The  census  of  1880  showed 
211  manufactories  of  glass  of  all  kinds,  employing  $19,884,099 
capital,  consuming  raw  materials  of  the  value  of  $8,028,621,  em- 
ploying 24, 177  hands,  paying  $9,144,100  in  annual  wages.and  pro- 
ducing glass  annually  to  the  value  of  $21,154,571.  Of  these  prod- 
ucts the  glassware  amounted  to  $9,568,520,  the  green  glass  to 
$5,670,433,  the  plate  glass  to  less  than  $1,000,000,  and  the  window 
glass  to  $5,047,313.  Of  the  plate  glass  manufactories,  two  are 
in  Indiana,  one  in  Kentucky,  and  one  in  Missoiu'i. 

From  1816,  glass  has  heen  protected  by  specific  duties  per  gross 
and  per  square  foot,  an  accurate  statement  of  which  in  detail  may 
be  found,  from  1790  to  date,  in  the  official  compilation  of  the  tariff 
by  the  Senate  finance  committee.  Our  imports  of  glass  are  now 
about  three  millions  per  year,  and  our  production  probably  five 
times  that  value.  The  manufacture  is  one  of  the  most  artistic 
and  beautiful  in  which  the  human  energies  can  be  employed. 
The  conversion  of  the  rude  sand,  ashes,  and  salts  into  a  transpa- 
rent ciystal,  the  processes  of  fusing,  molding,  pressing,  cutting, 
blowing,  chasing,  silvering,  embossing,  engraving,  and  lettering 
are  all  attractive  to  the  mind,  and  educative  to  the  hand,  the  eye, 
the  nerve,  and  the  taste.  Through  the  refining  power  of  intel- 
ligent industry,  over  the  moral  nature  of  man,  these  mechanical 
processes  tend,  like  all  the  finer  manufactures,  to  elevate  the 
standard  of  thought,  feeling,  and  life,  as  well  as  the  wealth  and 
comfort  in  the  communities  in  which  they  are  carried  on. 

221.  Evolution  of  the  Iron  and  Steel  Manufacture. — 
The  making  of  iron  and  steel  implements  for  hunting,  for  war, 
and  for  defense,  as  well  as  for  chaining  prisoners,  and  for  per- 
sonal oi'nament,  probably  precedes  any  settled  agriculture,  and 
is  possibly  coeval  with  that  prehistoric  period  in  which  domestic 
animals  were  tamed,  and  primeval  man  advanced  from  the 
hunting,  or  savage,  to  the  shepherd  life.  In  Central  Africa,  at 
points  where  very  little  cultivation  of  the  soil  was  carried  on, 
Stanley   found  tribes   devoted   to   the  manufacture  of  iron  for 

If  a  glass  factory  incidentally  employs  upon  wages  tke  men  who  mine  its  coal,  or  col- 
lect its  fuel,  its  tinners,  packers,  salesmen,  etc.,  its  list  of  persons  employed  may  ap- 
pear at  250.  But  if,  instead  of  hiring  them  on  wages,  it  lets  the  same  work  to  one  hun- 
dred of  them  on  contract,  it  only  appears  as  employing  150.  Yet,  in  both  instances 
alike,  the  glass  factory  is  the  real  employer  of  the  whole  number,  and  all  would  be 
unemployed  if  it  shonld  stop  work. 


ANTIQUITY  OF  IRON.  045 

spear-heads  and  arrows,  xinterior  to  the  age  of  iron  and  steel 
Aveapons,  there  was  an  age  of  stone  and  bronze.  At  the  discovery 
of  America,  the  Indians  of  North  and  South  America  were  still 
living  in  this  stone  age,  using  bone  for  fish-hooks,  flint  for 
arrow-heads,  and  stone  hatcliets  as  well  as  mortars  and  pestles 
of  stone  for  grinding  their  corn.  In  Asia,  Africa  and  Europe, 
the  remains  of  the  stone  age  interest  the  archaeologist,  and  are 
associated  with  an  inferior  brown  race,  small  of  stature,  and 
low  of  intellect,  which  certainly  spread  over  Europe,  and  may 
have  had  its  habitat  throughout  Asia.  But  history,  even  in 
Africa,  everywhere  opens  wuth  iron  somewhat  known.  In 
Homer,  as  Gladstone  remarks,  it  is  everywhere  rare  and  precious. 
But  in  China,  2,000  years  before  Christ  and  1,100  before  Homer,  it 
was  commonly  made,  and  of  the  best  quality,  as  early  as  West- 
ern Asia  or  Europe  were  in  a  condition  to  leave  written  records  of 
its  ari'ival,  by  camel  back,  across  the  wilds  of  Tartary  from  the 
far-away  land  of  the  Seres.  Dr.  Schliemann  finds  no  iron  in  the 
ruins  of  Troy  itself,  but  Homer  wrote  long  enough  after  his  facts 
to  admit  ix'on  becoming  known  in  the  interval.  The  pyramids 
antedate  all  history  in  Egypt,  having  come  down  from  unknown 
builders,  who  may  or  may  not  have  been  of  the  same  red  race  as 
the  Egyptians  of  the  historic  period.  Yet  iron  antedates  the 
pyramids.  In  the  Gi'eek  religion  one  of  the  gods,  A'ulcan,  is  a 
forger  of  iron,  and  this  name  is  supposed  by  Goldziher  to  be 
identical  with  the  Tubalcain,  and  even  with  the  Cain,  of  Genesis.* 

It  thus  appeal's  that  at  least  one  of  the  manufactures,  by  a 
long  stride,  precedes  agriculture,  and  this,  if  true,  shows  how  er- 
ratic was  the  economic  theory  of  Ricardo,  that  cultivation  would 
begin  on  the  best  soils.  The  first  cultivation  would  consist  in 
the  toil  of  hunters,  fishermen,  and  herdsmen,  or  even  of  savages, 
seeking  only  materials  for  spear-heads,  in  collecting  the  earth  to 
burn  it  for  its  iron.  This  would  early  attract  attention  and  set- 
tlement to  whatever  unsightly  hills,  rocks,  and  forest-covered 
mountains  might  be  found  most  productive  of  iron  ore,  lime, 
and  fuel.  These  would  command  a  rent  even  before  the  soil 
had  begun  to  be  tilled,  because  they  w^ould  supply  man  with  his 
earliest  want — a  destructive  weapon. 

Mr.  Swank,t  in  his  admirable  "  History  of  the  Iron  Manufac- 
ture," shows  that  Europe  bristles  all  over  with  points  where  iron 
and  steel  was  made  in  a  primitive  manner,  as  early  as  any  tiling 

*  "  Mythology  of  the  Hebrews,"  by  Goldziher. 

t  •'  The  Iron  Manuracture  in  all  Ages,"  by  James  M.  Swaulc.    1884. 


646  ECONOMIC  PHILOSOPHY. 

is  known  of  the  several  parts  in  which  it  is  made.  Whatever  the 
prehistoric  man  may  have  been,  the  historic  man  was  a  "  smithie  " 
from  the  start.  The  earliest  historic  nations— Egypt,  Babylon, 
Assyria,  Nineveh,  Phoenicia,  Greece,  Rome— must  have  found  in 
the  iron  and  steel  manufacture  the  chief  reason  why  they  became 
liistoric.  Iron  played  an  important  role  in  organizing  society. 
It  furnished  the  sword,  sjiear,  bridle,  spur,  knife,  lance,  trowel, 
plow,  loom,  fish-hook,  arrow-head,  battering-ram,  sceptre,  shield, 
armoi',  gun,  pen,  cannon,  engine,  and  ship.  The  mode  in  which 
an  army  could  be  drilled,  and  fought,  depended  on  the  progress 
its  country  had  made  in  making  iron  and  steel.  The  number  of 
men  capable  of  being  handled  under  one  leader,  and  the  nature  of 
the  ranks  and  orders  which  should  pervade  society,  are  a  sec- 
ondary consequence  of  iron  and  steel.  Sir  Walter  Scott  truth- 
fully portrays  the  importance  of  iron  and  steel,  m  his  graphic  in- 
terview between  Richard  Coeur  de  Lion  and  the  Saracen  chief 
Saladin.  Richard  vaunts  his  brute  force  b}^  cleaving  a  bar  of  iron 
with  his  sword,  while  Saladin  more  deftly  hints  the  graceful 
superiority  which  the  Mohammedan  world  then  temporarily  en- 
joyed over  the  Christian,  in  the  useful  arts,  by  severing  a  silken 
scarf  with  his  rapier,  while  it  floated  on  the  air. 

222.  Rivalry  between  Great  Britain  and  America. — 
A  century  ago  (1788)  Great  Britain  produced  only  about  as 
much  iron  as  Georgia  now  i^roduces,  viz.,  68,300  tons.  Her  entire 
imports  were  only  15,000  tons.  All  the  more  advanced  forms  of 
iron  and  steel  production  in  Great  Britain  were  limited  to  this 
small  supply  (83,300  tons),  for  their  raw  materials.  This  repre- 
sents a  degree  of  advancement  about  equal  to  that  of  the  United 
States  in  1820  to  1830.  As  the  population  of  the  United  States 
was  about  9,000,000  in  1820,  and  that  of  Great  Britain,  without 
Ireland,  is  believed  (in  the  absence  of  a  census)  to  have  been 
about  9,000,000  in  1788,  it  may  be  said  that  the  iron  jiroduction 
bore  as  large  a  proportion  to  population  in  America  in  1820  as  it 
did  in  England  in  1788 — 32  years  earlier.  The  rise  of  production 
within  the  century  in  England  was  as  follows  : 

Year.  No.  of  Furnaces.  Tons. 

1796 121 124,879 

1806 173 258,000 

1820 284 400,000 

1827 690,500 

1&40 1,396,000 

1854  (then  one-half  the  world's   production) 1,369,000 

1872 6,741,929 

1880 7,749,233 

1882 .• 8,856,680 


GATCEi:^G   UP  IN  IRON  AND  STEEL.  047 

The  United  States  in  1854  had  barely  passed  the  English  product 
of  1827,  by  turning  out  736,318  tons.  In  1866,  by  producing 
1,350,313  tons,  Ave  barely  rivalled  the  British  product  of  1810. 
It  was  1879  before  we  liad  caught  up  with  the  British  product  of 
1851,  producing  3,070,875  tons.  And  in  1887,  a  year  of  "  boom  " 
in  the  u*on  production  in  the  United  States,  our  product  of  6,330,- 
000  tons,  of  2,000  pounds  eacli,  brings  us  into  equal  rivalry 
with  the  British  product  of  1872.  It  is  probable  that  in  fifteen 
years,  if  protection  to  iron  and  steel  and  their  manufactures  shall 
be  steadily  maintained,  the  American  production  will  rise  above 
the  British  production  in  quantity,  and  will  meet  it  at  every 
pomt  in  price.  At  present,  the  pig,  bar,  sheet,  scrap,  and  other 
forms  of  crude  iron  and  steel  for  manufacture  are  somewhat 
dearer  than  in  Great  Britain,  while  the  finished  forms  of  imple- 
ments of  iron  and  steel,  such  as  locomotives,  boilers,  all  railroad 
rolling-stock  except  rails,  engines,  machinery  of  all  kinds,  instru- 
ments, implements,  edge-tools,  nails,  and  builders'  hardware,  are 
on  the  same  level  in  the  two  countries.  It  follows  that,  ni  the 
present  state  of  the  iron  manufacture  in  the  United  States,  the 
tariff  duties  paid  on  such  forms  of  crude  iron  and  steel  as  may  be 
in  any  degree  imported  rest,  so  far  as  they  are  not  paid  by  the 
foreign  producers,  on  the  American  manufacturers  of  iron  and 
steel  goods,  and  not  on  the  consumers  o'r  purchasers  of  the  ulti- 
mate products  into  which  they  are  made. 

The  efforts  of  Gi-eat  Britain  to  repress  the  iron  and  steel 
manufacture  during  the  colonial  period  were  pointed  and  effect- 
ive. In  1719  Parliament  forbade  the  making  of  iron  wares  of 
any  kind,  out  of  "sows,  pigs,  or  bars,"  and  also  the  conversion  of 
sows,  pigs,  or  bars  into  I'ods.  In  1750  Parliament  removed  the 
duty  from  American  pig-iron,  so  as  to  induce  its  export  to  Eng- 
land, to  be  there  manufactured,  and  enacted  that  all  machinery 
for  carrying  the  manufacture  farther  than  pig,  and  for  making  it 
into  rods  or  steel,  should  be.  on  criminal  information,  abated  as  a 
public  nuisance.  This  law  was  generally  enforced,*  Benjamin 
Fi-anklin's  name  as  printer  ai)pearing  under  the  Governor's 
proclamation  by  which  its  enforcement  was  announced  in  Penn- 
sylvania in  1750. 

Still  earlier,  however  (in  1696-90), an  act  of  Parliament  had  made 
it  criminal  to  export  from  the  kingdom  any  frames  or  engines  for 
knitting  gloves  or  stockings,  under  pain  of  forfeiting  the  frame 
and  a  fine  of  £40. 

*  Swank,    "  History  of  Iron  Manufacture,"  p.  167, 


(J4b  ECONOMIC  PlllLOSOrilY. 

In  1718  it  was  made  criminal  to  entice  any  artificer  away  from 
Great  Britain,  and  if  any  artificer,  when  so  enticed  into  any  coun- 
try beyond  tlie  seas,  tliere  to  carry  on  liis  calling,  did  not  retm-n, 
on  six  months'  notice,  to  Great  Britain,  he  forfeited  lands,  goods, 
became  attainted  so  as  to  become  incapable  of  taking  property  by 
descent,  devise,  or  purchase,  and  was  ' '  put  out  of  tlie  king's  protec- 
tion." 

In  1781  the  export  of  utensils  made  use  of  in  the  cotton,  linen, 
woolen,  and  silk  manufactures,  previously  prohibited,  was  pun- 
ished with  increased  severity.  In  1785  these  prohibitions  were 
extended  to  tools  and  utensils  made  use  of  in  the  iron  and  steel 
manufactures  of  Great  Britain.  As  late  as  1825  and  1833  these 
acts  were  renewedly  affirmed,  with  new  penalties,  and  they  were 
not  repealed  until  1845.* 

Meanwhile,  from  1782  to  1846,  the  British  duties  on  iron  and 
steel  were  much  more  protective  t  of  the  British  product,  than  the 
American  duties  were  of  tlie  American  product. 

Had  the  American  Congress  exactly  copied,  for  the  United 
States,  the  British  tariff  on  iron  and  steel,  which  prevailed  from 
1790  to  1842,  the  American  iron  and  steel  manufacture  would  not 
have  been  crippled  by  the  reverses  which  overwhelnaed  it  in 
1816  to  1819,  in  1839-40,  and  in  1846  and  1857-61.  It  would  have 
advanced  to  such  a  point  ihat  in  1822  to  1845,  when  it  had  become 
necessary  to  substitute  iron  engines,  boilers,  and  screws  for  pi*o- 
pelling  vessels,  in  lieu  of  hempen  canvas,  and  to  build  the  ves- 

*  Swank,  "  History  of  Iron  and  Steel  Manufacture  in  all  Ages." 

t  Scrivener's  "  History  of  the  Iron  Trade  "  says  :  "  From  1783  til!  1795  the  duty  on 
foreign  hars  was  £2  IGs.  id.  per  ton.  It  rose  to  £3  4s.  Id.  in  1797  ;  from  1798  to  1803 
it  was  £ti  15s.  hd.  ;  in  two  years  it  had  got  to  £4  37«.  \d. ;  from  1806  to  1808  it  stood  at 
£5  7s.  b%d.  ;  in  the  three  years  between  1809  and  1812  it  was  £5  9s.  10(/.  ;  and  in  tlie 
five  years  ending  with  1818  it  had  been  £6  9s.  10c;?.  At  this  date  a  distinction  was  made 
in  the  interest  of  British  shipping  :  for  whilst  thenceforward,  till  the  close  of  1825,  the 
duty  on  foreign  bars  was  £6  10s.  if  imported  in  British  ships,  it  was  £7  18s.  Gd.  if  im' 
ported  in  foreign.  Nor  was  this  all  ;  iron  slit  or  hammered  into  rods,  and  iron  drawn 
down,  or  hammered,  less  than  three-quarters  of  an  inch  square,  was  made  to  pay  a  duty 
st  the  rate  of  £20 per  ton  ;  wrought  iron,  not  otherwise  enumerated,  was  taxed  with  a 
payment  of  £,50  for  every  £100  worth  imported;  and  steel,  or  manufactures  of  steel, 
were  similarly  loaded  with  a  50  per  cent,  duty." 

On  the  contrary,  under  (eee  Senate  Finance  Committee's  compilation)  our  first  Ameri- 
can tariff  of  1789  to  1812,  most  qualities  of  iron  were  under  a  duty,  at  first,  of  7%  per 
cent.,  then  of  10,  15,  17J^,  and  did  not  reach  35  per  cent,  until  the  general  war  meas- 
ure of  1812-1815,  doubling  all  duties.  After  181G  bar  iron  paid  only  from  45  to  90  cents 
per  cwt.,  or  about  one  half  the  Englis-h  rate.  Nsils  under  American  tariff  paid  only  3 
cents  per  pound,  under  the  English  50  per  cent.,  which  was  about  three  times  the  Amer- 
ican rate.  Articles  not  otherwise  enumerated  were  from  20  to  25  per  cent,  in  Amer- 
ica, .50  per  cent,  in  Great  Sritain, 


EFFECTS  OF  LAGGING  BEHIND.  649 

sels  themselves  of  iron  and  steel  in  lieu  of  wood,  America  would 
have  been  as  well  prepared  as  England,  or  better,  to  turn  out  the 
required  quantities'  of  iron  and  steel  at  low  rates.  Indeed  the 
demand  for  iron  and  steel  was  intrinsically  far  greater  in  tlie 
United  States  than  in  England,  since,  as  events  have  proved,  the 
former  would  need  to  build  125,000  miles  of  railway  where 
17,000  miles  would  suffice  for  the  latter.  Thus  in  the  failure  of 
tlie  United  States,  to  protect  its  iron  and  steel  industry  and  manu- 
factures in  the  degree  that  England  protected  hers,  lay  the  clue  to 
the  decline  of  American  shipping  when  the  time  came  for  the 
transition  from  sails  to  steam  and  from  wood  to  iron.  During 
our  colonial  period,  under  the  stringent  English  laws  against  the 
manufacture  of  bar  and  pig  into  tlie  more  finished  forms,  there 
was  a  steady  annual  export  from  1718  to  1776,  from  the  American 
colonies  to  Great  Britain,  of  from  1,000  to  5,000  tons  of  pig,  and 
from  a  very  small  quantity,  or  none,  up  to  2,000  tons  of  bar  iron.* 
It  would  have  been  very  easy,  therefore,  by  a  proper  system  of 
protective  duties,  to  have  developed  our  iron  and  steel  manufac- 
tures at  as  rapid  a  pace  as  our  agriculture. 

The  political  effects  of  such  a  policy  would  have  been  even 
more  important  than  its  industrial  effects.  It  would  have  pushed 
the  iron  and  steel  manufacture  as  well  as  the  cotton  and  woolen 
manufacture,  which  are  so  largely  dependent  upon  cheap  iron 
and  steel  for  their  machineiy,  downward  into  Georgia,  Alabama, 
Tennesseee,  and  North  Carolina  in  1840-50  with  as  much  vigor  as 
they  have  since  entered  into  those  States  in  1870  to  1880— thirty 
years  later.  This  would  have  caused  a  large  part  of  what  has 
been,  during  the  past  forty  years  a  foreign  commerce,  between  the 
South  and  England  in  raw  cotton,  and  between  the  North  and 
England  in  breadstuffs,  to  have  been  an  internal  conmierce 
between  the  two  sections.  It  would  also  have  given  a  value  to 
skilled  labor  at  the  South,  which  would  have  made  the  profit  of 
gradually  freeing  the  slave  by  converting  him  into  a  skilled 
workman,  greater  than  the  profit  of  retaining  him  in  slavery.  It 
would  have  caused  also,  more  railroads  between  the  North  and 
the  South,  than  were  in  fact  built  to  unite  both  sections  to  En- 
gland, by  our  seaports.  More  travel  and  trade,  more  interchange 
oi  residence  and  people,  more  commei'ce  in  ideas  would  liave 
ari.sen  between  tlie  two  sections.  The  combined  armies  of  the 
world  could  not,  under  these  circumstances,  have  forced  the  two 

-        .  — ^    —■ -      I  ...        -  . ■    ■         -  ■  .    I.   ■       ■  ■  I     -   ■   ■  ■  ■      ■         I    —I    .^  M^^ 

*  Swank'8  "  History  of  Iron  and  Steel  Manufacture,"  )>.  388, 


650 


ECONOMIC  PHlLOtiOPllY 


sections  of  the  Union  asunder.  The  protection  question,  espe- 
cially in  its  relation  to  the  commodities  of  iron  and  steel  and 
cottons  and  woolens,  is  the  outer  husk  of  th'e  Union  question  in 
the  United  States,  as  it  has  also  been  in  Germany  and  in  other 
nations.  But,  aside  from  this  political  significance,  while  it  is  a 
matter  of  judgment,  not  admitting  of  mathematical  demonstra- 
tion, it  is  our  judgment  that  if  in  1789  our  forefathers  had  abso- 
lutely prohibited  the  importation  of  iron  and  steel,  cottons  and 
woolens,  from  any  source  or  under  any  duty,  the  American  peo- 
ple would  have  outstripped  their  English  cousins  in  all  these 
branches  of  manufacture  as  early  as  1845,  would  have  had  more 
iron  and  steel  to  this  time  than  they  have  had,  and  at  a  lower 
aggregate  cost,  would  consequently  never  have  suffered  a  decline 
in  their  ocean-carrying  and  would  have  escaped  the  southern 
war  for  secession.* 

Mr.  William  Kent  read  before  the  American  Association  for  the 
Advancement  of  Science,  in  1884,  a  paper  on  railroad  building, 
and  the  iron  and  steel  manufacture  in  the  United  States,  in  which 
he  happily  stated  the  chief  points  of  the  evolution  of  the  iron  and 
steel  industry  since  1861,  collected  them  all  into  a  table  of 
statistics,  and  then  exhibited  all  the  facts  contained  in  the  table 
in  a  static  chart.  They  show  that  in  1860,  after  seventy  years  of 
vacillating  and  occasional,  but  always  inadequate,  protection  to 
our  iron  and  steel  interests,  ending  with  sixteen  years  of  very  low 
duties,  we  entered  upon  twenty-four  years  of  actual  protection. 


*  The  world's  iron  and  steel  pr 
Steel  Manufacture  in  all  Ages,"  p 

oduction  is  now 
.  .393)  : 

as   follows   ( Swank's  "  Iron  and 

COUNTKY. 

Pig  Ieon. 

Steel. 

Coal. 

Year. 

Tons. 

Year. 

Tons. 

3,1.58,880 

1.673,.5.34 

1,066,920 

509,045 

220,000 

271,732 

292,360 

62,303 

216 

2,800 

20,000 

6,277,690 

Year. 

Tons. 

Great  Britain    

1883 

1883 
1883 
1883 
1883 
1883 
1881 
1883 
1880 
1883 
1883 

t.  of  pi 

8,490,224 

4,595,51Ga 

3,.397.588 

2,067,387 

770,659 

655,221 

462,043 

399,001 

85,939 

.53,000 

100,000 

21,076,571 

23 

g  iron  rose 

1883 
1883 
1883 
1883 
1883 
1883 
1881 
1883 
1873 
1876 
1883 

1883 
1883 
1883 
1883 
1883 
1883 
1881 
1882 
1880 
1882 
1883 

103,737,337 

United  States   

96,159,719 

Germany  and  Luxemburg  

France 

70,223,456 
21,446,199 

Belgium    

Austria  and  Hungary  

Russia 

18,134,880 

15,555,292 

3,437,840 

Sweden    

Spain 

Italy   

Other  countries 

250,000 

847,128 

220,000 

8,000,000 

Total 

398  011  841 

Percentage  of  United  States 

a.  In  1886  the  American  produc 
being  5,634,543  gross  ions. 

to  6,36C 

27 
,668  net 

tons  (o: 

24 
2,000  lbs), 

INCREASING  SIX-FOLD. 


651 


lu  1860  we  were  making  less  than  a  fourth  as  much  pig  iron  as 
Great  Britain  ;  in  1883  we  made  about  five-eighths  as  much,  and 
in  1886  three-fourths  as  much.  The  causes  of  the  depression  of 
1873  are  indicated  in  our  chapter  on  commercial  crises.  Within 
the  interval  the  manufacture  of  iron  rails  has  become  extinct,  and 


Year. 


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Pig  iron  produced  in 
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Rolled  iron,  except 
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steel  rails  made  in 
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Iron  rails  made  in 
United  States.  Net 
tons. 


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>  X  I-  ' 

5  00  lie 


Miles  of  railroad  built. 


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Year. 


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xxxxxxxxxxxxxxxxxxxooxooxc 


steel  rails,  of  which  we  made  our  first  in  1867,  have  superseded 
iron.     The  rapid  rate  of  decline  in  the  price  of  steel  rails  from 


b'52  ECONOMIC  PHILOSOPHY. 

$158. 50  per  ton  (gold)  in  1868  to  $37.75  per  ton  in  1883,  at  which  date 
they  were  produced  more  cheaply  than  iron  had  been  or  could  be 
produced,  is  one  of  the  marvels  of  industrial  development. 

The  preceding  is  Mr.  Kent's  tabulation  of  statistics  plotted  on 
diagram. 

The  chart,  as  appears  by  the  figures  on  the  left  margin,  is  so 
drawn  that  each  check  space  represents,  as  to  immigrants,  50,000; 
as  to  railroads,  a  hundred  miles  annually  built ;  as  to  iron  and 
steel,  250,000  tons  annually  produced  ;  and  as  to  prices  of  rails, 
a  rise  or  fall  of  $10  per  ton. 

223.  American  Ship-building,  Coasting  and  Ocean 
Vessels,  and  Carrying  Trade. — a.  The  Raio  Materials  of  Ship- 
building.— The  narrowness  of  the  trading  spirit  was  not  sutficient 
in  the  early  days,  nor  in  the  later  midday  of  the  republic,  to  cause 
it  to  be  supposed  that  Henry  Clay,  of  Kentucky,  favored  protec- 
tion to  American  industries  because  the  people  of  his  State  were 
largely  engaged  in  growing  the  hemp  that  would  be  used  in 
making  canvas  and  cordage  for  shipping.  The  pi'otection  of  our 
shipping,  however,  naturally  I'eceived  the  first  attention  at  the 
hands  of  the  founders  of  our  government.  Owing  to  our  great 
supplies  of  cheap  lumber  we  had  the  first  requisite  to  sliip- 
building.  The  tendencies  of  the  hardy  sons  of  New  England 
toward  fishing  and  whaling  sui^plied  the  second,  a  maritime  class. 
Our  position  among  commercial  nations  was  less  central  than  that 
of  England,  and  our  capital  and  banking  facilities  were  less. 
Our  manufactures  also,  were  about  thirty  years  behind  those  of 
England,  in  that  quality  of  dimensions,  or  magnitude,  which  is  the 
chief  requisite  to  cheap  production.  With  these  aids  and  draw- 
backs, the  adoption  of  the  Federal  or  National  Constitution  in 
1790  placed  it  in  the  power  of  Congress,  for  the  first  time,  to  legis- 
late in  a  manner  to  develop  our  shipping. 

b.  TJie  Navigation  Laivs. — The  American  navigation  laws, 
adopted  when  the  government  was  founded,  permit  only  Ameri- 
can-built vessels  to  be  registered  as  American  vessels.  American 
vessels  are  of  two  classes,  those  engaged  in  the  ocean-carrying 
trade,  i.  e.,  between  our  ports  and  those  of  other  nations,  and 
those  engaged  in  carrying  between  different  points  on  our  coast, 
which  is  called  the  coasting  trade.  From  our  coasting  ti-ade  all 
foi'eign-built  and  foreign-owned  vessels  are  shut  out  by  peremp- 
tory prohibition,  the  jji-ovisiou  of  the  statute  being  that  any  vessel 
having  a  foreign  registry,  which  carries  any  freight  or  passengers 
between  two  American  ports,  unless  they  be  ports  between  which 


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FROTECTiyCr  OUR  MEMCHAJT  SHIPS.  653 

tliei'e  is  direct  overlaud  conimuuieation  through  the  country  to 
which  such  vessel  belongs,  shall  be  forfeited. 

Our  navigation  laws,  as  originally  enacted,  also  virtually  ex- 
cluded foreign  vessels  from  carrying  a  large  share  of  our  imports 
and  exports  by  a  system  of  "  discriminating  duties,"  which  means 
higher  duties  on  the  same  goods  if  brought  on  British  or  other 
foreign  vessels  than  if  brought  in  American  vessels.  Thus,  under 
tlie  act  of  1789,  teas,  if  brought  in  American  ships  from  China 
direct,  paid  only  from  6  to  20  cents  per  pound;  if  brought  in 
American  ships  from  Europe  only,  then  from  8  to  26  cents  per 
pound;  but  if  brought  to  this  country  in  foreign  ships  they  paid 
from  15  to  45  cents  per  pound,  or  two  and  a  half  times  as  much 
as  if  brought  fi-om  China  in  American  vessels.  This  discrimina- 
tion continued  in  principle,  though  frequently  changed  in 
amount,  until  1833,  at  about  which  time,  under  the  cry  of  free 
trade,  then  beginning  to  be  popular  with  the  Southern  wing  of  the 
Democratic  party,  the  discrimination  was  given  away  by  the 
Senate  in  treaties  with  one  foreign  power  after  another,  until  it 
was  virtually  repealed.  This  withdrew  tariff  protection  from  our 
ocean-carrying  trade,  and  opened  the  privilege  of  carrying  our 
exjiorts  and  inipoi'ts  to  whomever  Avould  carvy  tliem  cheapest. 
Our  coasting  trade  remaiued,  being  held  fast  by  the  clause  in  our 
navigation  laws  which  prohibited  any  foreign  vessel  from  carry- 
ing between  two  American  ports.  For  the  period  from  1833  to 
1855,  this  practice  of  getting  our  carrying  done  where  we  could 
get  it  done  cheapest  did  not  develop  any  injurious  effects,  for  tlie 
reason  that  vessels  were  still  built  of  wood,  of  which  we  had  the 
cheapest  supply,  and  dependent  on  sails. 

c.  The  Tonnage  Acts. — The  tonnage  act  passed  in  the  firet  ses- 
sion of  Congress  also  favored  American  shipping  as  against  the 
ships  of  foreign  powers.  The  rate  imposed  on  vessels  built  and 
owned  in  America  was  6  cents  per  ton  ;  foreign-built  and  foreign 
owned  vessels  were  charged  with  30  cents  per  ton;  and  vessels 
both  built  and  owned  by  foreign  subjects  were  charged  50  cents 
per  ton.  The  effect  of  the  navigation  laws  and  toiniage  acts,  on 
the  carrying  trade  of  England  and  America,  is  seen  in  the  follow- 
ing table  (from  "  Taxation  in  the  United  States,"  by  H.  C.  Adams, 

p.  42)  : 

American  tonnage  British  tonnaije 

Year.                                                                 emjjloyed  in  for-  employed       in 

eigii  trade.  Amcricdii  trade. 

1789 127,329  ill, 110 

1792 414  G79  2()(j,005 

1794 525.049  37,058 

1796 075,046  J9,(iG9 


654  ECONOMIC  PHILOSOPHY. 

These  figures  conclusively  refute  those  who  say  that  the  best 
way  to  jirotect  our  navigation  interests  is  to  let  them  alone. 

Adams  further  says  (p.  70):  "The  growth  of  American  ship- 
ping, from  1789  to  1807,  is  without  parallel  in  the  history  of  the 
commercial  world.  During  the  years  intervening  between  those 
two  dates,  American  tonnage  engaged  in  the  foreign  trade  in- 
creased from  127.329  tons  to  848,306  tons,  i.e.,  the  capacity  of  ship- 
ping owned  byAmerican  citizens  devoted  to  the  foreign  trade  had 
increased  six  and  eight-tenths  times."  Between  1816  and  1846  a 
series  of  about  fifty  acts  of  Congress  were  passed,  from  time  to 
time  repealing  the  tonnage  duties  bj-  piecemeal,  and  as  to  one 
country  at  a  time.  In  1818  they  were  abolished  as  to  vessels  be- 
longing to  subjects  of  the  King  of  the  Netherlands,  in  1819  as  to 
Prussia,  Hamburg,  and  Bremen.  Among  the  last  abolished 
were  those  on  Spanish  vessels,  in  1846,  from  which  were  still  re- 
served vessels  coming  from  Cuba  and  Porto  Rico.  Mr.  Wells,  in 
his  "History  of  American  Merchant  Marine,"  p.  85,  says:  "At 
the  commencement  of  the  war  there  were  no  tonnage  taxes." 
We  think  this  is  substantially  but  not  literally  true.  In  1862  a 
tonnage  tax  of  10  cents  per  ton  was  laid,  which  was  afterwards 
increased  to  30  cents,  the  present  rate,  payable  alike  by  foreign 
and  domestic  vessels,  and  only  once  a  year  on  any  vessel,  and 
alike  whether  she  enters  an  American  port  once  or  a  hundred 
times.  But  if  any  person,  not  a  citizen  of  the  United  States,  be- 
comes part  owner  of  a  vessel  of  American  build,  then  the  tonnage 
tax  is  increased  to  CO  cents  per  ton,  and  the  vessel  ceases  to  be 
entitled  to  registry,  or  enrollment,  as  an  American  vessel. 

d.  The  Plea  for  Free  Ships. — An  American  citizen,  who  pur- 
chases an  English  vessel,  has  not  the  right  to  have  it  registered  as 
an  American  vessel  for  foreign  trade,  or  to  have  it  enrolled  or 
licensed  for  coasting  trade,  so  as  to  entitle  it  to  protection  by  our 
government  as  being  in  theory  a  part  of  our  American  soil.  Ex- 
actly what  the  status  of  such  a  vessel  would  be  in  an  American 
port  we  do  not  say,  as  we  do  not  know  that  the  question  has  ever 
been  put  to  a  practical  test.  If  such  a  vessel  should  attempt  to 
take  part  in  our  coasting  trade  by  carrying  goods  from  New  York 
to  Charleston  she  would  be  forfeited,  because  the  statute  so  de- 
clares. What  the  legal  consequences  would  be  of  her  taking  part 
in  foreign  traffic,  without  being  registered  as  an  American  vessel, 
or  as  a  vessel  of  any  other  nation,  we  do  not  say.  The  reasons 
of  this  state  of  the  law  are  that,  to  allow  the  free  importation 
and  registration  of  foreign-built  ships  would,  in  the  present  con- 


DlSGRIMmATlXG  DTfTlES.  655 

ditionof  prices  for  sliip-building  here  and  abroad,  practically  put 
an  end  to  the  American  business  of  building  ships,  for  whatever 
portion  of  our  carrj'ing  trade  the  ship  so  imported  could  be  used. 
If  she  could  be  used  only  in  our  ocean-carrying  tra,de,  then  the  free 
importation  of  ships  for  ocean-caiuying  only  would  destroy 
American  ship-building  for  ocean-carrying  only.  If  ships,  how- 
ever, could  freely  be  imported  for  the  coasting  trade  as  well,  /.  e., 
for  carrying  between  American  ports,  then  American  ship-build- 
ing for  coasting,  lake,  and  river  purposes  would  all  be  seriously 
invaded  or  left  open  to  invasion  and  destruction  at  any  time.  In 
return  for  the  national  character  accorded  to  American  vessels 
during  peace,  the  government  has  the  right  under-  a  sort  of  emi- 
nent domain  to  use  them  for  naval  purposes  during  war.  Our 
government  has  always  held  that  it  must,  for  its  naval  protection 
and  national  defense  during  war,  absolutely  prohibit  foreign  ves- 
sels taking  part  in  its  coasting  trade.  Great  Britain  did  the  same 
for  its  coasting  trade  until  1849,  when  it  threw  open  the  right  to 
carry  between  British  ports  to  the  vessels  of  all  nations. 

e.  Effects  of  icithdraioing  protection  from  ocean-going  ships 
and  entering  on  a  free  scramble  for  the  ocean-carrying  trade 
tvithout  subsidies. — In  our  ocean-carrying  trade,  however,  the 
United  States  applied  the  protective  policy  in  behalf  of  American 
vessels,  by  admitting  goods  brought  in  vessels  owned  by  Amei'i- 
cans,  at  lower  rates  than  if  brought  in  foreign  vessels,  from  1789, 
when  the  first  navigation  laws  where  passed,  to  1815,  when  by  the 
reciprocity  treaty  *  with  England  we  agreed  to  charge  no  dis- 
criminating duties  or  tonnage  against  English  vessels  coming 
into  our  ports,  if  England  would  charge  none  against  American 
vessels  entering  hers.  The  adoption  of  the  policy  of  discrimin- 
ating duties,  of  which  Madison  was  the  strenuous  advocate,  had 
transferred  to  American  vessels  the  ocean-carrying  which  liad 

♦  Rt.  Hon.  \Vm.  lluskisson,  president  of  the  Board  of  Trade,  Bpeaking  in  the  House 
of  Commons  on  May  12,  1826,  says  essentially  that  England  adopted  the  so-called  re- 
ciprocity law  of  181.5,  giving  American  vessels  the  privilege  of  carryinij;  goods  and 
products  of  other  countries  into  British  ports,  because  it  desired  for  English  .ships  the 
privilege  of  carrying  goods  of  other  than  English  production  into  American  ports, 
and  because  it  thought  the  reciprocity  would  give  American  vessels  few  or  no  addi- 
tional freights,  while  it  would  give  English  vessels  sailing  to  America  an  increase  of 
freights  of  great  value. 

Until  August  5,  1882,  American  vessels  paid  port  and  dock  dues  on  the  gross  ton- 
nage, while  English  vessels  paid  only  on  the  net  tonnage.  The  National  Line  steamer 
America,  having  a  gross  tonnage  of  5,r)i.'8  tons,  and  a  ni;t  tonnage  of  only  2,821)  tons,  if 
registered  as  an  American  vessel  would  pay  as  port  dues  Jl.O.'jS.  40,  but  as  an  EnglieU 
vessel  only  8847.70. 


Goii 


ECONOMIC  PHILOSOPHT. 


previously  been  done  by  English.  The  American  tonnage  em- 
ployed in  foreign  trade  had  multiplied  five  times  in  nine  years,  and 
the  English  tonnage  employed  in  the  American  trade  had  de- 
clined four-fifths.  From  1815  to  1851  the  ocean-carrying  trade  of 
both  England  and  America  continued  to  be  carried  on  in  wooden 
ships.  While  England  gained  immensely,  relatively  to  other 
nations,  by  having  induced  us  to  adopt  the  free-trade  policy  of 
getting  our  exports  and  imports  carried  where  we  could  get  them 
cai'ried  cheapest,  still  we  did  not  lose,  so  long  as  the  carrying- 
was  done  in  wooden  ships,  except  in  attempting  to  compete  with 
ocean  steamers.  We  could  always  build  wooden  ships  cheaper 
tban  they  could  be  built  in  England. 

In  1855,  however,  our  relative  deficiency  in  iron  and  steel  man- 
ufactures began  to  send  us  behind.  The  following  schedule 
shows  the  degree  of  decline  in  our  tonnage  engaged  in  the  ocean 
traffic,  which  was  thrown  open  to  a  so-called  free  competition, 
but  really  to  a  competition  with  an  English  subsidized  commer- 
cial marine  : 


1 

1 

1 

.5  'i 

8 

1 

i 

1. 

II 

Year. 

ge   in 
trade 

^1 

e  SI 

^1, 

1? 

alne 
and 

?is 

Is 

1^^ 

^>ii 

fi 

Em 

h-. 

". 

R. 

1840 

762.838 

1,172,694 

$231,227,465 

82.9 

17.1 

1845 

9i>4.4r6 

1,223.218 

231,901.170 

81.7 

18.3 

1850 

1,439,694 

1,797,825 

330  037,038 

72  5 

17.5 

1855 

2,.348  3.58 

2543,255 

530,625,366 

75.6 

14.4 

I860 

2,378-396 

2,644,807 

762.288,5.50 

06  5 

33  5 

1865 

1,518.350 

1,448.846 

3  318.522 
2  638,247 

604,412,996 
981,890,8b9 

27  7 
35  6 

02.3 

1870 

64.4 

1875 

1.545.998 

2,219,698 

1.219.434,.544 

25.8 

74,2 

1880 

1,314.402 

2.fi37,686 

1,613.770,633 

17.4 

82.G 

1881 

1,297,0.35 

2,646.011 

1  675,024.318 

16.0 

84.0 

1883 

1 ,259  490 

2.873.638 

1,560,071.700 

15.5 

84.5 

Fi'om  this  it  appears  that  our  tonnage  employed  in  foreign 
trade  is  only  one-half  as  great  as  it  was  in  1855-60,  while  our 
tonnage  employed  in  the  coastwise  trade  has  slightly  increased, 
some  of  it  being  interfered  with  by  our  rapid  railway  develop- 
ment. 

/.  English  subsidies  to  vessels  an  efficient  form  of  protection. 
— When  Great  Britain  seduced  us  in  1815  into  applying  free-trade 
principles  to  our  ocean-carrying  trade,  she  did  not  agree  not  to 
subsidize  her  own  vessels.  While  she  invited  our  vessels  to  free 
competition,  she  subsidized  her  own,  thus  playing  against  us  with 
loaded  dice. 


H 


WITHDRAWING  SUBSIDIES.  657 

About  1840  *  Cuuard  secui*ed  a  subsidy  of  £60,000  per  yeai*  for 
a  monthly  line  of  steamers  between  Liverpool  and  Halifax  and 
Boston,  wliicli  was  increased  in  1849  to  £90,000.  Soon  after  the 
United  States  government  granted  a  subsidy  to  the  Great  West- 
ern Steamship  Company,  or  "  Collins  "  Line.  Cunard  thereupon 
obtained  from  England  an  annual  subsidy  of  £145,000  for  a  line 
to  New  York,  and  in  1849  testified  before  the  Committee  on  Con- 
tract Packet  Service:  "  If  I  had  got  this  contract  three  months 
sooner  there  would  have  been  no  American  line."  Mr.  Colburn, 
Chancellor  of  the  Exchequer,  admitted  having  sustamed  the 
Cunard  competition  at  very  heavy  expense,  but  said  it  was  not 
right  to  place  that  expense  to  the  account  of  the  post-office. 
(Hansard,  Ixiv.  321.) 

On  June  14,  1858,  through  the  influence  of  Robert  Toombs 
of  Georgia,  and  as  one  of  the  measures  preliminary  to  an  expected 
dissolution  of  the  Union,  an  act  was  passed  limiting  the  Post- 
master-General and  forbidding  him  to  make  a  contract  for  carry- 
ing ocean  mails  to  run  more  than  two  years  or  to  involve  a  higher 
expense  than  sea  and  inland  postage.  At  that  date  the  Cunard 
Line  was  working  under  an  eleven  years'  contract,  with  an  annual 
subsidy  of  £191,400. 

This  law  destroyed  the  Collins  Line,  and  the  Havre  and  Bremen 
(American)  lines  followed  within  a  year  or  two  after. 

The  report  of  the  Committee  on  Contract  Packets,  made  to  Par- 
liament in  1853,  says:  "The  objects  which  appear  to  have  led  to 
the  formation  of  these  contracts,  and  to  the  larger  expenditure 
involved,  were  to  afford  us  rapid,  frequent,  and  punctual  com- 
munication with  distant  ports  which  feed  the  main  arteries  of 
British  commerce,  and  with  the  most  important  of  our  foreign 
possessions,  to  foster  maritime  enterprise,  and  to  encourage  the 
production  of  a  superior  class  of  vessels  which  would  promote  the 
convenience  and  wealth  of  the  country  in  time  of  peace,  and 
assist  in  defending  its  shores  against  hostile  aggression." 

It  referred  to  the  Cunard  subsidy  as  having  grown  to  £173,340, 
or  at  the  rate  of  $2.72 J  per  mile  (ti-aveled),  and  £61,642  in  excess 
of  the  postage  i-eceived. 

In  an  examination  of  witnesses  before  the  Parliamentary  Com- 
mittee on  Packet  and  Telegraph  Contracts  in  1859,  the  following 
questions  were  asked : 

By  Richard  Cobden — 

-  -     —  ■  - 

*  Edward  P.  North  in  forthcoming  article  in  North  American  Review. 


658  ECONOMIC  PHTLOSOPIIT. 

Q.  558.  You  are  aware  that  it  (the  ColHns  Line)  ceased  because 
the  American  government  withdrew  the  subsidy  ? 

By  Mr.  Wilson— 

Q.  613.  Mr.  Canard's  contract  is  £191,000,  is  it  not  ? 

A.  Yes,  £191,400. 

Q.  617.  £320,000  is  the  amount  wliich  is  now  paid  by  this 
countiy  and  tlie  colony  for  the  transatlantic  postage,  including 
the  Galway  Line  ? 

Q.  618.  And  in  the  face  of  these  increasing  subsidies  tlie 
American  government  has  altogether  relinquislied  the  practice 
of  subsidizing  their  vessels,  and  their  vessels  of  course  have  been 
driven  off  the  passage  ? 

International  contempt,  for  the  follj^  of  any  class  of  public 
dotards  and  imbeciles,  was  never  more  heartily  expressed  than  in 
questions  558  and  618,  in  which  the  English  free  traders,  Cobden 
and  Wilson,  record  their  scorn  for  the  stupidity-  and  unpatriot- 
ism  of  their  American  dupes  and  allies. 

In  a  letter  in  the  London  Times  of  September  28,  1886,  fi'oni 
J.  Henneker  Heaton,  M.  P.  for  Canterbury,  to  the  Postmaster- 
General  Raikes,  in  reply  to  the  assertion  of  the  Secretary  of  the 
Treasury,  that  "we"  (Great  Britain)  "are  losing  £1,000  a  day, 
£365,000  a  year,  by  our  ocean  mail  service,"  he  says:  "As  a 
matter  of  fact  these  subsidies  are  not  jjaid  to  make  up  a  deficiency 
in  the  postal  accounts,  I:)ut  in  order  to  keep  up  the  character  of 
our  merchant  fleet."  Until  three  years  ago,  England  was  the 
only  European  country  sending  regular,  and  fast,  steamships  to 
Australia.  Since  then  the  French  government  subsidized  the 
powerful  Messageries  Maritimes  to  the  amount  of  £160,000  a 
year,  and  now  the  four-weekly  steamers  are  to  be  changed  to 
fortnightly,  with  £250,000  a  year.  The  German  government 
also  established  a  splendid  line  of  steamers  to  Australia  with  a 
subsidy  of  £120,000  a  year. 

In  a  report  issued  by  the  British  post-office  in  1863  it  is  said: 
"To  assume  that  these  packets  were  only  established  for  post- 
office  purposes  is  to  charge  the  government  with  the  most  absurd 
extravagance.  The  West  India  packets,  for  instance,  were 
established  at  a  cost  of  £240,000  per  annum,  though  the  vitmost 
return  expected  from  letters  was  £40,000,  leaving  the  £200,000  a 
clear  deficit." 

After  1858  all  the  "  subsidy "  American  vessels  were  getting 
was   two  cents  postage  jjer  letter  for  carrying  mails  which  they 


ENGLISH  SUBSIDIES  WIK 


659 


would  freely  have  paid  fifteen  cents  to  avoid  carrying.     The 
subsidies  to  English  vessels  were  as  follows : 


Bounty    or    subsidy! 

VALUE   OP   TOTAL   ] 

[MPORTS  AND 

Years. 

paid  British  ships 

EXPORTS. 

by  British  Govern- 

ment. 

American  Ships. 

Foreign  Sliips. 

1848 

$3,350,000 

$338,300,163 

170,775,896 

1849 

8,180,000 

230,915,375 

73,697,984 

1850 

5,313,985 

339,372,084 

60,764.854 

1851 

5,330,000 

316,107,239 

118,505,713 

1852 

5,510,635 

394,735,404 

133,319,817 

1853 

5,865,400 

346,717,137 

152,237,677 

1854 

5,950,559 

406,698,589 

170,591,875 

1855 

5,741,633 

405,485,463 

131,189,904 

1856 

5,713,560 

483,368,274 

159,836,586 

1857 

5,133,485 

510,331,027 

213,517,796 

1858 

4,679,415 

447,191,304 

161,066,367 

1859 

4,740.190 

465,741,881 

339,816,211 

1860 

4,349.760 

507,247,757 

3.55,040,693 

1861 

4,703,385 

381,516,788 

208,478,278 

1863 

4,105,353 

217,695,418 

218,015,396 

1863 

4,188,375 

241,875,473 

343,056,031 

1864 

4,503,050 

184,061,486 

485,793,548 

1865 

3,981,995 

167,403,493 

487,010,134 

1866 

4,327,018 

335,711,961 

685,336,691 

1867 

4,079,996 

396,998,387 

580,033,004 

1868 

4,047,586 

397,981,573 

550,546,074 

1869 

5,481,690 

289,956,772 

586,493,013 

1870 

6,107,761 

353,969,607 

638,937,383 

1871 

6,070,741 

353,664,173 

755,833,576 

1873 

5,693.500 

345,331,101 

839,346,863 

1873 

5,665,296 

846,306,597 

966,733,651 

1874 

5,697,346 

350,451,994 

939,306,106 

1875 

4,860,000 

814,357,793 

884,788,517 

1876 

4,430,371 

811,076,171 

813,345,987 

1877 

3,976,580 

316,660,281 

859,930,536 

1878 

3,914,990 

318,050,906 

876,991,139 

1879 

3,768,330 

272,015,692 

911,369,333 

1880 

3,873,130 

380,005,097 

1,309,466,796 

1881 

3,601,350 

338,080,603 

1,378,556,017 

1883 

3,538,835 

343,850.815 

1,384,488,861 

The  difficulty  of  finding  commercial  vessels,  carrying  the 
American  flag  over  ocean  traffic,  is  not  quite  so  great  as  our  free- 
trade  enemies  contend,  but  such  as  it  is,  it  is  all  due  to  free-trade 
principles,  applied  in  four  ways,  viz. :  1.  Opening  our  ocean- 
carrying  trade  to  free  competition  ;  by  treaty  of  1815,  no  pro- 
tection whatever  has  been  given  to  our  ocean-carrying  trade 
for  seventy  years.  If  it  has  failed,  it  has  failed  on  the  free- 
trade  basis,   and  its  failure  must   be   charged   up  to   free-trade 


660  ECONOMIC  PHILOSOPHY. 

principles  only,  viz.,  getting  our  carrying  done  hj  tlie  cheapest 
carrier.  2.  Witli drawing  protection  from  iron  and  steel  manu- 
facture, by  tariffs  of  1833  and  1846.  3.  The  war  of  the  South  foi- 
secession,  professedly  to  establish  free  trade.  4.  The  war  on 
American  shipping  by  English  cruisers  in  1861-5  in  the  interest 
of  British  free  trade. 

g.  The  Transition  from  Wood  and  Sails,  to  Steam  and  Steel. 
— Doubtless,  had  we,  from   1816,  or  even  from  1833,  adequately 
protected  our  iron  and  steel  manufacture,  the  throwing  open  of 
our  ocean-carrying  trade  to  a  free  scramble  between  us  and  other 
nations  might  have  continued  to  be  void  of  harm  to  us.     For, 
in  that  case,  we  might  have  been  prepared,  by  1855,  to  pass  from 
small  wooden  ships  to  large  iron  and  steel,  and  from  sails  to 
steam,  in  competition  with  England.    Necessarily  England  could 
only  enter  upon  the  iron  and  steel  manufacture,  to  any  consider- 
able extent,  after  the  epoch  of  the  locomotive,  and  its  applica- 
tion to  laud  and  water  locomotion,  which  was  in  1828-30.     The 
two  free-trade  policies  combined,  of  throttling  our  iron  and  steel 
manufacture  at  home,  and  opening  our  ocean  carrying  trade  to 
free  competition  with  England,  brought   us  to  a  condition  in 
1850-55  where  England  was  prepared  for  the  great  transition 
froiii  small  clippers  to  great  iron  steamers,  and  we  were  not.     So 
long  as  the  transition  related  merely  to  the  change  from  sails  to 
steam  we  held  our  own.     In  1851  Great  Britain  herself  had  only 
65,921  tons  of  steam  shipping  engaged  in  the  foreign-carrying 
trade,  and  the  United  States  in  the  same  year  had  62,890  tons, 
being  nearly  equal.     It  grew  until  1855,  when  we  had  115,000 
tons.     Thence  it  stood  still,  and  in  1862  it  was  less  by  2,000  tons 
than  in  1855.     Our  sales  of  vessels  to  foreign  ship  buyers  began 
to  decline  in  1855,  and  by  1860  Avere  insignificant.     The  transfer 
of  American  ships  to  foreign  owners  during  the  war,  to  prevent 
capture,  and  the  destruction  of  our  ships  by  tlie  war,  together 
with  the  enormous  impetus  given  to  our  internal  industries, 
especially  railroads,  at  the  return  of  peace,  and  the  facts  that 
capital  invested  in  American  ships  paid  a  state  personal  property 
tax,  while  that  invested  in  foreign  ships  paid  no  tax  whatever  on 
the    principal,  and    other    facts   conspired    to   deter  American 
capital  from  investment  in  ships.      In  1880  the  fact  developed 
in   England   and   on   the   continent  that  in   Europe  there  had 
been  an   over-production  of  ships.     They  were  anxious  to  sell 
off  their  stock  to  Americans  before  the  decline  of  values  set  in. 
An  immense  free-.ship  lobby,  consisting  about  equally  of  English- 


THE  "  FREE  SHIP"  ERROR.  661 

men  enlisted  in  the  sliipping  interest,  and  of  Americans  who  had 
never  owned  ships  und  never  intended  to,  set  up  a  cvj  for  "free 
ships,'' so  that  Americans  coiikl  he  induced  to  talie  the  Enghsh 
surplus  off  their  hands.  There  could  be  no  interest  whatever  on 
the  part  of  American  capital  to  raise  the  cry.  For  if  any  American 
capitalist  desires  to  become  a  ship-owner  he  can  become  a  part 
owner  in  any  English  vessel,  to  any  extent  short  of  becoming 
an  owner  of  the  whole  vessel.  His  capital  Avill  earn  better 
dividends  in  an  English  than  in  an  American  vessel,  for  the 
three-fold  reason  that  it  will  not  be  taxed  for  state  and  local  pur- 
poses; that  it  will  receive  its  share  of  about  $6,000,000  a  year  of 
subsidies  for  can-ying  mails,  and  will  not  have  to  sustain  the  con- 
sular service,  which  in  England  is  sustained  by  salaries,  but 
among  us  by  fees,  which  are  a  tax  on  the  ship-owner.  Now  we 
come  to  the  objections  which  exist  to  the  free-ship  fraud. 

h.  Why  Ocean-going  Vessels  must  be  Built  by  Ourselves. — 
Every  registered  American  vessel  has  three  aspects.  If  it  could  be 
built  abroad  it  would  be  an  imported  pi'oduct  of  foreign  labor,  and 
as  such  would  compete  in  the  American  market  with  American- 
built  vessels.  Whether  built  abroad  or  hei'e,  it  becomes  in  law  part 
of  our  American  soil,  and  entitled  to  be  defended  as  such  by  the 
whole  force  of  the  republic.  In  return  for  this  obligation  to  pro- 
tect it,  the  nation  is  entitled  to  take  it  for  naval  purposes,  at  an 
appraised  value,  if  it  wants  it.  By  international  law,  however, 
and  the  laws  of  European  states,  the  ship  is  protected  from  this 
right  if  it  re-registers  under  a  foreign  flag  before  it  is  taken.  Two 
considei^ations,  therefore,  are  paramount  in  deciding  whether  we 
can  afford  to  take  these  foreign  craft  and  adopt  or  naturalize  them 
into  our  merchant  marine.  These  are:  First,  will  they  be  ours 
when  we  want  them  for  war  purposes  ?  For  we  do  not  want  to 
take  under  our  national  protection  a  fleet  of  thousands  of  mer- 
chantmen which,  at  the  first  note  of  war  witli  a  foreign  power. 
Avill  slip  back  again  out  from  under  the  American  flag,  and 
l)ecome  Bi-itish  vessels.  This  point,  in  its  turn,  will  depend  on 
whether  the  capital  owning  and  men  controlling  them  would 
really  be  American,  or  whether  it  would  continue  British.  Now, 
as  American  production  had  no  motive  of  jn-ofits  to  invest  in  a 
naturalized  English  ship,  which  would  not  have  been  fully  mot 
by  its  existing  privilege  of  buying  .shares  in  foreign  ships,  it  may 
be  assumed  that  the  capital  em))arked  in  the  Amei'icanized  vessels 
would  continue  to  be  in  their  English  buildei's  and  mortgagees. 
Ho  long  as  we  built  our  railroads  of  English  rails,  they  remained 


6G2  ECONOMIC  PHILOSOPHY. 

English  investments  to  the  end.  Presumptively  English-built 
ships  would  remain  the  property  of  their  English  builders,  and 
nine  of  the  transfers  out  of  ten  would  be  merely'  colorable,  or,  if 
made  in  good  faith,  would  retain  the  core  of  the  watermelon  in 
the  form  of  bottomry  liens  in  behalf  of  English  mortgagees.  This 
being  so,  at  the  first  speck  of  war  they  would  all  return  to  the 
English  flag.  They  would  not  perfo)'m  the  function  for  which 
alone  we  give  them  national  protection. 

A  second  consideration  would  be,  whether  we  would  admit  them 
to,  or  exclude  them,  from  the  coasting  trade.  The  framers  of  the 
free-ship  bills — Codmans,  Wells,  and  the  Free-trade  League— all 
asserted  that  they  did  not  seek  admission  to  the  coasting  trade. 
But,  obviously,  it  would  be  absurd  to  have  a  class  of  American 
vessels  sailing  from  New  York  to  Havana,  which  would  be  liable 
to  forfeiture  if  they  touched  and  took  cargo  at  Savannah  in  Georgia. 
It  was  obvious  that  the  coasting  trade  also  must  be  oj)en  to  them, 
if  they  were  to  be  American  vessels.  But  to  open  our  coasting 
trade,  to  the  competition  of  all  the  world,  would  destroy  the  last 
vestige  of  our  ship-building,  close  every  ship-yard,  and  leave  us 
with  a  fleet  of  foreign-built  and  foreign-owned  vessels,  which,  at 
the  first  sound  of  war,  would  return  to  their  foreign  flag. 

i.  Liberality  of  English  Subsidies  Contrasted  tcith  American 
Parsimony. — The  British  government  dispenses  its  subsidies  at 
the  discretion  of  the  Board  of  Admiralty.  Though  the  carrying 
the  mails  is  made  a  condition  of  the  subsidy  to  each  line,  yet  the 
amount  of  the  subsidy  is  graduated  by  the  judgment  of  the  Ad- 
miralty as  to  the  probable  deficit  in  the  earnings  of  the  company 
to  sustain  the  route,  and  not  by  the  valvie  of  the  mail  service  to 
be  rendered.  The  payments  of  subsidy  are  also  annual  sums  in 
gi'oss  to  the  line,  and  not  a  postage  per  letter.  From  1850  she 
paid  $705, G66  per  year  to  the  Cunard  Company  ;  to  four  compa- 
nies she  paid  a  total  of  $4,523,666  per  annum,  graduated  accord- 
ing to  their  needs.  From  1848  to  1854  she  paid,  to  bring  her  steam 
fleet  up  to  304,559  tons,  a  total  of  $23,390,020— a  subsidy  equal  to 
$93  per  ton,  which  is  more  than  such  a  fleet  would  sell  for  to-day. 
She  also  induced  Brazil,  and  other  countries,  to  join  her  in  subsidy 
schemes  in  favor  of  her  own  vessels,  to  the  extent  of  $1,500,000 
per  annum,  making  her  entire  subsidy  fund  between  1849  and 
1854  $8,023,000  per  year.  From  1854  to  1860  England  spent  $36,- 
308,632  in  subsidies  on  her  steam  merchant  marine,  and  increased 
her  tonnage  from  304,559  tons  in  1854  to  452,352  tons  in  1860. 
From  1861  to  1865  England  was  making  war  on  our  commerce,  so 


SA  VIXQ  MONEY  B  Y  PIRACY.  663 

much  more  effectively  through  the  rebel  pirate  ships  sent  out 
from  her  dock  yards,  than  she  had  been  able  to  do  by  subsidies, 
and  American  competition  in  the  ocean-carrying  trade  was  so 
swiftly  disappearing,  that  she  rapidly  reduced  her  subsidies,  until 
in  1865  she  paid  less  than  at  any  time  since  1849.  Indeed,  her 
economy  had  dated  from  the  year  1854 — the  very  year  in  which, 
under  the  pressure  of  her  competition,  our  merchant  marine  began 
to  decline.  In  1854  England  began  to  diminish  her  subsidies  in 
consequence  of  the  refusal  of  the  American  Congress  to  aid  Amer- 
ican shipping,  and  in  1870,  in  consequence  of  the  United  States 
having  for  the  first  time  granted  a  subsidy  to  the  Pacific  Mail, 
England  for  the  first  time  jumped  her  subsidies  up  to  a  higher 
figure  than  they  had  been  since  1854.  In  the  intermediate  period 
England  had  saved  in  reduced  subsidies,  compared  with  those 
she  was  payirig  while  the  United  States  was  a  successful  competi- 
tor, exactly  $19,472,094,  or  $5,000,000  more  than  was  necessary  to 
pay  the  Alabama  claims,  which  was  the  whole  cost  of  her  war  on 
our  commerce.  This  will  appear  from  the  following  schedule  of 
the  amounts  saved  by  Great  Britain,  in  subsidies,  in  each  year 
after  the  decline  of  our  commerce  began,  compared  Avitli  her  ex- 
pense for  subsidies  in  1854  : 


Saved  relative- 
Subsidies  ly  to  the  year 
Year.  paid.  1854. 

18M $5,950,559 


Saved  relative- 
Subsidies  ly  to  the  year 
Year  paid.  1854. 

1864 $4,.5u3,(t50  $1,347,509 


1855  5,741,633              $208,92(31 1 1865 3,981. ',.95  1,968  564 

1856 5,713.560                 23^.99911866 4.22T,C!S  1,723,.t41 

1857 5,1.33,485                817,0641  [1867 4,079,996  1,870,253 

1858 4,679,415              1,271,144  '1868 4,047..-.S6  1,902,973 

1859 4,740,190              I,110,.369';i869 5,481.69.)  468,869 


1860 4,349,760  1,600,799 

1861 4,703.885  1,247,274 

1862 4,10,-,353  1,845,206 

1863 4,188,275  1, ,■'62.274 


1870 0,107,761 


Total  $19,472,094 


From  these  figures  it  appears,  that  if  England  had  set  apart  the 
sum  she  could  save  annually  in  subsidies  by  the  effective  demoli- 
tion of  our  ocean-carrying  trade,  as  an  insurance  fund  to  indem- 
nify her  against  all  cost  of  making  war  on  our  commerce,  even 
to  the  extent  of  fitting  out  rebel  privateers  to  destroy  our  vessels, 
she  would  have  made  a  net  profit,  merely  on  her  savings  of  $5, 000,- 
000,  to  say  nothing  of  the  fact  that  while  these  savings  were  going 
on  she  was  increasing  her  shipping  to  5,150,000  tons,  valued  at 
$1,000,000,000,  all  of  which  represented  wages  paid  for  British 
labor,  and  was  giving  employment  to  240,000  men  in  the  con- 
struction and  repairs  of  her  ships,  and  to  220,000  more  in  sailing 
them,  tlie  latter  of  whom  would  increase  her  national  earnings 
by  $350,000,000  a  year. 


664  ECONOMIC  PHILOSOPHY. 

Between  1854  and  1882  Great  Britain  has  paid  in  subsidies  to 
her  shipping  $164,000,000,  while  the  United  States  in  1881  actu- 
ally collected  postage,  on  her  mail  matter  going  to  foreign  coun- 
tries, to  the  amount  of  $1,500,679.90,  and  paid  for  carrying  all  its 
mails  to  foreign  countries  only  $239,141.21,  tlius  taxing  her  mail- 
carrying  ocean  going  ships,  in  the  sum  of  $1,321,548.69  for  bene- 
fit of  the  land  mail  serv^ice. 

224.  Evolution  of  Maiiiifactiires  in  Canada. — The  Liver- 
pool Cotton  Circular  about  four  years  ago  said : 

"  This  country  has  suffered  very  severely  of  hite  years,  from  the  increasing  stringency 
of  foreign  tariffs.  There  has  been  a  growing  tendency  evinced  in  most  countries  to 
protect  their  own  industries,  and  in  every  such  case  we  are  the  jchief  sufferers,  for  we 
live,  as  already  said,  by  eschano;ing  our  manufactures  for  the  necessaries  of  life.  The 
United  States  was  at  one  time  a  large  customer  for  iron-ware  and  textile  fabrics;  but 
the  hostile  tariff  she  has  enforced,  since  the  civil  war,  has  nearly  driven  us  out  of  her 
markets,  and  has  built  up  a  vast  system  of  manufactures,  which  completely  supplies 
her  own  wants,  and  leaves  something  to  spare  for  competition  with  us  in  foreign  mar- 
kets. The  freetraders  of  this  country  console  themselves  by  thinking  that  she  is  the 
chief  sufferer;  but  whether  this  be  so  or  not  (which  is  very  doubtful)  the  fact  remains 
that  her  markets  are  almost  lost  to  us,  and  we,  on  the  other  hand,  are  constantly  more 
dependent  upon  her  for  food  and  raw  material.  For  this  we  have  no  means  of  paying 
except  by  money  or  bonds, or  indirectly  by  our  credits  with  China,  Brazil  and  other  coun 
tries,  from  which  America  imports  tea,  sugar,  etc.  Our  colonies  all  follow  in  the  wake 
of  the  United  States,and  dotheir  best  to  stimulate  their  own  manufactures  by  closing 
their  markets  against  ours.'' 

The  signiflcent  statement  that  tlie  British  colonies  all  follow  in 
the  wake  of  the  United  States,  notwithstanding  the  fact  that  the 
United  States  makes  no  effort  to  induce  tliem  to  do  so,  while  the 
British  administration  and  Parliament  use  every  blandishment 
to  persuade  them  not  to  do  so,  goes  far  to  prove,  as  Bonaniy  Price 
says,  that  protection  is  an  ineradicable  instinct,  and  that,  as  Mr. 
Lester  F.  Ward  *  holds,  government  by  coercion  (and  perhaps  by 
tradition  also)  is  rapidly  giving  place,  throughout  the  world,  to 
"government  by  attraction."  The  American  Congress  may  well 
say  to  Great  Britain,  in  the  matter  of  her  colonies,  both  Americtm 
and  Australasian,  "We  care  not  who  a^jpoints  their  Governors- 
General,  so  long  as  we  inspire  their  tariffs." 

In  1879,  largely  under  the  leadership  of  Sir  John  A.  Macdonald, 
Canada  determined  to  protect  certain  of  her  manufactures,  includ- 
ing cottons  and  woolens.  We  have  referred  to  Prof.  Sidgwick's 
ingenious  argument  that,  on  purely  economic  grounds,  the  North- 
western States  (Michigan,  Indiana,  Illinois,  Iowa,  Wisconsin,  and 
Minnesota)  would  gain  by  the  more  rajDid  advance  in  raanufac- 

"  Dynamic  Sociology,"  by  Le-ter  F.  Ward,  2  vols. 


CASADA  GAJyS.  665 

tares  tliey  would  make  if  permitted  by  the  Constitution  to  protect 
certain  of  their  manufactures  against  the  overwhelming  comi^eti- 
tion  of  the  long-established  manufactures  in  New  England  and 
Pennsylvania.  Under  the  Constitution  of  the  United  States,  this 
is  a  problem  in  purely  speculative  economics,  as  the  "if"  in  the 
way  of  its  practical  realization  is  probably  insurmountable,  and 
certainly  so  without  changes  in  the  American  Constitution  which 
would  look  like  disintegration  and  are  never  likely  to  be  asked  for. 
Inasmuch,  however,  as  American  free  traders  by  profession  ask 
us  why,  if  a  tariff  is  good  to  protect  New  England  from  old  En- 
land,  would  not  a  tariff  be  equally  good  to  protect  the  Northwest 
from  New  England,  we  have,  therefore,  placed  side  by  side  the 
results  of  the  adoption  of  the  protective  polic^^  in  Canada,  with 
the  economic  results  of  that  inability  to  adopt  a  protective  policy 
as  against  New  England  and  Pennsylvania,  which  pertains  to  the 
Noi'thwest  as  a  section,  by  force  of  the  inhibition  contained  in  the 
Federal  Constitution.  We  do  this  because  we  do  not  desire  to 
blink  or  evade  any  issue  legitimately  collateral  to  the  i)rotection 
policy.  There  are  grounds  for  holding  with  Prof.  Sidgwick 
that  the  Northwest  would  for  a  period  make  an  economic  gain, 
through  the  more  rapid  advance  in  manufactures  which  would 
ensue,  if  the  Northwest  were  free  to  protect  their  manufactures 
of  cottons,  woolens,  paper,  iron,  and  steel  against  their  Eastern 
competition  by  some  means  more  effectual  than  mere  cost  of 
transportation. 

The  results  of  four  years  of  the  protective  policy  in  Canada,  as 
exhibited  in  a  recent  report  of  Mr.  William  T.  Patterson,  secre- 
tary of  the  Dominion  Board  of  Trade,  as  well  as  of  the  Board 
of  Trade  and  Corn  Exchange  of  Montreal,  are  to  increase  nearly 
threefold  every  department  of  the  cotton  manufacture,  as  appears 
from  the  following  summary  of  the  progress  made  between  1879 

and  1883  : 

Seven  mills  Twenty  mills 

in  1879.  in  1883. 

Total  capital  employed $2,100,000  $8,.'j00,000 

Aggregate  raw  material  used  per  anuum,  lbs 12,800,000  38,470,000 

Quantity  of  cloth  produced,  yards .38,000,000  11.5,000,000 

Approximate  value  of  annual  production $3,74.5,000  $10,400,000 

Spindles,  number 134,000  472,000 

Looms,  number  2,910  9,9.50 

Employees,  number .   2,205  10,200 

Amount  of  wages  paid  per  annum    $.550,000  $1,1 10,000 

Value  of  fuel  consuued $15,000  $215,000 

Value  of  chemicals $20,000  $125,000 

In  the  manufacture  of  woolens,  the  census  makes  the  following 


666  ECONOMIC  PHILOSOPHT. 

exhibit,  it  being  premised,  however,  that  many  of  the  woolen 
factories  are  of  the  very  smallest  kind,  and  that  the  number 
of  mills  will  be  likely  to  diminish,  leather  than  increase,  with  the 
future  expansion  in  the  volume  of  business  : 

Number.  Capital,    Employees.  Production. 

Carding  and  fulling  mUls 439  $580,417  901  $1,498,343 

Hosiery  manufactories 83  630.821        1,556  1,385.730 

Woolen  cloth  making 1,281  6,272,376       6,877  8,113,055 

The  lines  of  production  in  cotton  goods  are,  besides  the  115,- 
000,000  yards  of  cotton  cloths,  brown  sheetings  and  shirtings, 
bleached  and  fancy  shirtings,  apron  checks,  nuns'  stripes,  denims, 
ticks,  ducks,  cottonades,  crochet  and  knitting  cottons,  beam 
warps  for  woolen  mills,  8-4,  9-4,  and  10-4  brown  sheetings, 
drills,  bags,  wadding  and  batting,  cheviots,  canton  flannels,  shoe 
ducks  an°d  drills,  pocketings,  wigans,  etc.  In  woolens  they  are 
tweeds,  cassimeres,  etofPes,  flannels,  blankets,  serges,  beaver, 
presidents,  diagonal  and  nap  coatings,  shoe  cloth. 

Canada,  therefore,  has  in  four  years  built  up  a  woolen  manu- 
facturing industry  about  equal  to  that  of  New  Hampshire  or 
New  York  in  the  value  of  its  products,  and  exceeding  the  com- 
bined woolen  industries  of  Ohio,  Illinois,  Indiana,  Iowa,  Wis- 
consin, and  Michigan.  The  aggregate  product  of  the  woolen 
mills  of  the  latter  States  is  as  follows  : 

Ohio $1,084,323 

Indiana 8,728,347 

Illinois! 1-896,460 

Iowa 435,747 

Michigan 481,517 

Wisconsin 1.480,069 

Total $8,107,463 

Yet  the  population  of  these  six  States  aggregates  12,831,282, 
while  the  entire  population  of  the  Dominion  of  Canada  is  only 
4,000,000  persons,  or  less  than  a  third  of  these  six  States.  More- 
over, every  one  of  these  six  States  is  better  fitted  for  both  growing 
sheep  and  manufacturing  woolen  goods  than  is  any  part  of 
Canada,  and  has  a  larger  market  of  purchasers. 

Canada  has  bravely  imposed  upon  herself  the  protective  duties 
necessaiy  to  bring  about  this  degree  of  industrial  development. 
Yet  the  rise  in  Canadian  prices  of  woolen  and  cotton  goods  is  so 
slight  that  the  strolling  conventions  of  New  York  free  traders, 
sent  out  annually  to  hold  sessions  in  the  Western  States,  continue 
to  speak  of  Canada  as  the  country  of  cheapness  relatively  to  the 


I^^  SIX  YEARS.  667 

United  States,  In  fact,  liowever,  the  United  States  have  long 
since  reached  low  prices  in  both  cottons  and  woolens  through 
domestic  competition,  and  the  Canadians  are  content  to  expand 
their  prices  in  some  degree,  if  they  see  it  to  be  necessary,  to  build 
up  a  diversified  system  of  industry. 

In  1884  the  facts  above  stated  for  1883  were  extended  and 
amplified  in  the  report  of  the  commissioners  on  the  effects  of  the 
tariff  for  five  yeai-s.  The  following  is,  in  the  main,  their  sum- 
mary of  its  effect  on  the  development  of  manufactures  in  the 
provinces  of  Ontario,  Quebec,  New  Brunswick,  Prince  Edward 
Island,  and  Nova  Scotia  : 

1878.  1884.  Increase. 

No.  of  hands,        .       .                 42,794  77,346  34,552 

Yearly  wages,       .        .         $13,833,733  $24,396,165  $10,562,432 

Capital  invested,  .        .        $37,819,931  $67,293,373  $29,473,442 

Yearly  output,      .        .        |49,966,282  $102,870,166  $52,903,884 

Industries  visited,        .                  1,501  2,135  634 

The  increases  have  therefore  been  as  follows  : 

Per  cent. 

Number  of  hands  increased, 80.74 

Yearly  wages  increased 76.35 

Capital  invested  increased, 77.96 

Yearly  output  increased, 105.90 

The  industries  embraced  are  the  foundry  business,  the  furni- 
ture, machinery,  implements,  iron,  tobacco  and  cigars,  knitting, 
leather,  brushes  and  bi'ooms,  woolen,  wooden,  confectionery, 
boots  and  shoes,  metals  and  tinware,  paper,  musical  instruments, 
clothing,  general  industries,  and  cotton  factories.  The  Canadian 
mode  of  gathering  statistics  shows  both  the  increase  in  the 
capital,  and  the  number  of  hands  employed  in  the  establishments 
existing  in  1878,  and  the  number  of  new  factories.  The  increase 
in  number  of  establishments  and  hands  employed  is  from  50  to 
100  per  cent,  in  six  years  in  nearly  all  the  industries.  In  cotton 
factories  it  is  greater,  thus  : 

Factories.  Hands.    Wages.  Product.  Capital. 

Factories,  1878,        ...          4  1,301      $276,000  $1,151,000  $1,800,000 

Same  factories,  1884,      .        .          4  2,120       445,000  1,8V2,000  3,350,000 

New  factories.  1884,        .        .        13  2.375        502,500  2 .530,000  3,448,000 

Increase  of  1884  over  1878,    .        13  3,140       671,500  3,251,000  4,998.000 

The  number  furnishing  statistics  is  seventeen,  four  of  which 
were  in  existence  prior  to  1879,  and  thirteen  have  been  estab- 
lished since.  The  increase  in  the  number  of  hands  iu  tliis  class 
has  reached  210  per  cent.  The  wages  avei'aged  |203.79  in  1878, 
and  1210.28  iu  1884. 


668  ECO^'OMIC  PHILOSOPHY. 

The  total  increase  distinguishing  the   old   factories   from  the 

new,  in  all  industries,  sums  up  thus  : 

Factories.  Hands.       Wages.  Pi-oduct.  Capital. 

Factories,  1878.     .        .        467       27,809  $8,174  900  $;«,]31,]no  $26,160,500 

Same  factories,  1884,     .        467       42,080  12,870.900  53,,5.54,500  36,617,400 

New  factories,  1884,      .        258       13,453       4,040,900  23,712,600  11,777,700 

Increase  of  1884  over  1878,    258       27,664       8.737,000  43,136,000  22,261,600 

The  Canadians  claim  to  manufactm'e  saws  and  some  edge- 
tools  for  export  to  the  United  States,  Tliey  are  doubtless  not 
wholly  insensible  to  the  fact  that  the  reason  why  they  are  per- 
mitted to  enact  protective  tariffs  against  England,  while  Ireland 
and  India  are  not,  is  that,  while  theoretically  they  are  under  the 
paw  of  the  British  lion,  potentially  and  influentially  they  are 
under  the  wing  of  the  American  eagle.  Their  particular  freedom 
to  enact  protective  tariffs,  they  owe  much  more  to  the  potency  of 
their  geographical  environment,  than  to  the  recommendations  of 
their  British  cousins. 

225.  The  Sheep  and  Wool.— The  sheep  is  pictured  as  a 
source  of  wealth,  closely  connected  with  man's  welfare,  on  the 
monuments  of  Egypt,  is  mentioned  in  the  Vedas  of  India,  in  the 
Chinese  Chou-King,  the  Persian  Zend  Avesta,  and  appears  as  an 
article  of  religious  sacrifice  in  the  fourth  chapter  of  Genesis. 
Everywhere,  therefore,  he  accompanies  man  on  his  entry  into  the 
historic  period,  and  certain  writers,*  attempting  to  probe  the  mists 
of  antiquity,  perhaps,  by  the  help  of  imagination,  discern  the  first 
recorded  social  contest,  in  the  preference  of  one  class  for  the  pas- 
toral life,  and  of  another  class  for  tilling  the  soil.  The  triumph 
of  the  farmer  over  the  shepherd  is,  they  think,  typified  in  the 
murder  of  Abel  by  Cain.  If  this  fancy  be  true,  the  history 
most  familiar  to  the  western  world  opens  with  an  economic  con- 
test between  the  two  classes  of  workers. 

It  is  believed  that  the  merino  sheep  of  Spain  is  descended  from 
the  Tarentine  sheep  of  the  Romans,  which  were  known  to  the 
Romans  as  "  Greek  sheep,"  being  remarkable  for  the  silky  fine- 
ness of  their  fleece.  The  Greeks  and  Romans  owed  much  of  their 
material  wealth  to  their  wool  industry.  One  patrician  be- 
queathed by  will  200,000  sheep  to  Augustus.  The  farming  of  the 
Roman  Empire  was  largely  of  the  kind  now  known  as  "  bonanza 
farming,"  or  "great  ranch"  grazing.f  Wool  depends  for  its 
value  much  upon  the  progress  made  in  the  other  arts,  and  espe- 

*  Goldziher  "  Mythology  of  the  Hebrews. " 

t  "  The  Fleece  and  the  Loom,"  an  address  by  John  L.  Hayes. 


WOOL  Ayn  WOOLEXS.  069 

cially  in  scouring,  and  dyeing,  in  spinning  and  weaving,  in 
navigation,  loom  construction,  and  ultimately  in  the  ix*on  and 
steel  manufacture.  The  Roman  purple  was  a  woolen  cloth, 
worth  four  dollars  per  pound  before  dj^eing,  and  one  hundred  and 
sixty  dollars  per  pound  when  colored  with  the  Tyrian  dye.* 
This  dye  has  for  many  centuries  been  numbered  among  the  lost 
arts,  but  in  1856  a  new  dye  of  perhaps  nearly  equal  value  was 
made  from  coal  tar. 

The  woolen  manufacture  preceded  banking,  as  the  basis  of  the 
modern  revival  of  industry  and  the  consequent  revival  of  art',  in 
the  twelfth  and  the  thirteenth  centuries,  in  Florence,  Venice,  Pisa, 
and  Genoa.  Then  the  woolen  manufacture  passed  to  the  Nethei'- 
lands,  and  from  thence  under  Charles  Y.  to  Spain,  France,  and 
England. 

In  the  time  of  Nero,  accordnig  to  Pliny,  Babylonian  couches 
woven  of  wool  I'ose  to  a  value  of  four  million  sesterces,  or  $640,- 
000.  The  name  of  Spinner  on  our  treasuiy  notes,  and  of  our  great 
orator,  Webster,  indicate  a  descent  from  an  ancestry  of  spinners 
and  weavers.  The  American  Wool  Growers'  Association  is  pre- 
sided over  by  a  president  whose  name,  De  Lano,  indicates  that 
his  Fi*ench  ancestors  were  also  wool-raisers. 

Edward  III.,  in  the  latter  part  of  the  fourteenth  century,  began 
the  S3"stematic  encouragement  of  the  wool  industry  by  the  En- 
glish government.  Prior  to  that  time  the  English  produced 
wool  chiefly  to  sell  to  the  Netherlands,  making  up  only  the  com- 
monest and  coarsest  of  their  own  cloths.f  One  parliament  was 
summoned  expressly  to  encourage  the  wool  pi'oduct  and  manu- 
facture of  woolens.  It  prohibited  the  importation  of  cloth  and 
the  export  of  rams,  and  forbade  the  weai'ing  of  foreign  cloth.  Soon 
the  prohibitions  wei-e  changed  to  duties.  So  effective  was  the 
policy  that,  while  at  the  beginning  of  his  reign  more  than  half 
the  cloth  worn  in  England  was  imported,  in  his  twenty-eighth 
year  the  expoi'ts  of  cloth  were  three-fold  the  imports. 

During  the  next  five  centuries  three  hundred  and  eleven  stat- 
utes were  enacted  for  the  protection  of  the  woolen  manufacture. 

*  "The  Fleece  and  the  Loom,"  by  .lolm  L.  Hayes. 

t  The  author  of  the  "  Golden  Fleece  "  gays  of  Edward  III.  :  "  He  paw  that  the  sub- 
jects of  the  Duke  of  Burgundy,  rcc(-Mving  the  Englieli  wool  at  ei.xpence  a  pound,  re- 
turned it  through  the  manufacture  of  that  induKtrious  people  in  cloths  at  ten  shillings, 
to  the  great  enriching  of  that  Ptate,  bolli  in  revenue  to  their  sovereign  and  employment 
to  their  subjects.  He  at  once  propcjsed  how  to  enrich  his  people,  and  to  peoj)le  Ills  new 
conquered  dominions;  and  both  these  be  dei^igncd  to  efiEect  by  means  of  his  English 
commodity.,,  wool." 


6V0  EcoyoMic  pniLosopiir. 

The  export  of  wool,  after  being  several  times  susijeuded,  was 
definitely  prohibited  in  16(i0,  and  so  continued  until  1825.*  The 
exportation  of  fuller's  earth,  and  of  sheep,  Avere  forbidden  under 
severe  penalties.  Sheep-shearing  within  five  miles  of  the  sea  was 
forbidden,  except  in  presence  of  a  revenue  officer  to  prevent  the 
export  of  the  wool.  To  prevent  a  monopoly  of  the  profits  of 
wool  production,  the  number  of  sheep  to  be  kept  by  one  person 
was  limited  to  2,000.  All  burial  shrouds  were  required  to  be  of 
woolen,  as  well  as  all  black  cloth  worn  at  funerals.  But  the  ex- 
port of  woolen  clotbs  was  at  length  permitted  free.f 

Ireland,  and  the  English  plantations  in  America,  were  forbid- 
den to  export  woolen  cloths.]:  At  first  the  wearing  of  Indian 
calicoes  was  forbidden,  and  when  the  cotton  manufacture  in 
England  was  getting  well  under  way,  British  calicoes  were  still 
restricted  to  those  of  a  blue  color,  lest  they  might  interfere  with 
the  Avoolen  manufacture.  The  East  India  Company  would  ex- 
port none  but  British  cloth,  from  its  foundation  to  1828.  Portu- 
gal, which,  until  1703,  had  supplied  both  her  own  people  and 
Brazil  with  woolen  goods,  was  cunningly  induced  by  certain 
favors  given  to  Portuguese  wines  by  England  to  admit  English 
woolen  goods  free.  This  ended  the  Portugese  wool  and  woolen 
industry,  and  reduced  Brazil  to  that  industrial  subserviency  to 
England  which  is  imperfectly  offset  by  her  affinities  in  race, 
religion,  and  language  to  Portugal. 

For  four  years  only,  from  1819  to  1823,  were  the  English  wool- 
growers  able  to  secure  a  duty  on  foreign  wool  of  sixpence  per 
pound. 

Wool  was  styled  ' '  the  flower  and  strength,  the  revenue  and 
blood,"  of  England.  The  lord  chancellor  of  England  presided 
over  the  House  of  Lords  on  a  wool -sack,  which  gave  its  name  to 
his  office,  as  an  emblem  of  the  close  association  existing  between 
the  kingdom  and  its  leading  industry.  § 

Lord  Bacon,  addressing  the  ministers  of  his  sovereign,  said  : 
"  Let  us  advance  the  native  commodities  of  our  own  kingdom, 
and  employ  our  own  countrymen  before  strangers.     Let  us  turn 

*  "  The  Fleece  and  the  Loom,"  by  John  L.  Hayes,  p.  13. 

t  let  William  and  Mary.  %  10  and  11  William  III. 

§Theantiquitieof  wool  within  thiskingdom  hathbfen,  beyond  thememorieof  man,  so 
highly  respected, for  those  many  benefits  therein,  that  a  customable  use  has  always  been 
observed  to  make  it  the  seat  of  our  wise  learned  judges,  in  the  sight  of  our  noble  peers 
(in  the  Parliament  House),  to  imprint  thememorie  of  this  worthy  commoditie  within  the, 
minds  of  those  firm  supporters  and  chief  rulers  of  the  land."— John  May,  1C13. 


WOOL  REQUIRES  TIME.  OVl 

the  wools  of  the  land  into  cloths  and  stuffs  of  our  own  gi-owth. 
It  would  set  many  thousands  to  work  ;  and  thereby  one  of  the 
materials  would,  by  industry,  be  multiplied  to  five,  ten,  and, 
many  times,  to  twenty -five  times  more  in  value,  being  wrouglit." 
A  statute  of  William  III.  declares  the  woolen  goods,  naming 
their  kinds,  to  be  "  the  greatest  and  most  profitable  commodities 
of  the  kingdom." 

In  short,  England,  in  like  circumstances  and  with  a  like  popu- 
lation, was  saying  then  exactly  what  Canada  and  Australia  are 
saying  to-day,  that  the  ability  to  make  its  own  woolen  clothing 
lies  at  the  basis  of  a  nation's  industrial  indeiDendence. 

226.  Wool  a  Finished  Product. — It  is  the  custom  of  manu- 
facturers of  woolen  cloths  to  speak  of  wool  as  a  raw  material,  be- 
cause it  is  the  raw  material  of  their  particular  industry,  and  each 
industry,  provided  it  confines  the  meaning  of  the  term  to  its  own 
uses,  may  properly  speak  of  tliat  which  it  buys  for  re-manufac- 
ture into  some  other  product  as  its  "  raw  material,"  and  of  that 
which  it  produces  for  sale  as  its  "  finished  jjroduct  "  But  tliis  use 
of  terms  becomes  delusive  and  misleading  when  it  is  applied  to 
the  industries  of  an  entire  nation,  for  therein  whatever  is  the  raw 
material  of  one  industry  must  have  been  the  finished  product  of 
some  other. 

In  fact  it  is  a  slower  and  longer  process,  to  evolve  wool  of  a 
particular  grade,  than  to  convert  the  wool  when  produced  into  a 
garment.  At  a  fair  in  Georgia,  wool  which  was  worn  by  a  sheep 
at  sunrise  as  his  natural  coat,  was  worn  by  the  governor  of  the 
State  at  a  ball  on  the  same  evening — having  undergone  in  so 
brief  a  time  all  the  intermediate  processes  of  washing,  shearing, 
scouring,  dyeing,  drying,  spinning,  weaving,  measuring,  cutting, 
lining,  basting,  sewing,  fitting,  and  ironing.  But  the  process 
of  developing  the  sheep  by  climate,  food,  care,  and  breeding, 
into  a  particular  variety,  is  one  of  years  or  even  centuries. 

The  species  is  more  susceptiljle  of  modification  than  any  other 
animal  except  the  dog,  and  as  wool  is  cajDable  of  being  transported 
to  great  distances  without  injui*y  to  its  value,  all  the  world  may 
be  said  to  compete  in  its  production.  Hence,  the  prime  requisite 
of  developing  it  is  steadiness  of  policy  over  long  periods  of  time. 
Subject  to  this  condition,  it  has  been  said:  "  the  breeder  may 
chalk  out  on  a  wall  a  form  perfect  in  itself,  and  then  give  it  ex- 
istence."*    Hence,  as  Dr.  Hayes  remarks,  "that  distinctness  and 

•  Lord  Somerville,  quoted  in  Bischoff  on  "  Wool,  Woolens,  and  Sheep,"  London, 
1842,  p.  380. 


672  ECONOMW  PIITLOSOPnY. 

variety  of  fabric  which  characterize  the  wool  manufacture;  and 
thus  we  liave  the  coarse  Cordova  and  Donskoi  wools  for  our 
carpets;  the  noble  electoral  wools  of  Saxony  and  Silesia  for  our 
broadcloths;  the  strong  middle  wools  of  the  Southdown  and 
our  native  sheep  for  blankets ;  the  soft,  long,  and  finer  merino 
wools  of  France,  Vermont,  and  Michigan  for  thibets,  delaines, 
and  shawls;  the  longer  and  coarser  combing  wools  of  the  Cots- 
wold  and  Leicester  races  for  worsteds  in  their  thousand  applica- 
tions; the  very  long  and  bright-haired  lustre  wools  of  Lincohi- 
shire  for  alpaca  fabrics;  and,  lastly,  the  precious  silky  Mauchamp 
wool,  the  recent  triumph  of  French  agronomic  skill,  rivalling 
even  the  cashmere  for  shawls  and  the  angora  for  Utrecht 
velvets." 

Wool  is  lighter  in  its  actual  specific  gravity  than  cotton,  linen, 
or  silk,*  is  the  best  non-conductor  of  heat,  and  is  the  most  inde- 
structible and  durable  of  all  the  fibres.  Its  value  as  w^ool  outlasts 
every  garment  in  which  it  enters,  and  in  the  form  of  shoddy 
forms  a  valuable  ingredient  in  the  manufacture  of  new  and  often 
of  very  fine  cloth.  Very  much  of  the  economy  of  the  English 
wool  manufacture,  for  40  years  past,  has  consisted  in  its  more  ex- 
tensive utilization  of  shoddy .f 

Tlie  fibre  of  wool  is  not  like  that  of  silk,  hemp,  flax,  and  cot- 
ton, a  straight  and  structureless  homogeneity,  but  is  "crisped 
or  spirally  curled,  and  is  made  up  of  cells  of  different  kinds,  the 
interior  forming  the  pith,  and  the  exterior  consisting  of  serrated 
rings  imbricated  over  each  other,  having  under  the  microscope 
the  appearance  of  a  series  of  thimbles  with  uneven  edges  inserted 
into  each  other,  these  serratures,  as  well  as  the  spiral  curls,  being 
more  or  less  distinct,  according  to  the  fineness  of  the  fibre."  X 
This  is  the  reason  why  wool  alone  of  all  the  fibres  can  be  made 
into  felt,  as  in  hats  and  broadcloths.  Wool  also  receives  and 
holds  dyes  persistently,  and  hence  gives  rise  to  garments  which 
W' ill  Avash  without  change  of  color. 

227.  Rate  of  Consumption  of  Wool.— About  a  pound  and 
a  quarter  of  wool  are  produced  for  each  inhabitant  of  the  globe; 
but  in  the  richer  countries,  as  France,  England,  and  tlie  United 
States,  the  consumption  of  wool  reaches  from  four  to  seven  pounds 
for  each  person  per  annum.  It  may  be  said  that  a  nation  which 
feeds  as  many  sheep  as  it  contains  of  human  beings,  will  not  need 


•  Hayes'  "Fleece and  Loom,"  p.  5.  t  Chambers'  Encyclop.  Art.  "  Wool." 

X  Hayes'  "  Fleece  and  Loom,"  p.  5. 


WOOL  CONSUMPTIOX.  073 

to  import  wool  for  its  own  consumption.  The  United  States,  witli 
58,000,000  people  and  45,000,000  sheep,  imports  about  as  much 
wool  as  from  3,000,000  to  13.000,000  more  sheep  would  produce. 
Austro-Hungary,  with  38,000,000  people  and  14,000,000  sheep, 
needs  more  wool.  France,  Avith  22,000,000  sheep,  is  moi-e  depen- 
dent on  imports  for  wool,  and  on  exports  for  its  markets  of  cloths. 
Yet  the  home  consumers  constitute,  in  the  main,  its  market. 

England  in  1855,  out  of  a  total  supply  by  production  and  im- 
portation of  250,000,000  pounds,  retained  for  use  in  hermanufac- 
tui'es  81|  per  cent.,  and  exported  as  wool  18i  percent.,  leav- 
ing her  somewhat  more  than  six  pounds  per  capita  to  supply 
both  her  manufacture  for  home  use,  and  her  iexport  of  cloths  and 
clothing.  The  subsequent  ratio  of  supply  to  consumption  has 
been  as  follows,  in  millions  of  pounds :  * 

1869.  1880.  1883. 

Total  Supply  466i^  720^  7.32 

Exported 129  254J^  2061^ 

Retained  in  Great  Britain  387H  475  4351^ 

Per  cent,  retained 72]4  65  59i^ 

Per  cent,  exported 37?^  35  40}4 

Meanwhile  the  growth  of  the  export  of  woolen  goods  in  quan- 
tity represents  a  considerable  decline  in  value,  and  hence  a  cor- 
responding decline  in  the  power  to  support  labor.  Between  1880 
and  1885  the  value  of  the  woolen  exports  of  Great  Britain  de- 
clined from  £129,000,000  to  £85,000,000,  and  the  number  of  per- 
sons employed  in  the  manufacture  has  within  20  years  declined 
by  5,000  persons.  The  consumption  of  wool  in  America  now  in- 
cludes a  domestic  production  of  370,000,000  pounds,  and  an  im- 
portation of  about  90,000,000  pounds,  all  of  which  is  consumed 
in  the  manufacture  of  woolen  goods  for  the  wear  of  the  Ameri- 
can people  without  export.  It  seems  that  the  consumption  of  wool, 
in  actual  wear  in  America,  rises  to  about  Q^  pounds  per  capita,  or 
very  exactly  the  same  as  the  like  consumption  in  the  United 
Kingdom. 

228.  The  Protection  of  Wool  and  Woolens  in  Europe. 
— In  France  the  evolution  of  the  woolen  industry  was  closely  re- 
sultant from  and  dependent  on  the  action  of  the  government. 
Colbert,  the  minister  of  Louis  XIV.,  made  attractive  offers  to 
foreign  artisans,  distributed  50,000  livres  in  encouraging  the  wool 
industry,  and  attracted  "Van  Robais  from  Holland,  by  a  patent  is- 
sued to  him  for  manufacturing  fine  cloths,  after  the  fashion  of 

•  J.  L.  Bowes  &  Bros.'  Annual  Wool  Tables.  1883. 


074  ECONOMIC  miLOSOPHY. 

Spain  and  Holland.  Thiers  attributes  the  credit  of  uitroducing  the 
manufacture  of  cloths  into  France  to  Colbert.  He  imposed 
heavy  duties  on  the  importation  of  foreign  cloths,  modified  the 
wool  of  the  French  flocks  by  imported  breeds,  and  is  regarded  by 
Carey  as  the  father  and  founder  of  the  Protectionist  School  of 
Statesmen.  Under  Louis  XVI.  merino  sheep  were  extensively 
introduced  into  France.  Once,  in  1786,  France  was  weak  enough 
to  enter  into  a  treaty  with  England,  whereby  in  exchange  for 
certain  expected  favors  in  the  admission  of  fine  and  high-priced 
French  cloths  in  England,  English  low-priced  goods  were  ad- 
mitted at  low  duties  into  France.  As  the  finer  and  more  improved 
branches  of  any  industi-y  must  always  be  the  outgrowth  of  the 
previous  success  of  the  coarser  and  cheaper  grades,  a  fatal  blow 
was  struck  by  this  treaty  at  the  entire  woolen  industr}^  of  France, 
from  which  the  country  had  not  recovered  at  the  outbi*eak  of  the 
French  Revolution  of  1793. 

Napoleon  was  as  vigorous  a  j)rotectionist  toward  wool  as  to- 
ward beet  sugar.  "Spain,"  he  said,  "has  twenty-five  millions 
of  merinoes.  I  want  France  to  have  a  hundred  millions ."  *  He 
established  sixty  additional  sheep-folds  for  blending  French  with 
Spanish  breeds.  One  of  his  chief  military  designs  was  to  shut 
English  manufactures  out  of  Europe  by  a  reciprocal  blockade. 
Visiting  the  calico-printing  works  of  Oberhampf,  he  said,  "  We 
both  have  a  war  with  England,  but  I  believe  the  noblest  is 
yours."  Indeed,  protection  has  been  thought  a  chief  cause  of 
Napoleon's  success  and  popularity  in  France,  as  well  as  a  leading 
element  in  his  usefulness. 

The  Jacquard  loom  was  the  product  of  this  inventive  period. 
Dyeing  was  brought  to  high  perfection.  Great  manufacturing 
towns  arose  out  of  the  profits  of  newly  born  industries.  By  1851 
a  million  and  a  quarter  persons  were  employed  in  the  woolen 
manufacture  in  France,  Germany,  Austria,  Russia,  Spain,  Switz- 
erland, and  Sweden,  all  strenuously  seeking  to  nurture  their 
flocks  and  spindles,  by  protective  duties,  against  undue  foreign 
competition. 

Had  the  continental  nations,  at  the  close  of  the  wars  of  France 
with  the  allied  powers  in  1815,  given  England  free  trade  in 
woolen  goods,  she  could  have  spun  and  woven,  temporarily  at  a 
lower  price  than  any  of  them,  every  pound  of  cloth  needed  on 
the  continent.      This  temporary  ability  would  have  concentrated 


♦  Berneville,  p.  J33.    Hayes'  "  Fleece  and  Loom,"  27. 


MANY  FORMS  OF  PROTECTION.  6 75 

the  woolen  manufacture,  foi*  all  these  countries,  in  England  and 
would  have  depi'ived  them  of  their  own.  Ireland,  Portugal,  Tur- 
key, India,  and  to  some  extent  China  and  Japan,  were  con- 
quered, dragooned  or  purchased  to  adopt  tliis  policy.  France, 
Spain,  Austria,  Russia,  Switzei*laud,  and  Sweden  owe  their 
woolen  manufactures  to  their  adherence  to  the  protective  policy. 
Nor  is  there  any  doubt  whatever,  in  the  mind  of  any  statesman, 
that  the  ultimate  effects  of  this  dispersion  of  industries  among 
nations  secures  a  more  abundant  supply  to  the  people  of  each,  at 
a  far  lower  labor  cost,  than  if  the  policy  of  immediate  cheapness 
had  been  pursued.  Cheapness  in  obtaining  for  a  while  a  supply 
of  a  particvilar  kind  of  goods  is  of  very  little  value,  when  com- 
pared with  cheapness  in  the  processes  whereby  such  goods  are 
produced.  The  former  is  a  transient  good.  The  latter  is  a  per- 
manent good.  The  pi'ocesses  whereby  products  are  caused  to  be, 
can  only  be  made  cheap  by  multiplying  the  cii-cumstances  under 
which  they  are  produced,  and  the  varietj^  and  number  of  the 
agencies  employed  to  produce  them.  This  is  done,  by  the  nations 
generally,  when  each  protects  its  own  industries. 

Whetlier  such  jirotection  is  effected  by  laying  out  roads,  so  as 
to  aid  its  producers  in  marketing  their  crops  as  cheaply  as  their 
comijetitors  in  other  lands ;  or  in  educating  its  people  so  as  to  de- 
velop their  capacity  for  skilled  industry,  in  a  degree  equal  or 
superior  to  that  of  other  countries  ;  or  in  granting  to  inventors 
of  new  machines,  authors  of  new  books,  and  discoverers  of 
new  substances,  processes,  or  compounds,  the  exclusive  profits  of 
their  inventions  for  a  term  of  years  ;  or  whether  it  seeks,  by  im- 
XDort  duties,  to  protect  its  industries,  by  securing  to  those  who  invest 
capital  and  labor  in  conducting  them,  at  a  period  when  the  profits 
are  rendered  hazardous  by  foreign  competition,  a  better  hold  on 
the  home  market  than  is  given  to  the  importer;  or  whether  it 
maintains  armies  and  colonies  in  various  parts  of  the  earth,  and 
subsidizes  the  lines  of  steamers  which  communicate  with  them,  so 
as  to  secure  to  the  coercing  nation  the  lion's  share  of  the  trade  of 
these  colonies,  or  of  the  nations  of  overawed  and  browbeaten  bar- 
barians among  whom  such  armies  and  stations  are  established — 
all  these  are  mere  modifications  of  the  form  of  protection,  and  all 
have  but  one  end  in  view,  viz.,  to  adapt  the  mode  of  protection 
to  the  intei'ests  of  the  people  of  the  dominant  class,  occupation,  or 
country,  never  to  those  of  the  subservient  country,  class,  or  occu- 
pation. 

It  is  in  this  broad  seiise  that  the  policy  of  protection,  to  the 


676  ECONOMIC  PHILOSOPHY. 

home  industries  of  the  class,  occutmtion,  and  country  which  leg- 
islates, may  be  said  to  be  the  intended  policy  of  all  nations,  and 
especially  of  Great  Britain.  The  withdrawal  of  protection  from 
farmers,  so  far  from  being  an  exception  to  this  rule,  illustrates 
it.  The  farmers  had  ceased  to  be,  even  proximately,  the  domi- 
nant class  ;  the  manufacturers  thought  it  to  be  for  their  protec- 
tion to  take  the  duties  off  bread-stuffs,  and  as  they  outnumbered 
the  farmers,  their  form  of  supposed  and  intended  protection 
won. 

229.  Wool  Culture  in  America. — The  colonial  period  wit- 
nessed the  colonial  legislatures  uniformly  trying  to  develop  wool 
growing  and  woolen  manufacturing,  while  the  British  parliament 
was  trying  to  repress  at  least  the  manufacture.  Massachusetts 
bountied  the  killing  of  wolves,  and  Delaware  and  Virginia  pro- 
hibited the  exportation  of  sheep  and  of  raw  wool.  The  first  gen- 
eral congress  of  deputies,  meeting  at  Annapolis,  in  1774,  as  well 
as  the  provincial  congress  of  Massachusetts  of  the  same  year,  the 
convention  of  Virginia,  and  the  assembly  of  Pennsylvania,  all 
adopted  protective  measures  toward  wool  growing,  and  looking 
to  its  manufacture. 

In  1800  the  first  merino  stock  was  introduced,  and  a  mill  was 
erected  for  manufacturing  "fine  wool."  In  the  restrictions  on 
trade  incident  to  the  Napoleonic  wars,  in  1809,  fine  nierino  wool 
rose  to  $2  per  pound,  full-blood  Spanish  merinoes  x'ose  to  $1,500 
in  special  instajices.  Even  as  late  as  1820,  twenty-five  merino 
sheep  brought  $5,900  in  Philadelphia.  Still,  until  1824,  no  duty 
was  imposed  on  the  importation  of  raw  wool.  That  act  imposed  a 
duty  for  the  first  year  of  20  per  cent.,  for  the  second  of  25,  and, 
after  1826,  of  30  per  cent,  on  all  wool  whose  invoice  price  abroad 
exceeded  ten  cents,  and  on  such  15  per  cent.  Mr.  Thomas  H. 
Benton  tried  to  make  it  a  progressive  duty,  increasing  at  10  per 
cent,  per  annum  until  it  amounted  to  5.0  per  cent. ,  and  then  at 
5  per  cent,  until  it  reached  70  per  cent.  Though  the  compromise 
act  of  1833,  and  the  acts  of  1846  and  1857,  reduced  the  protective 
efficacy  of  the  duties  on  wool,  its  importation  has  never  been  free 
since  1824. 

In  1810  the  first  wool  had  been  exported  from  Australia,  and  in 
1820  the  export  had  risen  to  only  99,000  lbs.  By  1830  it  had 
reached  1,000,000  lbs,  and  the  export  from  South  America  in- 
formed our  fathei'S  of  that  day  that  for  us  free  wool  would  mean 
but  little  wool,  and  that  of  poor  quality  aiad  deai*. 


FRUITS  OF  PROTECTIOI{  TO  WOOL. 


677 


A  high  price  for  wool  can  only  be  maintained  in  conjunction 
with  a  large  woolen  manufacture,  and  a  large  woolen  manufacture 
requires  both  cheap  power  and  cheap  looms.  As  both  ciieap 
power  and  cheap  looms  depend  largely  on  cheap  iron  and  steel, 
the  evolution  of  the  woolen  industry  in  the  United  States  fol- 
lowed close  on  the  heels  of  the  growth  of  the  iron  and  steel  in- 
dustry. 

The  following  (in  millions)  shows  the  increase  in  number  of 
sheep  and  pounds  of  wool  since  1850  : 


Census  Years 
1850.     . 
1860.     . 
1870.     . 
1880.     . 


No.  of  Sheep.     Pounds  of  Wool. 


28i 
43i 


52i 

100 
2351 


From  1867  to  1883  the  duties  on  wools  and  woolen  goods  were, 
in  the  main,  such  as  had  been  suggested  and  approved  by  the 
combined  associations  of  wool  growei's  and  woolen  manufacturers 
of  the  United  States.  The  essential  principles  involved  in  this 
tariff  were  that  it  is  more  important  that,  as  a  whole,  the  tariff 
should  be  effectually  protective  than  that  its  schedule  should  be 
simple  in  its  construction  ;  that  cheap  wool,  as  a  I'aw  material 
for  manufacture,  could  most  surely  be  had  by  maintaining  an 
active  home  production  of  wool  ;  that  America  is  sufficiently 
diversified  in  soil  and  climate  to  produce  all  varieties  of  wool 
needed  by  our  manufacturers  ;  and  that  the  interests  of  wool  pro- 
ducers, woolen  manufacturers,  and  the  American  consumers  of 
woolen  goods,  are  identical  when  periods  of  moderate  duration 
are  considered.  Each  of  these  positions  has  been  contested  by  the 
advocates  of  the  free-trade  theory. 

The  relative  abundance  of  our  total  supply  of  woollen  goods  in 
1860  and  in  1880  appears  as  follows  : 


Year. 

Population. 

Foreign 
Supply. 

Domestic 

Supply. 

Total  Supply 

Supply  per 
Head. 

1860 
1880 

31,443.790 
50,500,000 

$.37,876,945 
33,023,887 

$61,895,217 
2:^7,587,671 

$99,772,162 
271,211,.558 

$3.17 
5.37 

(378 


ECONOMIC  PHILOSOPIir. 


Mr.  Bigelow  states  the  increase  more  specifically  as  follows : 


Items. 

1850. 

1860 

1868. 

Pounds. 

Pounds. 

Pounds. 

Pounds  of  wool  grown     .     . 

52,516,959 

60.511,343 

177,000,000 

Value. 

Value. 

Value. 

Value  of  wool  imported 

$1,618,691 

$4,842,153 

$3,915,263 

Value    of    wool   manufactures 

imported 

17,151,509 

37,937,190 

32,400,759 

Value  of  domestic  wool  manu- 

factures .... 

45,281,764 

68,865,963* 

175,000,000 

Mr.  John  L.  Hayes  computes  the  rate  of  consumption  per  cap- 
ita at  $4.31  in  1860,  and  $6.52  in  1880. 

What  are  the  effects  of  existing  duties  on  wool  upon  the  Amer- 
ican price  ?  The  duties,  since  1866,  have  been  from  ten  to  twelve 
cents  per  pound  on  combing  and  clothing  wools,  and  from  two 
and  a  half  to  five  cents  per  pound  on  coarse  carpet  wools.  The 
latter  is  generally  regarded  as  a  duty  for  revenue  only,  as  we  do 
not  produce  the  article.  The  former  would  raise  the  price  by  the 
amount  of  the  duty,  if  our  country  were  producing  very  little 
wool  relatively  to  the  quantity  required — say  a  fourth,  half,  or 
even  two-thirds  of  the  competing  grades.  But,  in  fact,  we  pro- 
duce nine-tenths  of  the  competing  qualities,  and,  if  we  produced 
the  other  tenth,  our  total  production  would  make  the  price  as  low 
here  as  abroad,  even  if  the  duty  were  ten  dollars  a  pound,  or  pro- 
hibitory. A  duty  on  the  importation  of  an  article,  which  a  coun- 
try can  have  no  need  to  import,  because  it  produces  as  much  as 
it  desires  to  consume,  can  have  no  effect  whatever  on  its  price. 
The  following  diagram  shows  the  ratio  in  weight  of  our  home 
production  of  wool,  of  all  kinds,  to  our  importation.  The  greater 
part  of  the  importation,  as  here  indicated,  is  coarse  carpet  wools 
of  a  quality  inferior  to  any  we  have  yet  sought  to  produce. 

Wools  are  of  so  many  grades  that  their  prices  will  range  all  the 
way  from  ten  to  fifty  cents  in  the  same  market.  Hence  the  com- 
parison of  prices  between  different  markets,  or  between  two  coun- 
tries, is  difficult,  and  can  be  made  only  by  experts.  Mr.  John  L. 
Hayes,  in  a  defense  of  a  reduction  of  the  duty,  in  1883,  states  that 
the  combing  and  clothing  (fine)  wools  imported  in  1880  were  26,- 
785,171  pounds.  Tlie  customs  returns  show  that  these  were  in- 
voiced at  an   average  price  of  twenty-three  cents   per  pound. 


*  Bulletin  National  Association  Wool  Manufacturers,  vol.  xvi,  No.  1,  p  80. 


FOREiaN  AND  DOMESTIC. 


679 


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PROPORTION   OF   WOOL   PRODUCED   TO   THAT   IMPORTED. 

Prices  of  wool  were  five  cents  lower  in  1883  than  in  1880.  Yet 
the  British  Board  of  Trade  returns  show  that  the  total  import  of 
wool  of  all  grades  and  kinds,  from  Australia  into  England,  in  1883, 
was  valued  at  £17,066,476  for  326,517,520  pounds,  or  more  than 
twenty-live  cents  a  pound.  Wool  being  five  cents  higher  in  1880 
than  in  1883,  as  shown  by  the  accompanying  chart,  it  would  fol- 
low that  the  average  on  all  grades  of  Australian  wool  in  England, 
in  1880,  must  have  been  thirty  cents,  or  seven  cents  per  pound 
higher  than  combing  and  clothing  wools  were  invoiced  at,  to  bring 
them  to  the  United  States.  Allowing  another  five  cents  for  the 
difference  in  price  between  the  average  of  all  grades  and  the  fine, 
it  would  follow  that  the  combing  and  clothing  wools  brought 
into  New  York  at  twenty-three  cents,  in  1880,  should  have  had  a 
foreign  price  of  thirty-five  cents,  or  twelve  cents  higher  than  the 
invoice.  This  would  indicate  that  the  handlers  of  Australian 
combing  and  clothing  wools  made  a  "  dip  "  on  them,  to  get  them 
into  American  markets,  of  twelve  cents,  or  the  whole  amount  of 
the  duty.  While  Australian  wools  were  at  this  period  quoted  at 
"  good  to  superior  fleece- washed  merinos  Is.  8d.  to  Is.  lOd.  [forty 
to  forty- four  cents],  and  average  to  good  Is.  dd.  to  Is.  8d.  [thirty- 


680  ECONOMIV  F111L080PIIY. 

one  to  forty-one  cents]  per  pound,"  and  while  Mr.  Hayes,  an 
expert,  says  tliat  only  the  best  long  and  fine  wools  (apart  from 
carpet  wools)  are  now  imported,  yet  almost  the  entire  quantity 
imported  is  invoiced  at  twenty-three  cents  per  pound,  a  price 
which  is  three  cents  below  the  foreign  price  of  blanket  wools. 

The  conclusion  is  inevitable  that  the  foreign  price  does  "  dip  " 
by  nearly  or  quite  the  whole  duty,  to  accommodate  itself  to  the 
American  market,  and,  this  being  so,  the  president  of  the  "Wool 
Manufacturei's'  Association  was  right  in  testifying  before  the 
Committee  of  Ways  and  Means,  of  Congress,  that  the  price  of 
wool  is  not  made  higher  by  the  duty.  The  Association  was  only 
wrong  in  making  the  duty  on  wool  a  part  of  the  basis  for  esti- 
mating the  duty  on  woolen  goods.  The  duty  on  woolen  goods 
should  be  estimated  simply  by  inquiring  the  money  rate  at  which 
the  goods  can  sell  in  the  foreign  market,  under  the  most  favora- 
ble conditions,  then  the  rate  at  which  they  can  be  manufactured 
here,  and  making  the  duty  large  enough  to  more  than  cover  the 
difference  at  all  times,  and  under  all  fluctuations  in  price. 

The  annexed  chai't  shows  the  facts  above  cited,  as  to  the  prices 
of  wools.  The  average  invoice  price  of  twenty-three  cents  per 
pound  applies  to  all  years  since  1880. 

The  total  wool  product  of  the  United  States  is  now  estimated  at 
320,000,000  pounds,*  which,  adding  95, 000, 000  pounds  for  importa- 
tion, amounts  to  415,000,000  pounds  for  58,000,000  of  people,  or 
7jV  pounds  per  capita  per  annum.  The  consumption  of  wool 
in  1860  could  hardly  have  reached  one-half  as  many  jwunds  per 
capita.  This  goes  far  to  sustain  the  theory  tliat  an  abundant 
consumption  is  best  attained  through  an  abundant  home  pro- 
duction.! 

230.  Woolen  Industry  of  England. — Toward  the  close  of 
the  eighteenth  century  England,  owing  to  the  persistency  which 
she  had  shown  in  developing  her  ii*on  and  steel  manufacture, 
plunged  into  a  series  of  inventions  in  mechanics  which  brought 
her  into  the  front  rank  of  nations  as  a  manufacturer  of  woolen 
goods,  and,  at  the  opening  of  the  present  century,  in  cottons. 
These  were  the  steam-engine  by  Watt,  which  for  the  fi^rst  time 
superseded  human  power  by  steam  power,  and  converted  capital 

*  Helmuth,  Schvvanze  &  Co.'s  Circular,  published  by  George  William  Bond  in  1887, 
estimates  product  of  North  America  &i  460,000,000  pounds. 

t  Since  1884,  however,  owing  to  the  threatened  sacrifice  of  the  wool  producers,  im- 
plied in  the  reduction  of  the  duties  on  wool  in  1883,  the  number  of  shet'p  in  the  United 
States  has  declined  by  about  6,000,000,  or  by  7.37  per  cent.  (Keport  for  1887  of  Pennsyl- 
vania Wool  Growers'  Association.) 


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«hart  Showing  Who  Pays  the  Duty       3 

Foralgn  Price  of  rm«il  Wool 

BoBum  PriM  orrine  DimcHic  Wool  In  Gold. 

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PROTECTION  FORGING  INVENTIONS.  681 

into  the  cheapest  of  all  laborers — cheaper  even  than  coolie  labor  ; 
the  roller-spinning  of  Paul,  adopted  by  Ai-kwright,  dispensed 
with  finger  and  hand-work  in  spinning,  and  di-ew  and  twisted 
the  fibi*e  in  a  continuous  thread  by  an  automatic  mechanism  ; 
then  came  the  jenny  of  Hargreaves,  which,  instead  of  one,  drew 
seventy  threads  at  once  ;  then  the  mule  of  Crompton,  which  in- 
creased the  power  of  the  spinner  a  hundred-fold  ;  and  the  power 
looms  of  Cart  Wright,  which  quadrupled  the  power  of  the  weaver. 
Then  came  the  factory  system  of  Arkwright,  which,  by  gathering 
many  looms  under  one  control,  intensified  production  and  in 
many  ways  saved  labor,  while  it  lessened,  perhaps,  the  individu- 
ality and  independence  of  the  workers.  Finally  came  the  gig- 
mill  by  Mr.  Gott,  raising  the  wool  on  the  cloth  without  manual 
labor,  and  the  shearing  frames,  worked  also  by  power.  By  these 
inventions  the  consumption  of  wool  in  Great  Britain  rose  to  94,- 
000,000  pounds  of  domestic  wool,  and  8,000,000  imported,  by  the 
close  of  the  last  century.  By  1851,  according  to  M.  Bernoville,* 
the  annual  consumption  had  grown  to  208,000,000  pounds,  or 
more  than  double.  In  1883  the  total  supply  for  the  United  King- 
dom had  grown  to  732,000,000  pounds,  of  which  296,000,000  were 
exported,  leaving  435,000,000  pounds  for  domestic  consumption. 
Though  this  gives  the  British  people  as  large  a  supply  of  woolen 
goods,  per  capita,  as  is  obtained  by  those  of  the  United  States,  the 
source  of  that  supply  is  increasingly  foreign  in  England,  and  in- 
creasingly domestic  in  America.  In  England  the  wool  grown  in 
the  kingdom  declined  from  140,000,000  in  1855  to  128,250,000 
pounds  in  1883,  while  the  imports  increased  five  times.  In  Amer- 
ica the  imports  both  of  wool  and  woolen  goods  have  remained 
stationary,  or  declined,  while  the  domestic  production  has  in- 
creased tenfold  and  the  consumption  about  threefold.  The  in- 
ference is  that  the  English  wool  and  woolen  industries  are 
gradually  leaving  England  to  take  up  their  abode  in  protective 
countries. 

So  far  as  this  transfer  of  industry  is  coincident  with  a  like 
migration  of  English  population  to  new  countries,  it  may  be 
ascribed  to  the  various  causes  which  help  to  make  populations 
migratory,  tlie  chief  of  which  is  the  migratory  nature  of  profits. 
But  so  far  as  the  rate  of  transfer  exceeds  that  of  population,  and 
especially  so  far  as  the  rate  of  transfer  of  a  particular  industry 
from  a  country  wherein  it  is  not  protected  by  tariffs  to  one  where 

*  ■' InduBtries  dcs  Laines  Peignees,"  par  M.  Bernoville,  p.  11. 


682 


ECONOMIC  PHILOSOrUY. 


it  is  so  protected  exceeds  the  rate  of  transfer  of  industries  which 
are  equally  protected  in  both  countries,  such  increased  rate  may, 
in  the  absence  of  the  clear  indication  of  other  adequate  causes, 
be  fairly  ascribed  to  the  difference  in  the  protection  extended  to 
them. 

Thus  a  period  in  which  the  British  carrying  trade,  or  commer- 
cial marine,  is  actively  protected,  and  the  American  is  not,  is 
marked  by  a  transfer  of  American  vessels  and  sailors  to  Great 
Britain ;  though  if  in  the  same  pei'iod  British  farmers,  wool  grow- 
ei'S,  and  silk  weavers  are  inadequately  protected,  and  Americans 
in  the  same  walks  of  life  are  either  naturally  or  artificially  pro- 
tected in  an  adequate  degree,  a  ti'ansfer  takes  place  of  British 
farmers,  wool  growers,  and  silk  weavers  to  America,  above  the 
ordinary  migratory  tendency  of  industry. 

231.  The  Cost  of  Protection  to  the  Woolen  Manufac- 
ture.— Among  the  familiar  impositions  of  the  free  traders,  is 
that  of  estimating  the  cost  of  protecting  a  domestic  industry,  by 
assuming  that  the  whole  domestic  product  is  raised  in  price 
by  the  amount  of  the  duty,  or  by  some  large  x^ercentage  of  that 
amount,  and  that  it  could  all  be  obtained  by  importation  at 
the  price  it  sells  for  abroad  when  no  importation  occurs.  Mr. 
Springer,  of  Springfield,  Illinois,  has  worked  up  the  cost  of  pro- 
tection to  the  American  woolen  manufacture,  on  this  basis,  as 
follows  : 


Value  wool  im- 
ported 1882. 

Duty  received. 

Average  ad  va- 
lorem rate. 

Value 
home    products 
consumed  1880. 

Incidental 
taxes,  being  In- 
creased cost  to 

consumers. 

«47,C79,503 

$89,254,234 

61.36  per  cent. 

$267,182,914 

$106,873,165 

As  the  wages  paid  in  the  manufactures  of  woolen  goods  amount 
to  only  $47,351,628,  an  argument  is  thus  made  out  that  it  would 
be  cheaper,  to  pay  all  these  employees  their  wages,  and  to  this 
might  also  be  added  the  dividends  paid  to  the  mill-owners,  than 
to  pay  the  increased  cost  to  consumers.  Mr.  Springer,  however, 
impeaches  all  these  figures,  resolving  them  into  solemn  guess- 
work, by  admitting  that  the  domestic  i^rice  is  not  increased  by 
the  amount  of  the  duty,  and  that  he  does  not  know,  and  has  no 
means  of  knowing,  by  what  amount  it  is  increased,  or  that  it  is 
increased  at  all.  All  this  is  admitted  in  the  following  words, 
which  are  Mr.  Springer's,  and  which  are  uttered  by  him,  not  to 
ffive  away  his  case,  but  to  save  it.    He  says; 


FIGURES  TEAT  GUESS.  683 

"  It  will  be  seen,  from  an  examination  of  the  statement,  that 
the  rate  of  increase  in  the  cost  of  the  home  product,  by  reason  of 
the  tariff,  has  been  estimated  in  each  case  at  much  below  the  duty 
itself.  This  is  due  to  the  fact  that  many  of  the  articles  are  in- 
creased in  price  only  to  a  limited  extent  by  reason  of  the  tariff. '' 

All  these  figures,  however,  lose  their  value  as  means  of  estimat- 
ing the  cost  of  the  tariff,  when  the  principle  upon  which  they 
are  marshalled  is  conceded  to  be  false.  This  principle  is  that  the 
price  of  the  domestic  i^roduct  is  raised  by  the  amount  of  the  duty. 
This  Mr.  Springer  admits  is  false,  by  taking  a  different  standard, 
viz. :  a  certain  percentage  of  the  duty,  the  rate  of  percentage  being 
the  result  of  pure  guess-work  on  his  part.  Thus  all  this  cumbrous 
superstructure  of  pretended  argument  from  figures  rests,  at  hot  ■ 
tom,  on  a  guess.  The  attempt  to  compute  the  exact  cost  of  pro- 
tection, like  the  attempt  to  prove  the  net  profit  derivable  from  law, 
education,  internal  improvements,  or  any  other  function  of  gov- 
ernment, shades  rapidly  off  into  quantities  that  are  immeasurable. 
It  belongs  to  the  domain  of  intellectual  jugglery. 

The  problem  of  the  relation  of  the  cost  of  protection  to  its  ad- 
vantages is  one  that  appeals  to  the  sense  of  vakie,  or  profit- 
perception,  or  business  judgment  of  all  men.  The  production,  per 
capita,  of  wool  and  woolen  goods  in  the  United  States,  has  about 
doubled  in  the  protective  period  since  1860.  The  common  sense 
of  common  men,  and  the  special  sense  of  statesmen,  concur  in 
holding  that  this  more  abundant  production  renders  the  Ameri- 
can market  as  low-priced  a  market,  on  most  kinds  of  woolen 
goods,  as  the  world  contains.  Practical  merchants  having  a  close 
knowledge  of  markets  concur  in  this  opinion.  Hence,  the  tax  of 
protection,  while  not  actually  computable,  and  while  it  is  liable  to 
undergo  a  theoretical  variation  with  every  change  in  prices,  is 
really  nominal  on  all  varieties  of  goods  that  have  had  any  consid- 
erable period  for  development  under  its  influence. 

232.  Cotton — Antiquity  and  Modern  Growth  of  tlie 
Industry. — The  cotton  of  commerce  is  produced  l>y  about 
twenty  species  of  the  genus  Gossypium,  in  all  of  which  the  cotton 
wool  is  attached  to  the  seed,  for  the  physiological  purpose  of 
promoting  the  distribution  of  the  seed,  as  thistle-down  distributes 
the  thistle  seed.  Most  of  these  are  flowering  herbs  approximat- 
ing to  the  hollyhock  more  nearly  than  to  any  other  northern 
flower.  The  exceptions  are  the  sacred  cotton  tree  of  the  Hindoos, 
which  produces  a  fibre  used  only  in  preparing  the  robes  of  the 
Brahmin  priests,  as  its  tripartite  thread  is  held  to  be  a  sacred  em- 


684  ECONOMIC  PHILOSOPHT. 

blem  of  the  Trinity,  and  the  cotton  tree  of  ancient  Peru  and 
Mexico,  from  whose  product  Cortes  was  presented  with  cotton 
garments,  on  his  arrival  in  1519. 

Cotton  was  largely  used  in  the  domestic  manufactures  of  India 
five  centuries  before  the  Cliristian  Era, and  therefore  twenty  centu- 
tries  before  it  was  largely  raised,  spun,  or  woven  in  the  European 
world.  Its  culture  and  manufacture  reached  China  about  B.C. 
200.  Its  extension  to  Turkey,  Egypt,  and  Africa  lias  been  made 
since  its  culture  in  the  United  States  made  it  a  leading  article  of 
modern  commerce. 

The  Hindoo  used  the  distaff  and  the  fingers  in  spinning,  and  a 
few  sticks,  the  limb  of  a  tree,  a  hole  in  the  ground  for  his  treadles 
and  feet,  constituted  his  entire  loom  during  twenty  centuries.  But 
so  great  was  his  industry  that  "in  every  village, every  woman  and 
child  was  at  work,  making  a  piece  of  cloth,"  says  Orme,  and  the 
muslins  of  Deccawere  so  finely  woven  that  they  were  described  as 
"webs  of  woven  wind." 

It  is  disputed  whether  the  manufacture  of  cotton  in  Europe 
was  brought  to  Italy  during  the  Crusades,  or  to  Holland  by  the 
Dutch  after  the  latter  had  passed  to  India  by  the  Cape  of  Good 
Hope.  The  former  is  the  better  view,  as  Holland  imported  cottons 
from  Italy  before  her  ships  rounded  the  cape. 

The  cotton  manufacture  began  at  Manchester,  England,  before 
1640,  as  an  adjunct  to  the  linen  manufactui*e  previously  carried 
on,  but  had  hardly  any  growth  until  1760  and  later.  The  inven- 
tion of  the  spinning  jenny  by  Hargreaves,  in  1770,  was  the  be- 
ginning of  the  cotton  industry  in  England.  The  invention  cre- 
ated such  alarm  among  the  spinners,  whose  labor  it  displaced, 
that  they  first  broke  into  Hargreave's  house  and  destroyed  his 
machine,  and  afterwards,  when  the  jenny  had  begun  to  come 
into  genei'al  use,  they  had  a  great  uprising  of  the  peoj)le,  and, 
scouring  the  country,  broke  every  curling  and  spinning  machine 
they  could  find  in  Lancashire.  In  1769  to  1772,  Arkwright  fol- 
lowed with  the  invention  of  the  spinning  fi^ame,  water  frame,  or 
"  throstle,"  as  it  was  variously  called,  which  performs  the  whole 
process  of  spinning  itself,  leaving  to  the  workmen  only  to  feed 
it  with  material  and  piece  the  thread  when  it  breaks.  In  1785  the 
steam-engine  was  first  applied  to  drive  the  machines  for  spinning 
cotton.  At  this  period  the  raw  material, or  as  it  was  for  many  years 
called  the  "cotton  wool,"  or  more  briefly  the  "wool,"  came  from 

*  Encyclopedia  Britannica,  Art.  "  Cotton." 


GROWTH  OF  MANCHESTER.  085 

the  British  West  Indies,  Brazil,  Smyrna,  etc.  In  the  same  year, 
1785,  a  clergyman  named  Cartwright,  who  had  never  seen  a  per- 
son weave,  invented  the  power  loom,  being  stimulated  thereto  by 
the  suggestion  that  the  spinning  machine  vpould  soon  spin  so 
much  yarn  that  hands  enough  never  could  be  hired  to  weave  it. 
He  had  seen  an  automaton  machine  play  chess,  and  as  all  the 
movements  in  weaving  were  reducible  to  three,  he  thought  a 
machine  could  make  them.  When  fii'st  broached,  the  idea  was 
combated  as  visionary,  by  every  person  familiar  with  weaving. 

Until  these  inventions  came  into  use  cotton  goods  were  dearer 
than  woolen,  and  too  dear  for  general  use.  About  1795  a  canal 
brought  cheap  coal  to  Manchester.  Her  small  wares  were  sent 
out  on  pack-horses,  into  the  villages  of  England,  and  sold  by 
chapmen,  in  the  inns.  The  whole  cotton  trade  was  still  in  the 
germ,  but  from  1795  it  gi^ew  rapidly.  By  1800  it  consumed  100,- 
000  bales  aiid  exported  $27,000,000  worth  of  manufactured  cot- 
tons. Now  3,000,000  bales  are  required,  and  the  export  of  manu- 
factured cottons  has  grown  to  $337,500,000.  The  period  of  great- 
est rapidity  in  the  growth  of  the  cotton  industry  was  from  1795 
to  1855.  In  3817  it  employed  110,763  persons  in  Great  Britain. 
In  1835  it  employed  220,134  persons,  or  more  than  there  were  in 
1880  employed  in  the  same  industry  in  the  United  States.*  The 
cotton-spinning  kingdom  had  fifty  years  the  start,  as  a  manufac- 
turing power,  of  the  cotton-growing  republic,  and  yet  this  start 
had  all  been  won  in  the  preceding  forty  years. 

The  rate  of  growth  of  the  cotton  industry  in  England  is  almost 
identical  with  that  of  the  city  of  Manchestei',  for  about  eight- 
ninths  of  all  the  people  employed  in  the  industry  in  England 
were  employed  in,  and  formed  a  part  of  the  growth  of,  the  city  of 
Manchester,  since  1800.t 

The  cotton  industry  in  England  results  in  an  export  four  times 
as  great  as  the  domestic  consumption.  In  1876  the  annual  value 
of  the  exports  of  yarn  and  cloth  were  £72,079,000,  while  the 
home  consumption  amounted  only  to  £17,777,000.  It  is  this  in- 
dustry which  more  than  any  other,  except  banking  or  the  lend- 
ing of  money,  compels  England  to  pursue  an  aggressive  policy  in 
pushing  her  foreign  markets  and  defending  her  foreign  trade  at 
every  point.  It  is  this  desire  to  protect  and  defend  her  foreign 
trade,  that  causes  the  drum-beat  of  her  morning  reveille   to  ac- 

*  Robert  P.  Porter,  "Breadwinners  Abroad,"  p.  91. 

t  Manchester,  including  Salford.    Porter's  "  Breadwinners,"  p.  91, 


686 


ECONOMIC  rillLOSOPIIY. 


company  the  sun,   without  ceasing,    in   his   circuit  around  tlie 
world.     For  behind   the  British    drummer    everywhere  is   tlie 


s 

^ 

5 

2 

s 

S 

2 

S 

s 

OJ 

^  ~\ 

/- 

518,000 

500,000 

^ 

+40,000 

476,000 

4U0,000 

/ 

400,000 

300,000 

^ 

2.W,000 

.300,000 

200,000 

y 

162,000 

95 

^y^m 

,000 

GROWTH   OF  THE   CITY  OF  MANCHESTER. 

British  trader,  who  employs  the  drummer,  and  pays  for  the  beat- 
ing of  the  drum  out  of  the  profit  on  his  exports. 

233.  The   Cotton-Growing    Industry    in   the    United 

States.— To  encourage  the  production  of  raw  cotton,  or  as  it  was 
at  first  usually  called  "cotton  wool "  in  the  United  States,  a  duty 
of  thi-ee  cents  per  pound  was  laid  on  its  importation  in  1790,  and 
this  duty,  with  slight  variations  m  its  amount,  continued  until 
1846.  A  doubt  was  expressed  whether  such  a  duty  could  prove 
advantageous,  as  the  prospect  that  the  cotton  plant  could  succeed 
in  thefSouth  was  deemed  precarious.  In  1792  Eli  Whitney  in- 
vented the  first  machine  for  ginning  or  separating  the  seeds  from 
the  lint  or  down.  Whitney's  "  saw  gin  "  consists  of  a  series  of 
saws  revolving  between  the  interstices  of  an  iron  bed,  upon 
which  the  cotton  is  placed  so  as  to  be  drawn  through,  whilst  the 
seeds  are  left  behind.  This  invention  lessened  greatly  the  cost 
of  getting  the  fiber  ready  for  shipment,  and  immediately  caused 
the  cultivation  of  cotton  to  become  profitable  In  1799  the  ex- 
port had  risen  to  9,000,000  pounds,  in  1817  to  95,000,000  pounds, 
and  in  1845  to  872,000,000  pounds.  The  protective  duty  was 
probably  not  needed  after  1798, 


FALL  OF  PROTECTED  COTTON. 


687 


The  average  price  of  cotton  per  pound  for  the  half  century 
from  1790  to  1844  was  as  follows  : 


PRICES  OP   COTTON   PROM   1790   TO   1845  IN  CENTS  PER  POUND. 

A  general  identity  will  be  observed  between  the  fluctuations  in 
prices  of  cotton  here  indicated  and  those  of  breadstufPs  in  En- 
gland and  America  set  forth  inch.  iii.,p.  124.  The  general  decline 
in  price  of  cotton,  between  1800  a)id  1845,  results  from  the  increase 
in  quantity  produced  ;  this  increase  was  so  marked,  and  its  effect 
on  the  price  so  evident,  as  to  give  rise  to  the  saying  that  the  more 
cotton  the  planter  sent  to  market  the  less  he  got  for  it,  while  the 
smaller  his  crop  the  greater  his  returns.* 

The  high  price  of  cotton  between  the  years  1815  and  1820,  con- 
curring with  a  rapid  expansion  in  the  production,  caused  an 
advance  in  the  price  of  negro  slaves  in  the  United  States  in  1820 
to  1830,  so  that  the  rearing  and  breeding  of  slaves,  and  the  internal 
trade  in  slaves  between  the  slave- raising  and  the  cotton-growing 
States,  became  very  profitable.  This  in  turn  gave  a  rapid  acces- 
sion of  political  power  to  the  slaveholding  interest,  which  was 
at  the  same  time  the  free-trade   interest.     Hence  from  1820  to 


*  Dr.  H.  C.  Carey,  "Social  Science,"  by  McKean,  p.  262,  shows  that 

In  1815-16  a  crop  of  80,000,000  lbs.  brought  $20,500,000. 

"    1821-22      "        134,000,000  lbs.      "  21,500,000. 

•    "    1827-29      "        230,000,000  lbs.       "  26,000,000. 

"    1830-32      "        280,000,000  lbs.      "  28,000,000. 

"    1840-42       "        616,000,000  lbs.      "  .55,000,000. 

"    1843-45      "        719,000,(KX)  lbs.      "  51,000,000. 

"    1849  "      l,026,(X)l),000  1bs.       "  66,000,000. 

In  short,  twelve  and  one  hiilf  tInicH  m  niiich  cotion  in  1849  as  was  produced  in  1815 
brought  only  three  and  one-third  times  as  mucli  money. 


688  ECONOMIC  PHILOSOPHY. 

1860  cotton  growing,  slavery,  and  free  trade  became  closely  knit 
together  into  one  principle.  This  it  was  which  repealed  the 
Missouri  Compromise  in  1820,  battled  for  the  equality  of  slavery 
with  the  wages  system  from  1820  to  1860,  thi'eatened  secession 
and  a  dissolution  of  the  Union  in  1828  to  1830,  and  after  thwart- 
ing the  protective  policy  from  1833  to  1860,  except  during  an 
interval  from  1842  to  1846,  finally  broke  out  into  the  civil  war  of 
1860  to  1865. 

The  considerations  underlying  the  entire  struggle  were  eco- 
nomic. The  armies  that  met  on  the  Rapidan,  and  at  Vicksburg, 
represented  opposing  economic  theories.  The  constitution  of  the 
attempted  Confederate  States  solemnly  provided  that  no  protec- 
tive tariff  should  ever  be  enacted  in  those  States,  or  by  that  gov- 
ernment. The  Confederacy  was  only  to  differ  from  the  Union,  in 
making  slavery  the  noi'mal  condition  of  labor,  and  freedom  from 
protective  duties  the  natural  right  of  commerce. 

It  is  an  impressive  truth  that  the  free  trade,  thus  contended  for, 
destroyed  the  Confederacy.  The  lack  of  the  gold  revenue,  which 
would  have  come  from  a  protective  tariff  if  the  South  had  had 
competing  manufactures,  rendered  the  bonds  and  notes  of  the 
Confederate  States  worthless.  The  lack  of  the  manufactured 
goods  greatly  impaired  their  military  strength.  The  conviction 
became  far  more  general  in  the  South  after  the  war,  that  no  nation 
can  afford  to  depend  upon  the  production,  by  another  nation,  of 
any  of  the  forms  of  wealth  essential  to  a  nation's  defense  in  war. 
The  feeling  of  dependence  on  cotton,  expressed  by  the  saying 
"Cotton  is  king,"  gave  way  to  the  feeling  that  money  is  king, 
Tlae  Northern  States,  by  their  greater  diversification  of  industries, 
actually  grew  richer  in  the  midst  of  the  expenditures  which  so 
impoverished  the  South.  Of  this  diversity  of  industries  money  is 
the  symbol  and  agent. 

234.  Cotton  as  a  Power  in  Politics. — The  political  effects 
of  the  rapid  expansion  of  the  cotton  manufacture  in  England, 
from  1800  to  1855,  were  as  important  as  were  those  of  the  equally 
rapid  expansion  of  the  cotton  culture  in  the  United  States.  It 
engendered  the  ambition  of  England  to  become  the  workshop 
of  the  woi'ld  and  to  convert  all  other  nations  into  consumers 
of  her  products  and  producers  of  her  food  and  raw  mate- 
rials. In  pursuit  of  this  policy  she  sacrificed  her  farmers,  and 
yeomanry  of  Ii'eland  and  Scotland,  at  the  shrine  of  foreign  trade. 
The  nature  of  her  success  will  be  seen, by  observing  how  much  more 
largely  her  trade  lies  with  nations  which  she  is  able  to  command 


THE  COTTO:S  FAMINE. 


689 


with  her  guns,  and  whose  tariffs  she  regulates  by  treaties  obtained 
by  aggressive  war,  or  by  more  or  less  open  purchase,  than  with 
nations  whose  power  enables  them,  and  whose  intelligence  in- 
spii'es  them,  to  admit  or  exclude  her  goods  at  their  own  pleasure. 
In  1881  British  cotton  piece  goods  were  shipped  to  countries 
whose  trade  is  commanded  by  treaties  which  are  the  product  of 
former  wars,  coercion,  or  purchase,  as  follows  : 


To  Coerced  and  Treaty -bound  Countries. 


To  Turkey 

To  Egypt  .... 
To  Brazil  .... 
To  foreign  West  Indies  . 
To  China  and  Hong  Kong 
To  Java 


$2.3,468,506 
7,755.935 

14,501,444 
6,154.888 

29,105,947 
5,176,369 


To  India,  C'eylon,"and  Singapore  93.571,981 

1179,735,070 


To  Free  Countries. 


To  France 

To  Italy  .... 
To  United  States    . 
To  Argentine  Republic  . 
To  Chili    .... 
To  British  North  America 
To  Australia    . 


To  other  countries 


$4,973,286 
6,344,745 
7,521,409 
5,864,570 
5,257,543 
4,599.664 
8,187,015 

$41,748,211 

164,762,159 


Nearly  five  times  as  much  of  the  foreign  trade  of  England  in 
cotton  piece  goods  now  lies  in  countries  whose  legislation  she  is 
able  to  shape,  and  does  shape,  by  coercion  or  other  means,  as  in 
those  which  are  independent  of  her  control.  No  other  element 
of  the  English  export  trade  has  exercised  so  aggressive  an  influence 
over  English  |)olitics  as  this  export  of  cotton  goods.  To  it  are 
due  the  establishment  of  an  empire  in  India,  the  repeal  of  the 
corn  laws  in  1846,  the  Briti.sh  naval  and  commercial  policy,  and 
much  of  British  colonial  finance. 

235.  The  Cotton  Famine  of  1860-5. — Society  by  an  in- 
voluntary economic  law,  acting  only  through  the  impulse  of 
dealers  towards  profits,  economizes  in  the  use  of  any  essential  of 
life  of  which  the  supply  is  cut  ofi',  by  means  of  a  rising  scale  of 
prices.  This  was  shown  in  the  cotton  famine,  produced  by  the 
civil  war  in  the  United  States,  in  1861  to  1865.  The  year  1860 
had  been  the  year  of  greatest  ]n-oduction  ever  known  in  cot- 
ton goods.  Two  thousand  six  hundred  and  fifty  mills,  em- 
ploying 440,000  hands,  were  running  30,000,000  spindles  and 
350,000  power  looms.  Of  1,390  million  pounds  of  cotton  im- 
ported 1,054  million  were  worked  up  in  Great  Britain.  Twenty- 
four  million  pounds'  (sterling)  worth  annually  of  cotton  goods 
were  consumed  in  Great  Britain,  and  a  value  twice  as  large  was 
exported. 

In  the  year  1861  the  price  of  middling  Orleans  rose  from  TJd.  to 


C90  ECONOMIC  PHILOSOPHY. 

12d.  per  lb.  Tliis  shut  off  the  i^rofits  of  spinning  and  weaving 
until  an  unusually  large  stock  of  goods  on  hand  could  be  sold 
off,  as  the  manufactured  goods  did  not  rise  in  price  as  rapidly  as 
the  raw  materials.  Moreover,  though  the  quantity  of  raw 
cotton  in  store  was  greater  than  ever  before,  the  ratio  of  its  price 
to  that  of  the  goods  was  such  that  it  could  not  be  made  up  at  a 
profit,  and  hence  the  mills  were  rajiidly  closed  or  put  on  short 
time.  In  1862  relief  funds  were  subscribed,  and  soup  kitchens 
were  opened,  furnishing  soup  at  Id.  per  basin.  From  half  to 
three-fourths  of  the  employees  in  the  different  mills  were  out  of 
work.  About  $1,000,000  was  subscribed  to  keej}  the  workers 
from  starving.  In  May  cotton  rose  to  15d.,  and  in  October  to 
2s.  3d.  per  lb.,  and  more  profit  could  be  made  by  buying  to  hold 
than  by  manufacturing.  At  Christmas  352,000  persons  were  out 
of  work,  and  £40,000  per  week  were  distributed  in  relief.  Not 
until  May,  1863,  did  the  manufactured  goods  on  hand  climb  up 
to  prices  at  which  the  raw  cotton  could  be  spun  and  wove  at  a 
profit,  when  it  was  worth  2s.  5d.  per  lb.  in  the  bale.  Then  the 
manufacture  W' as  gradually  resumed.  The  following  schedule, 
of  the  prices  obtained  for  the  quantity  of  raw  cotton  imported, 
shows  that,  the  smaller  the  quantity  obtainable  in  any  except  one 
year,  the  larger  was  the  sum  of  money  which  measured  its  aggre- 
gate value  : 

Year.                       Quantities  (cwts )  Value. 

1800  12,410,000  £35  757,000 

1861 11,223,000  38,653,000 

1862 4,678,000  31,093,000 

1863    5,978,000  56,278,000 

1864 7,976,000  78,204,000 

1865 8,732,000  66,032,000 

1866 12,296,000  77.521,000 

The  high  price  of  cotton  was  divided  by  being  spread  in  part 
over  silks,  woolens,  linen,  hemp,  and  even  jute,  straw,  paper, 
etc.,  all  of  which  were  called  on,  in  part,  as  substitutes.  The  rise 
which  remained  was  sufficient  to  withhold  it  entirely  from  use, 
until  the  stocks  previously  nianufactui'ed  had  been  worn  out, 
thus  dividing  the  rise  in  price  over  the  largest  quantity  of  goods 
and  the  longest  possible  period  of  time.  In  this  way  the  hard- 
ships of  the  famine,  thougli  severe,  were  minimized  to  the  utmost 
extent  possible,  until  the  supply  returned.  The  cold  operation  of 
speculative  selfishness  thus  had  the  effect  to  save  the  cotton  on 
hand  and  prevent  its  waste.  This  form  of  economy,  was  therefore, 
as  benevolent  in   its   effects  as  the  feeding  of  the  hungry  with 


QUmmE-MAjaNG  expelled.  691 

cheap  soup.  Students  of  political  economy,  in  accounting  for  the 
prices  of  textile  fabrics  in  Europe  or  America  from  1861  to  1870, 
will  be  careful  to  unite  with  such  other  causes  as  they  may  have 
in  view,  the  all-controlling  influence  of  the  cotton  famine,  and 
tlie  large  issues  of  paper  money  in  the  United  States,  and  of  debt 
in  Europe. 

The  imports  of  cotton  goods  into  the  United  States,  in  certain 
lines,  are  more  than  three  times  as  great  in  value  as  the  exports 
of  cotton  goods  in  other  lines.  The  former  are  $36,000,000,  and 
the  latter  $13,000,000  annually.  Our  imports  are  most  largely  of 
hosiery,  and  our  exports  most  largely  of  sheetings  and  prints. 
The  cotton  manufacturers  of  New  England  were  among  the  ag- 
gressive adv'ocates  of  the  protective  policy  in  the  early  days  of 
the  republic,  or  fi'om  1790  to  1850.  For  thirty  years  past,  how- 
ever, the  classes  of  cotton  manufactui'e  which  were  able  to  live, 
were  also  able  to  export  in  free  competition  with  English  manu- 
facturers. While  steadily  urging  the  necessity  of  securing  the 
home  market  to  American  producers,  they  have  not  sought  ac- 
tively to  supersede  the  importation  in  those  lines  in  which  the 
former  held  the  field. 

The  success  of  foreign  hosiery,  and  certain  other  forms  of  cotton 
manufacture,  in  keeping  their  hold  on  the  American  market  is  due 
to  the  admission  of  them  at  low  and  encouraging  rates  of  duty, 
which  have  repressed  the  effort  to  substitute  the  American  for  the 
foreign  article  in  those  lines. 

230.  Destruction  of  Quiniue  Mamifacture  in  the 
United  States. — To  descend  from  the  great  cotton  iudustiy  to 
the  little  manufacture  of  quinine  out  of  cinchona  bark,  is  like  a 
step  from  the  infinitely  great  to  the  infinitely  little.  Quinine, 
however,  possesses  economic  importance  as  the  one  and  only 
article  which,  as  a  sop  to  an  agitation  extending  over  twenty-five 
years,  in  behalf  of  "tariff  reform,"  was,  in  1879,  taken  out  from 
under  a  duty  which  had  the  effect  to  protect  the  manufacture  in 
the  United  States,  and  was  jjlaced  upon  the  free  list.  Thei'e  were, 
at  the  time  of  the  repeal  of  the  duty,  five  American  firms,  and 
tliirteen  European  firms,  engaged  in  the  manufacture.  It  had 
first  been  placed  under  a  duty  of  fifteen  per  cent,  dux'ing  the  pres- 
idency of  Jackson,  in  1832,  which  had  been  raised  to  forty  cents 
per  ounce  in  1842,  restored  to  twenty  percent,  in  1846,  changed  to 
fifteen  per  cent,  in  1857,  to  twenty  per  cent,  in  1861,  to  forty-five 
per  cent,  in  1862,  to  twenty  per  cent,  in  1872,  where  it  continued 
until  made  free. 


692  ECONOMIC  PniLOSOPHY. 

The  article  is  made  from  a  bark  obtained  chiefly  in  Peru,  and 
"which  European  as  well  as  American  manufacturex's  import  free. 
The  rate  of  production  is  very  variable,  and  hence  the  price  of 
quinine  varies  chiefly  according  to  the  price  of  the  bark.  Under 
the  various  duties  above  named,  the  follovs^ing  was  the  range  of 
prices  for  twenty-five  years  : 

III  1857  it  sold  as  high  as  $3.00  and  as  low  as  $1 .40  per  oz. 

In  18G0  "  as  high  as  $1-80,  and  as  low  as  |1.20. 

In]8G2  "  as  high  as  $2.90,  and  as  low  as  $2.25. 

Ill  1864  "  as  high  as  $3.75,  and  as  low  as  $2.00. 

In  1865  "  as  high  as  $3.40,  and  as  low  as  $2.20. 

In  1877  "  as  high  as  $4.50,  and  as  low  as  $2.70. 

In  1881  '•  as  high  as  |3.25,  and  as  low  as  $1.90. 

In  short,  in  each  year  it  varied  in  price,  by  an  amount  several 
times  greater  than  the  duty,  which  variation,  therefore,  could 
not  have  been  an  effect  of  the  duty.  In  1877,  when  the  special 
agitation  was  raised  against  the  duty  as  a  "tax  on  invalids,"  the 
quinine  was  selling  for  $4.12i  per  ounce  in  London,  which  w^as 
$2.59  higher  than  it  had  sold  for  in  London  one  year  previously. 
On  this  ci-y  the  duty  was  repealed.  Four  years  after  its  repeal 
quinine  sold  as  high  as  $3.25  and  as  low  as  $1.90,  which  was 
seventy  cents  higher  than  it  had  sold  for  when  under  a  duty  in 
1860. 

The  price  on  both  sides  of  the  ocean  rose  and  fell  chiefly  with 
the  price  of  the  bai'k.  The  effect  of  the  withdrawal  of  the  duty 
was  that  the  American  manufacturers,  who  had  imported  6,389,- 
378  pounds  of  bark  for  manufacture  in  1878,  imiiorted  only  3,639,- 
815  pounds  in  1883,  and  afterward  a  continually  diminishing 
quantity.  Meanwhile  our  imiDortation  of  the  sulphate  of  quinine 
rose  at  the  following  rates,  our  American  invalids  being  each 
year  more  dependent  on  the  imported  article : 


In  1877 ' 

ive  imported 

75,804  ounces 

In  1878 

17,549 

" 

In  1879 

228,348 

ii 

In  1880 

416,998 

tt 

In  1881 

408,351 

ti 

In  1882 

794,495 

(i 

In  1883 

1,055,764 

t< 

In  short  the  repeal  of  the  duty,  exactly  as  in  the  case  of  the 
repeal  of  the  English  duties  on  breadstuffs,  while  it  makes  no 
permanent  change  in  the  price  of  the  breadstufiPs,  operates  efPect- 
ually  to  transfer  the  seat  of  production  from  the  home  country 
to  the  foreign. 


AMEBICAN  SALT. 


693 


237.  The  Salt  Industry  as  Related  to  the  Tariff.— The 

manufacture  of  salt  in  the  United  States  depends  largely  on  pro- 
tective legislation  by  Congress,  and  by  the  several  States  for  its 
existence  ;  yet  its  history  is  full  of  proofs  that  thus  to  protect  the 
domestic  manufacture  cheapens  the  supply,  and  that  a  repeal  of 
the  duties  only  raises  the  price  of  salt  abroad  instead  of  reducing 
it  at  home.  Every  State  in  the  Union,  and  probably  every 
country  on  the  globe,  contains  the  means  of  making  salt.  In 
1880,  out  of  a  total  consumption  of  52^  pounds  per  capita  for  the 
American  people,  19  pounds  were  foreign  salt  imported,  33^ 
pounds  were  domestic,  of  which  9.7  pounds  were  produced  in 
New  York,  3.46  pounds  in  Vh-ginia,  2.95  pounds  in  Ohio,  13.87 
pounds  ill  Michigan,  and  3.20  pounds  in  all  other  parts  of  the 
United  States.  The  following  diagrams  exhibit  the  expansion  in 
the  production  relatively  to  the  importation  in  forty  years. 


SUPPLY  PER  CAPITA  IN  1880. 


SUPPLY  PKB  CAPITA  IN  1840. 


In  the  fifty  years  ending  in  1880,  the  supply  of  domestic  salt 
increased  by  14.1  pounds  per  capita,  the  supply  of  foreign  salt 
diminished  3.8  pounds  per  capita,  and  the  total  supply  of  salt  in- 
creased by  10.25  pounds  per  capita.  The  price  of  domestic  salt 
during  this  period  declined  in  about  the  ratio  of  its  increased 
abundance  jier  capita,  viz.,  from  21  cents  per  bu.shel  to  16^  cents, 
while  the  average  foreign  invoice  value  per  bushel  declined  only 
from  12^  cents  per  bushel  in  1830,  to  10|  cents  per  bushel  in 
1880.  So  much  foreign  .salt  can  be  brought  in  ballast,  free  of 
freight,  to  the  United  States,  that  ocean  transportation  adds  little 
or  nothing  to  the  cost  of  foreign  salt. 


694  ECONOMIC  PHILOSOPHY. 

On  March  3,  1807,  a  duty  of  twenty  cents  per  bushel  which  had 
existed  since  1800  was  repealed.  The  country  enjoyed  the  benefits 
of  free  salt,  at  $2  per  bushel !  *  In  1809,  and  later,  after  the  war  of 
1812-15  set  in,  it  rose  to  |4  per  bushel.  During  neither  of  these 
periods  would  the  cost  of  production  have  exceeded  thirty-five 
cents  per  bushel,  if  the  interval  of  free  trade  in  salt  had  not  de- 
stroyed the  domestic  establishments.  The  cost  of  salt,  for  the 
three  years  of  war,  was  thus  made  equivalent  to  what  an  equal 
supply  for  thirty-three  years  would  have  cost,  had  proper  estab- 
lishments for  making  salt  been  maintained. t 

In  Texas  and  Louisiana  are  some  of  the  finest  beds  of  mineral 
salt  in  the  United  States,  wherein  salt  can  be  obtained  with  fewer 
hours  of  labor  per  bushel  than  at  any  of  the  foreign  salt  produc- 
ing points,  but  not  at  so  low  a  money  price.  The  South,  being 
always  most  dependent  on  the  foreign  supply  for  salt,  expected 
to  get  cheap  salt  thi'ough  a  secession  from  the  Union  in  1860,  as 
one  of  the  economic  advantages  of  that  undertaking. 

Practically,  however,  the  war  of  1861  to  1865,  and  the  block- 
ade of  the  Confederate  ports,  gave  the  Southern  States  so  vigor- 
ous a  protective  policy  that  the  salt  manufacture  at  the  Grand 
Saline  in  Texas  alone  soon  employed  3,000  men.  As  in  1807  to 
1815,  so  again  in  the  Southern  States  in  1861-5,  the  cost  of  four 
years  of  salt  certainly  exceeded  any  sum  that  thirty  years  of  salt 
supply  could  have  cost,  under  a  diversification  of  industries 
arrived  at,  during  peace,  by  tariff  duties.  Indeed,  the  inability  of 
the  Southern  States  to  supply  themselves  promptly  with  salt, 
quinine,  iron  and  steel  ware,  and  clothing,  were  among  the  chief 
material  causes  of  their  overthrow  in  the  military  struggle. 

Protection  to  the  salt  manufacture,  by  tariff  duties,  has  been 
offset  by  State  taxes  on  the  product,  in  a  degree  that  is  not  usually 
allowed  for.  Thus,  from  1813  to  1830,  though  the  duty  was 
twenty  cents  per  bushel,  the  State  of  New  York,  where  alone  the 
manufacture  had  got  a  start,  levied  a  tax  of  twelve  and  one-half 
cents  per  bushel,  thus  reducing  the  protection  to  seven  and  one- 
half  cents.  In  1830  the  duty  was  reduced  to  fifteen  cents  per 
bushel,  leaving  a  protection  of  only  two  and  one-half  cents,  and 
from  1832  to  1834  the  State  tax  was  two  and  one-half  cents  higher 
than  the  duty,  thus  virtually  fining  the  domestic  producers  two 


*  Bishop's  "  History  of  American  Manufactures." 

+  Report  of  Committee  on  Salt  to  National  Convention  for  Protection  of  American 
Interests,  held  at  New  York,  April  5, 1841. 


THE  MICHIGAN  COMPETITION.  695 

and  one-half  cents  pei*  bushel,  relatively  to  their  foreign  competi- 
tors, for  doing  business  in  New  York,  instead  of  abroad.  In  1834, 
the  duty  having  fallen  to  9.4  cents  per  bushel,  the  State  tax  was  re- 
duced to  six  cents,  and  in  1841,  under  the  further  decline  of  the 
duty,  the  protection  was  only  1.6  cent  per  bushel. 

The  highly  protective  tariff  of  1842  laid  a  duty  of  eight  cents 
per  bushel,  which  in  1846  was  reduced  to  twenty  per  cent.,  equal 
to  2.43  cents  per  bushel,  and  the  state  reduced  its  tax  to  one  cent 
per  bushel,  where  it  still  remains.  Hence,  for  ten  years  ending 
in  1857,  the  protection  to  the  New  York  salt-makers  was  only  1.43 
cents  per  bushel,  and  under  the  reduction  in  1857  the  protection 
fell  to  three-fifths  of  a  cent  per  bushel.  In  1861-2  the  duties 
were  raised  to  from  ten  to  thirteen  cents  per  bushel.  In  1872 
these  rates  were  reduced  to  from  4|  to  6|  cents  per  bushel. 

Meanwhile  the  legislature  of  Michigan,  in  1859,  offered  a  bounty 
of  ten  cents  per  bushel,  for  all  salt  over  the  first  5,000  bushels 
produced  from  water  obtained  by  boring  wells  in  Michigan. 
Though  the  tariff  protection  was  then  only  If  cent  per 
bushel,  capital  rushed  into  the  manufacture  at  a  rate  that  soon 
compelled  the  State  to  repeal  the  tax.  The  ])roduction,  beginning 
in  1860  with  2,360  bushels,  rose  in  1881  to  13,751,495  bushels, 
which  about  equalled  the  entire  consumption  of  foreign  salt  in 
either  1860  or  1880.  The  only  special  advantages  enjoyed  by 
Michigan  over  many  of  the  other  States  lay  in  the  temporary 
offer  of  the  bounty,  and  the  cheap  supply  of  sawdust,  fuel, 
and  lumber  for  barrelling,  furnished  by  the  vast  lumber  manu- 
facture in  conjunction  with  which  the  salt  manufacture  is  car- 
ried on. 

In  the  competition  thus  set  on  foot  between  the  Michigan  salt 
producers  and  the  importers  of  foreign  salt,  the  Michigan  salt  has 
steadily  declined  from  a  price  equal  to  the  invoice  price  of  the 
foreign  salt,  plus  the  duty,  down  to  a  price  actually  lower  in  some 
years  than  the  invoice  (foreign)  price  of  the  imported  salt  free  of 
duty.     The  diagram  shows  the  prices. 

Here  it  is  evident  that  the  Michigan  prices  for  the  five  years, 
1877  to  1881  inclusive,  are  on  a  level  with  the  foreign  invoice 
prices  without  duty  from  1868  to  1872,  and  are  from  twenty  to 
twenty-four  cents  per  barrel  lower  than  the  foreign  invoice  price 
from  1872  to  1876  inclusive.  But  the  striking  fact  shown  by  this 
diagram  is  that  the  reduction  of  from  four  to  six  cents  per  bushel 
(sixteen  to  twenty-four  cents  per  barrel),  made  in  our  import 
duty  in  1872,  sent  the  foreign  invoice  price  of  salt  up  by  fi'om 


696 


ECONOMIC  PIIILOSOrnY. 


twenty  to  twenty-four  cents  per  barrel,  or  by  exactly  the  duty.* 


Average  Price  per 

Barrel  in  cents. 

r-l90 


If  there  were  any  class  of  cases  in  which  Mr.  Mill's  theory 
would  apply,  that  protective  duties  on  imports  would  make  them- 
selves felt  in  the  increased  prices  of  exports,  and  would  there- 
fore, operate  in  part  to  tax  foreigners  on  our  exports,  and  in  part 
to  lessen  our  exports,  such  an  effect  might  be  expected  in  the 
case  of  the  import  duty  on  salt  acting  on  our  export  of  but- 
ter. Under  the  tariff  of  1851,  with  a  duty  of  only  1.5  cent 
per  bushel  on  salt,  the  country  exported  less  butter  in  five 
years,  than  when  the  duty  in  1862  was  made  twenty-four  cents 
per  100  pounds  it  exported  in  one  year,  viz.,  the  year  1863.  In 
fifteen  years,  from  1846  to  1862,  of  virtual  free  trade  in  salt,  the 

*  David  H.  Mason,  of  Chicago,  a  most  accurate  economic  expert,  says  ("  Report  of 
Tariff  Commission,"  p.  1205) : 

"The  reduced  duty  went  into  operation  August  1,  1872.  Let  it  be  noticed  that  the 
foreign  producers,  who  always  take  whatever  profit  circumstances  will  permit  them  lo 


LEATHER  AND  SHOES.  C97 

country  exported  only  66,118,096  pounds  of  butter,  while  in  the 
ten  yeai's  following,  under  a  duty  of  twentj^-four  cents  per  100 
pounds,  the  export  of  butter  rose  to  101,031,946  pounds,  being 
more  than  twice  as  large  an  export  of  butter  when  the  duty  on 
salt  was  twelve-fold  higher  than  under  free  trade. 

If  the  import  duty  on  salt  is  powerless  to  prevent  the  doubling 
the  export  of  butter  from  whatever  cause,  it  may  safely  be  affirmed 
that  the  notion  that  duties  on  imports  are  a  check  on  exports  is 
the  dream  of  a  visionary. 

238.  Leather,  Boots,  and  Slices,— The  United  States 
surpasses  every  other  country  in  the  abundance  per  capita, 
average  quality,  and  cheapness  of  its  supplies  of  leather,  boots, 
and  shoes.  Lynn  began  to  export  women's  shoes  in  1788.  In 
1795  she  supplied  the  Southern  raai-kets,  and  sent  some  to 
Europe,  and  in  1874  the  product  of  the  Lynn  factories  alone  was 
$14,000,000,  and  the  three  States  of  Massachusetts,  Maine,  and 
New  Hampshire  now  make  upwaixls  of  $100,000,000  worth  per 
annum  in  factories,  while  the  total  factory  product  of  the  United 
States  in  1880  was  $166,050,354.  The  product  of  the  petty  in- 
dividual shoemakers,  and  makers  to  order,  admits  of  no  accurate 
statement,  and  hence  we  are  without  any  data  of  the  aggregate 
quantity  consumed. 

The  United  States  has  three  and  a  half  times  as  many  cattle 
per  capita  of  population  as  Great  Britain,  about  as  many  sheep;  * 
and  imports  free  of  duty  almost  exactly  the  same  annual  supply  of 

get,  put  up  their  prices  immediately  after  the  passage  of  the  bill,  in  June,  1872,  reduc- 
jng  the  duties  on  salt,  the  invoice  price,  even  in  July,  1872,  under  the  old  duty,  being 
advanced  over  one  and  one-quarter  cents  per  100  pounds;  in  fiscal  year  1873,  very 
nearly  six  and  one-half  cents  above  what  it  was  in  fiscal  year  1872  ;  in  fiscal  year  1874, 
about  ten  cents  ;  in  fiscal  year  1875,  over  seven  cents  ;  and  in  fiscal  year  1876.  over  four 
and  one-quarter  cents.  In  forty-seven  months  after  the  reduction  of  the  duty  took 
effect,  the  average  increase  in  the  foreign  invoice  value  amounted  to  8.343  cents  per 
100  pounds,  or  to  more  than  two-thirds  of  the  duty  taken  off.  Practically  considered, 
therefore,  the  reduction  of  duty  deprived  the  government  during  that  period  of  $1,011,- 
336.00  of  revenue,  and  legislated  $1,120,281.69  of  that  sum  into  the  pockets  of  the 
foreign  manufacturers  of  salt,  to  whom  the  legislation  by  Congress  was  an  enabling 
act  to  that  extent  by  the  enlargement  of  competitive  powers  which  it  conferred  upon 
our  alien  rivals.  Comparing  the  whole  period  ending  in  1K81  with  the  one  ending  with 
July,  1872,  it  appears  that  the  foreigners  increased  their  invoice  prices  an  average  of 
3.89.5  cents  per  100  pounds,  or  by  nearly  one-fourth  of  the  duty  taken  off,  so  that,  in 
the  aggregate,  the  government  lost  $3,891,113.88  of  revenue  from  salt  in  packages  alone, 
and  the  foreign  salt-makers  pocketed  the  sum  of  $1,202,990.91  ;  consequently,  the  legis- 
ation  in  1872,  advocated  and  framed  in  (he  interests  of  cheap  salt,  was  virtually  a  move- 
ment to  enable  the  foreign  manufacturers  to  charge  more  for  their  salt,  at  the  expense 
of  the  national  revenue,  of  the  American  consumer,  and  of  our  domestic  producers." 
*  As  many  per  capita,  viz.,  31,000,000, 


698  ECOI^OMW  PHILOtiOrUV. 

hides,  so  that  our  aggregate  sources  of  leather  supply  must  be 
fully  twice  as  abundant  as  those  of  Great  Britain.  The  ship- 
ments of  shoes  from  Boston  alone,  to  points  outside  of  New  Eng- 
land, in  1873,  were  55,000,000  pairs,  for  which  the  retui'ns  were 
$61,875,000,  being  $1.12  per  pair,  while  the  shipments  from  the 
whole  of  Great  Britain  to  all  parts  of  the  world  were  in  the  same 
year  only  6,332,328  pairs,  of  which  the  returns  were  $8,197,852.80, 
showing  an  average  selling  price  of  $1.28  per  pair.  This  shows 
that  the  current  producers'  prices  were  lower  in  New  England 
than  in  Great  Britain,  which  is  in  accordance  with  the  standing 
law  that  prices  will  always  be  lower  where  the  largest  supplies 
are  produced. 

England  imported  in  1875  109,906  dozen  pairs  of  boots  and 
shoes,  and  exported  462,104  dozen  pairs,  leaving  a  net  export 
of  352,198  dozen  pairs,  or  4,226,376  pairs,  which  is  about  one- 
twentieth  the  trade  in  shoes  which  would  figure  as  exports  if 
New  England  were  an  independent  nation. 

The  United  States  export  boots  and  shoes  to  thirty-eight  for- 
eign countries,  of  which  the  British  West  Indies  and  Mexico  are 
our  largest  customers,  and  export  sole,  upper,  and  other  leather  to 
forty  foreign  countries,  England  buying  27,284,716  pounds,  worth 
$5,529,600.  We  also  ship  morocco  and  other  fine  leather  to 
thirty  foreign  countries.  England  receiving  six-sevenths  of  our 
shipments.  Side  by  side  with  these  exports  we  also  imjiort 
neai'ly  as  large  a  quantity  of  leather  for  various  purposes  as  we 
export,  notwithstanding  an  import  duty  of  15  per  cent,  on 
leather  and  30  per  cent,  on  its  manufactures. 

A  repeal  of  these  protective  duties  would  substitute  foreign 
for  American  leathers  and  boots  and  shoes  first  in  the  Southern 
and  Pacific  States,  and  Avould  cause  a  temporary  panic  in  prices, 
notwithstanding  the  average  prices  in  the  United  States,  both  on 
leather  and  most  of  its  products,  are  lower  than  they  are  abroad. 

In  spite  of  these  facts,  the  Wilmington  (N.  C.)  Morning  Star 
lately  said  : 

"  A  pair  of  shoes  that  can  be  bought  in  England,  and  made  of  better  material  at  tliat, 
for  $3,  will  cost  nearly  dou'ile  in  the  United  States.  Every  time  a  father  shoes  his  wife 
and  children  he  is  paying  a  tax  to  New  England  manufacturers  of  from  50  to  100  per 
cent." 

North  Carolina  has  but  five  shoe  factories,  which  turn  out  a 
product  of  only  $107,000  per  year.  Her  people  have  all  the 
natural  facilities,  and  have  had  all  the  time  in  which  to  acquire 
the  artificial  facilities,  that  those  of  New  Engiand  have  had. 
Within  the  experience  of  persons  now  living,  it  was  the  common. 


CREED  OF  THE  THRIFTLESS.  699 

custom  of  persons  residing  in  the  mountain  sections  of  Noi*th 
Carolina  and  East  Tennessee,  to  cai-ry  shoes  to  church  on  Sunday 
in  their  hands  to  the  church  door,  put  them  on  merely  to  wear 
while  inside  the  church,  and  on  their  exit  remove  them  again  at 
the  church  door  and  walk  barefoot  the  rest  of  the  week.  It  is 
lack  of  enterprise  which  induces  a  people  to  oppose  the  introduc- 
tion of  the  manufacture  of  shoes  into  a  country,  upon  whose 
hills  millions  of  cattle  might  freely  grow  the  hides,  lest  some 
one  else  will  make  a  profit  out  of  their  manufacture,  which  they 
might  make  if  they  would,  but  are  too  lazy  and  thriftless  to 
make.  It  is  uni^atriotic  spleen  to  complain  of  the  prioi'ity  in 
enterprise  of  those  who  will  make  shoes,  as  being  a  mode  of  op- 
pression and  rapine  practiced  upon  those  who  will  almost  forego 
their  use  rather  than  make  them.  This  compound  of  unthrift 
and  spleen  are  the  natui*al  soil  in  which,  at  least  in  America, 
the  seeds  of  "free  trade  "  germinate  with  fecundity  and  grow 
with  power. 

A  man  who  practices  thrift  himself,  in  his  personal  aflFairs,  will 
readily  submit  to  the  tax,  if  tax  it  require,  which  is  necessary  to 
give  him  thrifty  social  surroundings  of  every  kind,  and  especially 
a  thrifty  school,  a  thrifty  town,  county,  state,  and  nation.  But 
tln'iftlessness  shirks  production,  and  holds  aloof  from  every  form 
of  enterprise  and  labor,  until  its  means  of  subsistence  are  lowered 
to  a  standard  bordering  on  barbarism,  and  its  forms  of  obtaining 
the  services  of  others  verge  toward  either  swindling,  vice,  or 
slavery.  It  then  finds  it  much  easier  to  see  why  it  should  con- 
tribute nothing  to  the  welfare  of  othei's,  since  it  has  fallen  into 
the  ways  and  habits  which  contribute  nothing  to  its  own  welfare. 

Hence  it  is  that  in  the  United  States  the  thriftless  "  ne'er-do- 
well  "  class,  and  the  class  who  really  believe  that  to  love  one's 
country  is  a  pretence  which  stamps  a  man  as  presumptively  in- 
sincere, form  the  basis  of  impulse  and  type  of  charcter  which 
avows  the  free-trade  passion. 

Protection  to  native  industry  strikes  down  into  the  depths  of 
the  human  heart  through  two  leading  sentiments  or  tap-roots, 
one  of  which  is  the  perception  that  it  is  in  an  economic  sen.se 
profitable  to  the  aggregated  mass  of  the  people,  but  the  other  of 
which  must  always  be  that  public  spirit  which  feels  tliat  the  most 
active  emplo^^ment  and  highest  utilization  of  man  is,  necessarily 
and  without  computation,  prolitable.  If  free  trade  gives  vis  our 
choice  of  three  arts,  protection  gives  us  a  like  choice  of  thirty. 
When  public  spirit  wanes,  protection  goes  to  the  wall,  but  not  be- 


VOO  ECONOMIC  rUILOtiOrUY. 

cause  it  is  not  economically  profitable  to  the  citizen  who  opposes 
it  as  well  as  to  all  others.  Its  opposition  comes  from  those  whose 
passion  it  is  to  sacrifice  ultimate  welfare  to  temporary.  Hence 
a  sufficient  ground-swell  of  misrepresentation  can  now  and  then 
be  manufactui'ed  to  secure  a  transfer  of  power  from  the  provident 
and  enlightened  to  the  thriftless  and  unwary. 

Society  has  its  periods  when  it  grows  tired  of  being  wise,  tired 
of  being  just,  intelligent  and  humane,  and  prefers  to  be  erratic, 
spasmodic,  and  foolish.  When  these  freaks  come,  it  delights  in 
having  a  grand  All-Fools'  Day.  It  honors  folly  as  something 
generous  and  democratic.  It  abuses  prudence  as  the  virtue  of  the 
j)arsimonious,  and  actually  succeeds  in  making  inertia  appear 
profound  and  vacancy  and  stupidity  inspired.  When  the  carni- 
val is  over  and  society  resumes  its  judgment,  there  will  alwaj's 
be  those  who  will  contend  that  things  are  better  for  the  relaxa- 
tion. They  will  call  the  pressure  of  their  own  noses  against  tlie 
revolving  grindstone  a  getting  down  to  hard-pan,  or,  perhaps, 
a  destruction  of  monopolists.  It  is  due  to  this  relapse  toward  a 
rest  from  being  wise,  i-ather  than  to  any  weight  or  dignity  that  has 
attached  to  free-trade  arguments,  that  the  American  Congress  or 
politicians  have,  at  periodical  intervals,  solemnly  enacted  that 
the  prosperity  which  had  been  enjoyed  in  protective  periods 
should  be  razeed,  and  that  we  should  all,  like  Nebuchadnezzar,  eat 
grass  for  a  w^hile.  So  long  as  this  passion,  of  the  shiftless  andun^ 
thiiifty  man  for  change,  is  a  predominant  element  in  his  basic 
nature,  there  is  at  no  time  any  assurance  that  a  partially  free- 
trade  policy  may  not  be  adopted  temporarily,  at  any  moment,  in  a 
period  of  prolonged  peace  and  prosperity. 

2.'59.  Iiirtiistries  Must  be  Unprofitable,  as  well  as  De- 
sirable, to  Merit  State  Action. — The  political  principle  vmder- 
lying  protection  to  any  industry  which  is  temporarily  unprofitable, 
but  permanently  desirable,  applies  with  eximnding  and  increas- 
ing force  as  the  prospect  that  the  industry  will  ever  be  profitable 
diminishes,  provided  the  conviction  that  it  is  desirable  and  essen- 
tial to  the  general  welfai-e,  irrespective  of  the  profitableness  to 
those  who  carry  it  on,  is  sure  and  general.  It  is  on  this  ground 
that  the  state,  in  different  countries,  becomes  the  active  pro- 
moter of  education,  religion,  charity,  amusements,  internal  im- 
provements such  as  roads,  lights,  sewers,  docks,  wharves,  paved 
streets,  public  libraries,  parks,  public  games,  the  destruction  of 
dangerous  or  offensive  animals,  quarantine  regulations,  light- 
houses, the  care  and  removal  of  dead  animals,  garbage  and  filth. 


OPPOSITE  KINDS  OF  "  PROFIT."  701 

vaccination,  the  planting  of  trees,  and  scores  of  other  details. 
Each  of  these  represents  an  industry  in  the  carrj^ng  on  of  which 
there  would  be  some  slight  I'eturn,  apart  from  any  aid  thereto  by 
the  state,  but  the  return  would  be  hisufficient  to  secure  its  activ- 
ity in  the  degree  required  for  tlie  general  good.  Teachers  can 
always  find  a  few  pupils  if  they  teach  for  fees  jjaid  by  parents. 
Until  the  present  century,  and  outside  of  the  United  States  and 
Germany,  these  were  almost  the  only  schools.  But  owing  to 
the  unprofitableness  of  the  industry  when  left  thus  unaided,  cer- 
tain states  deem  it  better  to  make  the  education  of  youth  a  func- 
tion of  the  state.  So  it  is  an  unprofitable  industry  to  detect  and 
punish  crime,  in  the  sense  that  the  private  fees  obtainable  for  the 
work  would  never  secure  its  adequate  performance.  It  is  be- 
cause the  work  of  administering  justice  to  criminals  is  both  nec- 
essary to  the  common  weal,  and  yet  productive  of  no  profitable 
return  in  the  economic  sense,  that  the  state  deems  it  necessary  to 
make  the  administration  of  justice  one  of  its  functions.  In  some 
states  and  nations  the  administration  of  religion  is  a  state  func- 
tion, in  others  it  is  sustained  by  individual  gifts  and  fees.  But 
in  all  except  a  few  very  large  church  congregations  sustained  by 
preachers  of  special  eloquence,  it  is,  in  the  economic  sense,  an 
unprofitable  industry,  requiring  to  be  sustained  by  either  volun- 
tary or  involuntary  taxation. 

In  this  point  of  view,  the  state  may  be  economically  defined  as 
being  the  aggregate  of  all  the  perpetually  unprofitable  industries 
which,  for  public  and  prudential  I'easons,  it  is  expedient  that  soci- 
ety should  be  taxed  to  i^rotect.  If  the  adjustment  or  trial  of 
private  disputes  and  the  punishment  of  crime  could  in  any  man- 
ner be  made  so  intrinsically  profitable  as  a  business,  without 
state  aid,  as  to  be  efficiently  carried  on  by  private  persons  for 
profit,  court-houses  and  jails,  built  at  pubMc  cost,  would  soon 
cease  to  exist,  and  judges  and  courts,  maintained  at  public  ex- 
pense, would  disappear.  The  usual  unprofitableness  of  the  busi- 
ness is  as  essential  as  its  intrinsic  desirableness  to  tlie  governing 
majorities  or  deciding  classes  of  persons  in  tlie  state,  to  insure  the 
making  it  a  state  function.  Hence,  industries,  however  desira- 
ble, which  are  also  usually  profitable,  are  never,  where  profitable, 
made  a  state  function,  unless  it  be  that  they  are  less  profitable 
than  the  state  feels  Ihe^^  should  be.  The  particular  industries 
which  a  .state  will  aid,  or  exalt  into  a  state  function  are  as  varied 
as  the  genius,  or  whims,  of  unlike  races.  In  one  it  may  be  pre- 
dicting the  weather  ;  in  another,  watching  eclipses. 


702  ECOXOMIC  riiiLo^oriiY. 

CLOSING  WORDS. 

240.  Private  and  Public  Purposes. — The  habit  of  regard- 
ing certain  objects  or  functions  of  the  state  as  public,  and  others 
as  relating  only  to  private,  interest  is  so  strong  in  many  minds, 
that  they  suppose  it  to  be  innate  and  self-evident  that  to  tax  a 
citizen  to  maintain  a  court-house  is  to  tax  him  for  a  public  pur- 
pose, but  to  tax  him  to  maintain  a  factory  is  to  tax  him  for  a 
private  purpose.  Very  likely  such  will  say  that  in  one  case  the 
money  goes  to  the  state,  in  the  other  it  is  paid  over  to  a  private 
individual. 

The  money  raised  by  the  state  to  build  court-houses,  maintain 
judges  and  sheriffs,  and  sustain  the  ordinary  administration  of 
justice,  is  paid  in  salaries  to  the  judges  and  sheriffs,  to  be  ex- 
pended by  them  in  the  support  of  their  families  and  the  gratifi- 
cation of  their  individual  wants.  It  is  earned  by  them  in  the 
perfoi'mance  of  their  official  duties,  but  it  is  paid  to  them  as  indi- 
viduals, simply  because  the  functions  they  perform  are  not  self- 
supporting — in  short,  are  unprofitable  industries  in  the  economic 
sense  (but  are  held  to  be  socially  desirable),  and  are  therefore 
paid  for.  Hence,  when  the  state  takes  money  from  the  tax-payer 
A  to  pay  to  the  judge,  sheriff,  or  school-teacher  B,  it  is  taxing 
A  to  sustain  B  in  an  industry  economically  unprofitable,  but 
socially  desirable.  What  is  a  public  purpose  and  what  a  private 
purpose  varies  with  the  social  evolution  of  a  state  or  tribe.  In 
all  the  Catholic  countries  of  Eui'ope,  wherein  state  and  church 
are  united,  religion  is  a  public  purpose,  and  the  education  of 
youth  a  private  purpose.  In  the  United  States  education  is  a 
public  purpose,  and  religion  is  chiefly  a  private  purpose.  A  few 
centuries  ago  the  right  to  punish  murder  was  a  private  right, 
which  belonged  first  to  the  deceased's  relatives.  Only  when  they 
waived  their  private  right  did  the  punishment  of  murder  become 
a  public  purpose.  In  China  the  planting  of  trees,  and  protection 
of  the  people  from  river  floods,  is  a  public  and  imperial  purpose. 
In  the  United  States  it  is  a  private  purpose.  In  Greece  the 
Olympian,  Isthmian,  and  Nemean  games  were  a  public  purpose 
of  the  highest  state  importance.  In  America  all  amusements  are 
a  pi'ivate  purpose.  In  the  middle  ages  the  relief  of  the  poor  was 
a  private  purpose,  except  so  far  as  the  church  was  part  of  the 
state.  In  America  poor  relief  is  a  public  purpose  in  some  states, 
and  a  private  one  in  others,  but  is  nowhere  a  function  of  the 
central  government. 


*  AB'TER,  THEREFOEE  FOR  THIS  CAUSE.  703 

It  is  conceivable  that,  in  the  infancy  of  society,  hunting  and 
Ashing,  and  even  the  cultivation  of  the  soil,  if  carried  on  by  tiie 
commune  or  tribe,  would  be  a  public  purpose.  Certainly,  in 
many  of  the  more  savage  African  tribes  visited  by  Stanley  in  liis 
fii'st  voyage  down  the  Congo,  and  wherein  no  trade  could  be 
done  except  with  the  chief  as  representative  of  the  tribe,  trading 
and  receiving  presents  were  public  purposes.  But  in  civilized 
states  both  receiving  presents  and  trading  have  ceased  to  be  pub- 
lic purposes. 

What  is  a  public  purpose  and  what  a  private  varies,  therefore, 
more  or  less,  as  between  any  two  states  and  stages  of  develop- 
ment. But  in  all,  the  public  purpose  is  that  which  the  majoi'ity 
of  numbers,  wealth  and  force  in  society,  decide  shall  be  done  by 
the  state,  and  the  private  purpose  covers  all  matters  of  choice,  in 
which  the  individual  is  left  untrammeled  by  the  state.  In  a 
military  age,  when  figliting  w5,s  the  chief  occupation  of  the 
ruling  classes,  all  taxation  to  maintain  soldiers  was  a  public  pur- 
pose. But  taxation  to  maintain  a  teacher  would  have  been 
deemed  very  clearly  for  a  private  purpose.  It  is  possible  that  as 
we  advance  industrially  the  military  function  may  come  to  be 
performed  wholly  for  hire,  as  the  educational  one  comes  to  be 
absorbed  by  the  state.  Certainly,  with  each  step  in  a  nation's 
advance  from  the  military  toward  the  industrial  state,  it  gives 
less  attention  to  its  armies  and  more  to  its  industries. 

241.  Post  Hoc,  Ergo  Propter  Hoc. — The  class  of  econo- 
mists who  prefer  the  crude  simplicities  of  dogmatic  assumption 
to  the  often  complex  methods  of  historic  proof  are  wont  to  meet 
all  economic  argument,  based  on  a  grouping  together  of  economic 
causes  and  their  consequences,  by  the  apt  phrase,  '''Post  hoc.  ergo 
propter  hoc.''''  The  use  of  this  phrase  by  free  traders  as  a  means 
of  thwarting  an  argument  for  protection,  founded  on  a  coupling 
of  protective  policies  with  national  prosperity,  is  constant,  and 
seems  to  be  regarded  as  efficient.  In  fact,  as  effects  cannot  well 
precede  their  causes,  all  argument  from  causes  to  effect,  and, 
indeed,  all  logic  and  philosophy,  are  open  to  be  met  by  this 
phrase  with  equal  effect.  At  a  given  period  after  the  moon  is 
either  in  the  zenith  or  the  nadir  of  a  given  point  on  the  earth's 
surface,  the  tides  rise  in  the  ocean  at  that  point.  Can  the  moon's 
influence  over  tlie  tides  be  negatived  by  the  simple  sneei*,  ^'  Post 
hoc,  ergo  propter  hoc  "  ?  So  of  all  other  causes  in  science.  The 
propter  follows  the  post.  An  accurate  statement  of  the  nature 
of  the  historic  method  would  be  that  ' '  one  adequate  or  conducing 


704  ECONOMIC  PHILOSOPHY. 

cause  liaving  arisen  immediately  prior  to  the  event,  and  no  other 
adequate  or  conducing  cause  being  shown,  the  event  will  be 
inferred  to  be  due  to  the  adequate  or  conducing  causes  actually 
shown  to  have  preceded  it,  in  preference  to  any  assumptions  of 
causes  which  are  not  shown  to  have  existed,  or  which,  if  they 
existed,  were  not  adequate,  or,  if  existing  and  adequate,  did  not 
in  fact  conduce  to  the  event,  owing  to  the  interception  of  their 
operation  by  other  known  events." 

In  the  presence  of  adequate  producing  causes,  no  others  being 
shown,  the  maxim,  ^^  Post  hoc,  ergo  propter  Jioc,''^  becomes  the 
very  form  and  substance  of  logic  instead  of  a  fallacy.  Hence,  in 
economic  argument,  the  maxim  does  not  of  itself  disclose  or  im- 
ply a  fallacy  in  the  argument,  but  presents  only  a  buttress  behind 
which  the  opposing  advocate  may  plant  himself  while  he  presents 
the  other  adequate  and  conducing  causes  to  whose  operation  he 
himself  attributes  the  event.  A*s  a  cover  for  such  opposing  state- 
ments it  is  valid.  As  an  independent  and  self-sustaining  objection, 
or  as  a  substitute  for  the  very  proof  it  may  properly  introduce,  it 
is  entirely  void. 

The  reader  should  also  be  admonished  against  the  sophistry  of 
assuming  that  simplicity  and  even  beauty  in  the  statement  of  a 
policy  are  to  be  mistaken  for  simplicity  and  beauty  in  its  opera- 
tion. A  policy  which  may  be  extremely  simple  in  its  statement 
may  be  infinitely  complex  and  painful  in  its  operation.  On  the 
contrary,  a  policy  which  may  be  as  full  of  entanglements  in  its 
statements,  as  a  fort  is  of  buttresses  and  ramparts,  may  be  as  de- 
lightfully direct  and  simple  in  its  operation,  as  that  fort  is  on  an 
invading  foe.  Herod's  decree,  "Kill  all  the  babes  under  two 
years  of  age";  Solomon's  deci-ee,  "  Divide  the  babe  equally  be- 
tween the  two  women  who  claim  to  be  its  mother";  the  Rus- 
sian Czar's  decree,  "Build  the  railway  from  St.  Petersburg  to 
Moscow  in  the  straight  line  between  those  cities  as  I  now  draw 
my  pencil  " ;  and  the  Compromise  Tariff  decree  of  1833  in  the 
United  States,  "  Reduce  the  tariflp  10  per  cent,  each  alternate 
year  until  it  stands  at  20  per  cent,  all  round,"  were  models  of 
simplicity  in  their  statement,  but  of  complicated  barbarity  and 
multifarious  torture  in  their  ojieration. 

But  time  would  not  avail  to  caution  the  student  against  the 
multifarious  forms  which  fallacy  may  assume.  Fallacy,  like 
fraud,  defies  accurate  definition  in  advance  by  wearing  a  new 
coat  every  time  it  appears.  Hence  it  is  that  economic  works, 
however  ample,  truthful,  and  explicit  may  be  their  contents — 


BOOKS  CAN  NOT  MAKE  ECONOMISTS.  V05 

and  very  few  of  them  are  either  ample,  truthful,  or  explicit — 
can  never  brace  the  student  certainly  and  finally  against  ei-ror. 
They  are  useful  in  cultivating  the  habit  of  detecting  error,  but 
in  their  use  there  must  arise  the  new  men  who  are  wiser  than 
the  old  books,  and  who  are  as  the  \\qw  wine  that  can  not  be  held 
in  the  old  bottles.  Such  men  will  see  in  each  exigency,  as  it  shall 
arise,  the  facts  which  distinguish  it  from  all  preceding  cases,  and 
will  detect  in  advance  that  right  way  which  books  can  only 
point  out  after  it  has  been  trod.  These  pioneers  in  industry  and 
in  legislation  are  the  actual  economists,  who  stand  in  a  like  re- 
lation to  the  science,  as  the  great  lawyers  do  to  the  law.  They 
absorb  its  past  leai'ning,  but  they  mold  its  future  quality.  So, 
after  economists  have  wintten,  and  all  that  books  can  teach  has 
been  said,  it  remains  that  political  economy,  or  the  science  of 
man  in  society,  is  a  part  of  the  process  of  the  continual  radiation 
of  new  truth  by  new  minds.  It  comes  by  perpetually  renewed 
inspiration.  As  held  by  the  best  instructed  minds,  it  will  not  be 
identical  with  the  instruction  they  received.  Its  latest  life  will 
always  have  found  its  suggestion,  but  never  its  exact  form,  in 
books.  It  cannot  cease  to  be  a  process  of  emanation  or  of 
evolution.  To  this  extent,  as  Dr.  Henry  C.  Carey  was  wont  to 
say,  political  economists  can  make  books,  but  books  can  never 
make  political  economists.  It  must  be  in  the  man.  So  must  all 
art,  power,  inspiration,  and  success.  But  not  in  one  man  ab- 
solutely. All  men  know  more  than  02ie  man.  The  highest 
school  of  economic  thought  must  always  be  the  aggregated  con- 
sensus of  opinion  of  the  world's  best  business  men,  producers, 
workers,  whom,  as  forces,  the  statesmen  and  insti'ucted  thinkers 
marshall  and  generalize.  The  writer  has  tried  to  bring  this  book 
abreast  of  the  moving  host,  to  tune  it  to  the  living  pulses  of  the 
active  world.  If  he  has  succeeded,  he  has  caught  the  im^jress  of 
the  marching  host,  their  flying  banners,  and  their  fervid  cause, 
for  a  moment.  That  moment  past,  the  economists  of  the  future 
in  their  march  sweep  by,  and  again  raise  life  above  the  book. 
These  real  economists  include  those  who  conduct  the  world's 
industries  and  legislation,  rather  than  those  who  instruct  in 
this  particular  art.  The  claim  to  be  endowed  with  the  gift  of 
prophecy  as  to  future  economic  developments,  often  springs  from 
being  out  of  sorts  with  existing  economic  conditions.  Those  who 
adapt  themselves,  with  most  facility  and  tact,  to  the  demands  of 
their  environment,  can  usually  see  as  far,  or  farther,  ahead  than 
tlif>  unsuccessful.     Economic  philosophy  is  yet  in  its  nascent  and 


706  ECONOMIC  PniLOSOPHV. 

plastic  state.  It  is  born,  but  it  is  only  beginning  to  grow.  The 
science  will  proceed  according  to  its  inward  law,  and  will  have 
its  own  mode  of  growth.  It  will  be  a  factor  in  the  world's  pro- 
gress as  momentous  as  could  be  wished.  But  it  must  bide  its 
time.  Its  period  of  ascendency  over  mankind  will  not  be  that 
of  its  first  youthful  impulse,  but  of  its  sober  second  thought. 
At  present  the  laonest  study  of  society,  in  its  economic  aspects, 
will  tend  to  impart  to  its  students  a  tone  which  may  be  defined 
thus  :  In  observation,  industry;  in  generalization,  modesty;  in 
criticism,  equity;  in  nationalism,  harmony;  in  internationalism^ 
purity ;  in  cosmopolitanism,  sincerity.  By  these  signs  ye  shall 
know  the  true  economists. 


THE  END. 


GENERAL  INDEX. 


Absentee  expenditure,  465,  466, 
487 

Abstinence,  relation  of  to  wealth, 
74,  210,  217,  307 

Abundance  and  scarcity,  Bastiat's 
sophism  on,  508;  protection  to 
home  industry  makes  more 
abundance  than  free  trade,  unless 
the  article  is  one  of  which  we 
can  permanently  import  our 
whole  supply,  510;  effect  of 
abundance  of  cotton  on  values, 
687 

Account,  money  of,  335,  348,  349 

Accumulation,  its  social  utility, 
220,  222,  304-307;  involves  as- 
sorting men  according  to  their 
productive  capacity,  309;  large 
fortunes  the  measure  of  a  high 
social  demand  for  some  special 
change  of  business  energy  from 
outworn  channels,  397 

Acreage,  statistics  of  acreage 
planted,  when  first  kept  in  Eng- 
land, 119;  of  large  proprietors 
in  America  and  Europe,  269, 
270;  in  England,  272-275;  of 
forests,  148;  of  great  land  grants, 
157-159;  of  bonanza  farms,  269; 
of  cultivation  in  Ireland,  274; 
of  cultivation  in  India,  486;  of 
land  in  India,  488;  of  cultivated 
lands  in  England  and  Wak^s, 
545,  546;  in  China,  547;  decline 
of  acreage  to  wheat,  etc.,  on  re- 
peal of  protective  duties,  5"i9 

Adage,  ridiculing  facts,  24 

Adulteration  of  highly -taxed 
wines,  475 

Ad  valorem  duties,  tariff  of  1828, 


383;  defined,  481;  few  in  Ger- 
man tariff,  517 

xVdvice  from  John  Bright  on  the 
American  tariff",  608    . 

Adzes,  American,  superseding  Eng- 
lish in  1868,  596 

Africa,  population  of,  descent  in 
America,  33;  markets  in,  99; 
manufacture  of  iron  in  Central, 
644 

Age,  relation  of  to  crime,  443;  pre- 
historic ages,  iron  and  steel  in, 
645 

Agrarian  laws,  138 

Agriculture,  wages  in  go  far  to- 
ward fixing  wages  in  manufac- 
tures, 181 ;  rate  of  yrofit  in,  177, 
178,  192;  product  of,  in  various 
countries,  230;  how  affected  by 
situation  and  fertility,  238-255; 
number  engaged  in,  in  United 
States,  320;  may  employ  too 
many,  382;  functions  of  the  state 
concerning,  433,  434;  decline  of 
modes  of  tillage  in  Ireland 
through  loss  of  home  market, 
491;  potato  rot  in  Ireland  caused 
1)}^  decline,  491;  agricultunll 
class  large  in  France,  496;  gov- 
ernment aid  to  growth  of  beet 
sugar,  504;  improvement  of,  in 
Prussia,  520;  women,  number  of 
working  at,  in  Germany,  525;  in 
Wurtemberg,  525;  conununal 
system  of,  in  Russia,  526;  reno- 
vation of,  in  Cliina,  how  to  be 
effected,  551-555;  decline  of 
acreage  planted  to  wheat  in 
Great  Britain  on  withdrawal  of 
protective  duties,  559;  the  small 
proportion  of  agricultural  pro- 
ducts which    will    bear  export 


^08 


GENERAL  INDEX. 


makes  home  trade  essential  to 
abundant  agricultural  produc- 
tion, 602 

Agricultural  colleges,  bountied  in 
United  States,  145 

Agricultural  implements,  duty  on, 
and  export  of,  610 

Alcoliolic  beverages,  taxes  on,  475; 
English  protection  to  manufac- 
ture of,  483;  against  Irish,  under 
act  of  Union,  493;  in  France 
(wines),  497;  revenue  from,  in 
France, 498;  retaliatory  duties  on, 
by  England,  500;  in  Russia,  527; 
duties  on,  removed  in  Japan,  553; 
English  acts  to  protect  manufac- 
ture of,  555;  value  of,  consumed 
in  United  States,  25;  wages  in 
manufacture  of,  as  high  in  Eng- 
land as  in  United  States,  because 
as  well  protected — as  high,  582; 
as  well  protected,  482;  in  United 
States  beer,  ale,  and  porter  pro- 
tected and  exported,  610 

Ale,  duties  on  imported,  export  of, 
610;  revenue  from,  613 

Algeria,  499 

Aliens,  exempt  from  all  taxation 
in  Turkey,  488,  489 

Alloy  in  American  dollar,  337;  in 
English  coius,  339-342 

Alpaca,  wool  and  fabric,  672 

Altruism  and  altruistic  labors,  only 
useful  in  the  very  few,  323;  al- 
truistic effects  obtained  by  ego- 
istic means,  433;  alleged  lack  of, 
except  in  the  family,  among 
Chinese,  552 

Ambition,  its  function  in  states- 
manship and  industry,  400,623- 
626 

America,  Central,  United  States 
buys  from  more  than  we  sell  to, 
600 

American  school  of  Political  Econ- 
omy, 16,36;  influence  of  Ameri- 
can war  on  political  economy, 
17;  Saratoga  convention  of,  17; 
influence  of  American  teachings 
in  forming  the  Zollverein,  514 

American  banks,  crisis  of,  in  1857, 
377 

American  colonies  protected  wool 
and  wool  manufacture  variously, 
676 


American  Indians,  ownership  by, 
23,  49-54;  lived  in  stone  age, 
645;  agriculture,  value  of  pro- 
duct, 230;  tribal  government 
among,  rellected  their  economic 
condition,  402 

American  inventions,  plows,  264; 
reapers,  265;  general,  59G;  glass, 
643 

American  manufactures,  in  war  of 
1812-1815,  641,  642;  colonial,  de- 
clared a  nuisance  by  parliament 
and  punished,  647,  648;  wool 
and  woolen  manufacture  pro- 
tected in  the  colonies,  676 

American  opinion  needed,  382 

American  markets  for  Canadian 
lumber  fix  its  price,  532 

American  people,  drink  bill  of,  25; 
meat,  bread  and  groceries,  bill 
of,  25;  safety  of  travel,  28;  area 
of  America,  141 ;  otiicial  govern- 
ing class  in,  423;  methods  of 
in  politics  disappoint  in  some 
things,  424-425;  insignificance 
of  the  accidents  that  prevail,  425; 
not  alive  to  moral  issues  if  the 
wrong  doing  is  pervasive,  426; 
cost,  war  of,  1861-5,  438;  crime 
among,  442;  duties  of,  in  pro- 
tecting American  labor  against 
excessive  immigration  by  pre- 
venting the  disruption  of  Chi- 
nese home  industries,  548;  de- 
mand for  silks,  633;  lost  their 
mercantile  marine  in  1855  by 
previous  blunder  in  trying  to 
get  cheap  iron  and  steel  through 
low  duties,  648-650 

American  ocean  steamer  lines  lost, 
how?  657-660 

American  trade,  how  carried,  656, 
659 

American  Union,  closely  identified 
with  the  protective  policy,  649, 
628,  629 

American  vessels,  reasons  why 
must  be  American-built,  661,  662 

American  workers,  an  immigrant 
differs  from  an  imported  product 
in  economic  effect,  321;  Ameri- 
can workers  inventive  because 
well  paid,  and  vice  versa,  596,  597 

Amusements,  state  in  respect  to, 

■    431 


GEXEBAL  IJSWBX. 


709 


Anarchy  —  anarchists  of  Chicago, 
91;  relation  of,  to  the  state,  131; 
the  organization  of  labor  in  in- 
dustry is  governed  by  the  value 
sense  on  both  sides  and  is  largely 
beyond  the  pale  of  law,  309;  in 
that  sense  anarchic,  310;  anarchy 
not  organization,  310 

Angel  and  angclet,  340-360 

Angora,  wool,  672 

Animals,  rudiments  of  government 
seen  among,  378;  absence  of 
working  animals  in  China  and 
economic  effects  of,  540-545 

Anna — India,  338 

Annapolis,  first  colonial  congress  at, 
protected  wool  and  wool  manu- 
facture, 676 

Appropriation,  all  title  and  pro- 
duction begins  in,  135,  130 

Aqueducts  for  cities,  430 

Arbitration,  303;  derives  its  effi- 
cacy from  previous  belligerency, 
435;  in  effecting  emancipation  in 
Russia,  526 

Area  of  United  States  compared 
with  Europe,  141 ;  of  countries, 
230;  of  German  Zollverein,  515 

Argentine  Republic,  unit  of  coin- 
age of,  338;  American  purchases 
from,  paid  by  England's  sales  to, 
600;  Endand's  trade  in  cotton 
goods  with,  689 

Aristocracy,  and  land-holding,  270; 
defined,  405;  relation  of,  to  num- 
bers, 405;  (^//rt.si  aristocratic  views 
of  Calhoun,  Webster  and  Hamil- 
ton, 413;  aristocracy  of  manipu- 
lators of  conventions,  425;  and 
protective  policy  in  England,  557 

Arms,  382 

Army,  health  of  British  and 
Freueh,  31;  employed  to  extend 
foreign  trade,  67;  part  of  na- 
tion's wealth  which  is  not  pri- 
vate wealth,  66,  68;  American 
policy  of  having  no  army,  68, 
437;  destruction  of  values  by 
allied  armies  in  France,  70; 
destruction  vs.  consumption  of 
values  by,  in  Unitrd  Stales,  70; 
founds  ail  governments,  435;  in- 
cluding that  of  United  Slates, 
438;  an  army  is  a  factory  and 
what  it  makes,  439;   cost  of,  in 


England,  479;  in  India,  how  paid 
and  officered,  485,  486;  of  China 
is  also  the  police,  537;  organiza- 
tion and  mode  of  drilling  and 
fighting  depend  on  condition  of 
iron  and  steel  manufacture,  646; 
officers  of,  in  England,  406; 
Roman  army  furnished  accord- 
ing to  capital,  412;  when  army 
is  chief  power  in  the  state  the 
form  of  government  indicates  it, 
413;  army  part  of  the  executive, 
416,  427;  cost  and  economy  of, 
437,  440;  sustained  in  France 
and  United  States  by  conscrip- 
tion, 437;  expenditure,  438; 
native  and  English  officers  of, 
in  India.  486 

Art,  is  political  economy  an,  1-9; 
Adam  Smith  and  Stewart  so 
hold,  7;  export  of  works  of ,  610; 
import  and  revenue  from,  613; 
position  of  glass-making  in  use- 
ful arts,  638,  644 

Artisans  of  a  whole  country  can 
not  learn  new  trades,  66,  67; 
wages  of  American  higher  than 
English,  and  their  work  better, 
596 ;  Birmingham  Board  of  Trade 
and  London  7Yw?««on,  596;  Span- 
ish and  Dutch,  how  attracted  to 
France,  673,  674 

Artel,  in  Russia,  526-530 

Ash,  pot  and  pearl,  export  of,  and 
duties  on  import,  610 

Asia,  tribute  paid  by,  454;  brown 
race  prehistoric,  645 

Associations,  wool  growers  and 
wool  manufacturers,  combine  to 
form  American  tariff  on  wool 
and  woolens,  677 

Assumption,  sul)stitution  of  for  ar- 
gument, 25,  26;  simpler  than  in- 
vestigation, 571 

Athens,    its   government  tlie   pro- 
duct of  eccmomic  life,  402;   aris- 
405;     dependence    for 


locratic, 
food,  570 


Attraction   in  the   stale,  433,  664; 

may  Ix;  greatest  toward  a  (.-ouu- 

try  of  high  taxation,  473 
Augers,    English    and   American, 

])rices,  590;  (|ualiti('S,  596 
Australia,  registration  of  titles  in, 

143;  life  of  herdsmen  ami  ,sliep- 


710 


GENERAL  INDEX. 


herds  in,  317;  eflfect  of  Aus- 
tralian and  California  gold  on 
coiuag-e,  3H5,  :i80;  governments 
of,  407;  colonization  of  criminals 
in,  445;  tariffs  in,  530,  531;  ex- 
port of  wool  from,  since  1810, 
676;  crime  in,  83,  442;  prices  of 
Australian  wool  abroad  and  of 
Ohio  wool  in  Boston  (chart),  079- 
681;  England's  trade  in  cotton 
goods  with,  689 

Australia,  West,  fixed  terms  of  of- 
fice,  407 

Austria,  coinage  unit,  338;  alleged 
bankruptcy  of,  448;  war  with 
Germany  in  1866,  516,  522 

Austro-liungary,  government  of, 
407 ;  expenditure  on  army  in, 
438  ;  protection  tariff  essentially 
like  those  of  France,  Germany, 
etc.,  530  ;  product  of  iron,  steel, 
and  coal,  650 ;  the  basis  of 
unity,  630  ;  wool  supply,  678 

Autocracy,  in  form  of  government 
not  inconsistent  with  democratic 
methods,  526;  or  socialistic,  528- 
529 

Avarice,  its  function,  sphere  and 
cost,  201-210,  433  ;  relation  of 
to  wages,  625 

Axes,  English  and  American, 
prices,  590  ;  qualities,  596 


Babylon,  woolens,  669 

Bacon,  revenue  on  paid  by  foreign 
producers,  586 ;  exports  and 
imports,  610.013  ;  revenue  from, 
618 

Baconian  school ,  24 ;  doctrine  of 
protection,  670,  671 

Baden,  515,  528 

Balance  of  Trade,  Gregory  King's 
essay  on,  95  ;  example  of,  383  ; 
turned  in  favor  of  United  States 
by  protection  in  1824-1834,  384  ; 
Doctrine  of,  stated,  393  ;  Bacon 
on,  392-394;  examples  of  in  Uni- 
ted States  from  1802-1883,  398- 
395,  599-602;  doctrine  true  when 
statistical  omissions  are  cor- 
rected, 395  ;  discussed  by  Adam 
Smith,  500  ;  where  no  imports 
are  needed,  effect  of,  599 


Balance  of  industries,  A.  Jackson 
on,  382 

Bank  of  England,  organization 
and  practice  of,  889 ;  profits, 
890 

Bankers,  protected  when  home 
trade  is  secured  against  foreign, 
609 

Banks,  Secretary  Chase  and  banks 
of  New  York,  221  ;  distrust  of, 
by  the  poor  causes  hoarding, 
224  ;  antiquity  of,  in  China,  334  ; 
deposits  and  checks,  349  ;  notes 
of,  850  ;  national,  351  ;  secured, 
851  ;  state  and  private,  352  ; 
part  of  banks  in  crises,  871-873; 
limitations  on  Bank  of  England, 
374  ;  stopped  in  1857,  377  ;  prac- 
tice of  Bank  of  England  in  a 
panic,  378,  389  ;  banks  may  be 
led  into  inflation  by  excess  of 
goods,  384 ;  may  by  discounts 
produce  inflation,  389 ;  may 
profit  by  crisis,  389  ;  policy  of 
i  standing  by  each  other,  389 ; 
debts  of,  in  United  States,  448  ; 
part  of  banks  in  aiding  govern- 
ment in  Russia  in  its  issues  of 
paper  money,  528,  529  ;  relation 
of  woolen  industries  to,  609 

Banks  for  savings,  deposits  in, 
in  United  States,  190 

Bankruptcy,  effects  of  by  gov- 
ernment, 221  ;  in  United  States 
in  1854-7  produces  crisis  in 
England,  876-378;  alleged,  of 
Russia,  529  :  individual,  avoided 
by  national  liquidation  of  debt 
at  current  values,  529 

Bark,  tanning,  protection  on  and 
export  of,  610 

Barter,  doctrine  of,  applied  to 
domestic  wages,  821-823  ;  inter- 
national trade  is  not,  601  ;  if  it 
were  it  would  be  oppressive  in 
refusing  most  of  our  products, 
602 

Bavaria,  515,  522,  523 

Beef,  duties  on,  382  ;  paid  by 
foreign  producers  as  to  United 
States,  586,  610,  613 

Beer,  protection  and  export  of, 
610 

Belgium,  trade  with  France,  26  ; 
wool,  20;  silks,  coals,  wool,  hops, 


GENERAL  INDEX. 


11 


glass.  2  ;  travel  in,  28  ;  unit  of 
coinage.  338 ;  government  of, 
407 ;  proportion  of  improved 
land  and  tillage.  540  ;  rates  of 
wages  in,  581,  511  ;  our  balance 
of  trade  against,  oJ)9-602  ;  jiro- 
duct  of  iron,  steel  and  coal  in 
1883,  650 

Bells  and  bronze,  duty  on  and  ex- 
port of.  610 

Beneficence,  of  the  adjustment  of 
each  part  of  society  to  every 
other  through  interest,  400,  401  ; 
of  the  economic  law  that  prices 
rise  when  production  is  small, 690 

Bengal,  petition  of  cotton  and  silk 
manufacturers  of,  for  protection 
against  English  competition,  487 

Berlin,  405,  514  ;  Berlin  and  Milan 
decrees,  640 

Billiard  tables,  export  of,  610 

Bimetallism,  361-369 

Birmingham,  American  cheapness 
in  iron  and  steel  wares  affects  it, 
596 

Blacksmith's  tools,  383  ;  wages  in 
various  countries,  511 

Blacking,  export  of,  610 

Blankets,  protected,  383  ;  wool  for, 
672  ;  consumers  of,  589  ;  not 
taxed,  590;  shoddy  in,  590;  prices 
of,  in  England  and  America,  590 

Bolivar,  monetary  unit  of  Vene- 
zuela, 338 

Bolivia,  monetary  unit  of,  338 

Boliviano,  336 

Boards,  local  diversity  of  in  Eng- 
land 478  ;  Boards  of  trade  on 
destruction  of  silk  industry  in 
England,  636,  637  ;  on  Canadian 
manufactures,  665 

Bonanza  farming,  262-272 

Bonds,  national,  bearing  interest, 
relation  of  to  notes,  392 

Bonnets,  protected,  383  ;  exi)orts, 
610  ;   imports  and  revenue,  613 

Books,  duties,  383  ;  imports  and 
exports,  duties  on,  revenue  from, 
610,  613 

Boots  and  shoes,  recent  strikes  in, 
328  ;  heavily  protected  from 
1816-1828,  383  ;  w;iges  in  Mus- 
saclnisetts  and  England,  583; 
producticm  and  prices  in  Amer- 
ica and  Great  Britain,  697,  698 


Borough  boards  and  rates,  477-479 

Boston,  glass,  644 

Bounties,  in  land,  144;  on  export  of 
beet  sugar  essentially  a  fiction, 
506  ;  the  substitution  of  bounties 
for  duties  is  generally  a  free 
trade  notion,  597 ;  objections 
to,  596;  on  silk  culture,  632;  on 
ships  by  British  government, 
659  ;  on  sheep  culture — killing 
wolves,  676  ;  on  salt  production 
in  Michigan,  695 

Bourgeoisie  in  France,  403 

Brandy,  English,  482;  German,  520 

Brass,  383;  in  coinage,  339;  success 
of  American,  596  ;  imports  of 
and  revenue  from,  613  ;  exports 
of,  and  duty  on  imports,  610 

Brazil,  coinage  of,  338 ;  British 
control  of  trade  of,  516,  670  ; 
tariff,  530  ;  protection  of  metals 
in  chart,  366  ;  balance  of  Am- 
erican trade  with,  600  ;  benefited 
by  removal  of  American  duties 
on  coffee,  600  ;  England's  trade 
with,  689 

Breach  of  trust,  as  a  mode  of  con- 
quest, 484 

Breeding  of  sheep  to  any  pattern, 
671  ;  in  France,  674 

Bread  and  breadstufls,  cost  of,  25  ; 
relation  of,  to  laboring  class,  26  ; 
dealing  in  breadstuffs  and  pro- 
visions on  boards  of  trade  or 
produce  exchanges,  105-120 ; 
effect  of  rise  in  price  during 
scarcity  to  cause  economy  in  use 
of,  106-120 ;  capacity  of  a  few 
to  produce,  220  ;  black  bread  in 
India,  227  ;  home  market  for, 
382  ;  export  of  breadstuffs  from 
Fnuice  prohibited  by  Colbert  in 
interest  of  manufacturer,  60  ; 
German  trade,  in,  519;  effect  of 
duties  on  trade  between  Canada 
and  United  Slates,  533 ;  bread 
not  reduced  in  price  by  repeal  of 
corn  laws,  558  ;  revcniue  on  im- 
ports, of  into  United  States  paid 
by  foreign  producers,  586 ;  ex- 
ports of,  610  ;  imports  and  rev- 
nue  from,  613  ;  consumer  paj's 
no  revenue  on,  615 

Breech-loaders,  American  manu- 
facture for  export,  596 


12 


GENERAL  INDEX. 


Bremen,    523 ;    steamer     line    to 

(American),  how  destroyed,  657 

Brewers,  incidental  protection  to, 

in  England,  482 
Bribery,  agency  in  procuring  the 

Act  of  Union,  493 
Brick,  strikes  and  losses  in,  328 ; 
England  gives  Ireland  free  brick 
but  protects  herself  against  Irish 
brick,    493 ;    revenue    collected 
from    Canadians    on,    586 ;   ex- 
ports of,  610  ;  wages  of  making 
in  Massachusetts  and  England, 
582  ;    imports  of,  and   revenues 
from,  614 
British  Empire  (see  Great  Britain) 
British  Indies,  balance  of  trade  of, 

against  United  States,  600 
British  advice,  through  free  trade 
leagues,  604  ;  from  John  Brinht, 
608' 
British  drumbeat,   who  pays  the 
dnmimer,  686  ;  extent  of  British 
trade  in  cotton  goods  with  co- 
erced countries  compared   with 
her  free  trade,  689 
Bridges,  Roman,  taxes  on,  454 
British  cholera,  488 
Broad,  coin  of  Cromwell,  340 
Broadcloths,  wool  for,  672 
Bronze,    339  ;  duties  on,   and  ex- 
ports of,  610  ;  age  of,  645 
Brooms,  exports  of,  610  ;  imports 

of,  and  revenue  from,  613 
Buckets,  export  of,  from  United 

States,  596 
Budget,  annual,    453;  of    United 
States  in  1883,  468  ;  of  1882  and 
1878  in  Great   Britain,   479;  of 
1878  in  France,  498 
Buenos  Ayres  tariff,  530 
Building     trade,     wages    of,     in 
United  States  and  Great  Britain, 
582 ;  strikes  and  losses  in,  310, 
328 
Bulgaria,  roses  in,  215 
Bullion,  relation  of,  to  money,  335 
Bureaucracy,  406 
Burlingame  Mission,  535,  550 
Butter,  under  tariff  of  1816  to  1828, 
383;    duty    on    does    not   affect 
price,  586  ;    amomit  of  revenue 
collected  by  United  States  from 
Canadians  on,  586,  591  ;  export 
of,    610 ;    import    and   revenue 


from,  613  ;  export  of  butler  and 
duties  on  salt,  696 
Buying,    necessity  of,  in  order  to 
sell,  a  specious  economic  error, 
599,  602 

C. 

Cabinet,  construction  of,  410 

C^alicut,  trade  of,  486 

Calicoes,  importa(i(jn  into  England 
prohibited, 489;  in  1720  lined  per- 
sons found  wearing,  489,  670  ; 
Napoleon  on,  678 

California  gold,  385 

Cambrics,  France  prohibited,   500 

Cambridge,  IMassachuselts,  glass 
manufacture,  641 

Camel,  iron  and  steel  brought  by, 
from  China  2000  B.C.,  643 

Canada    (British     possessions     in 
North  America),  coinage  of,  386  ; 
national      policy      of     internal 
improvements      and    protection 
in,    531-533;    Canadian   liberty 
largely  enhanced  by  her  juxta- 
position   to  the   United  States, 
531  ;  American  duties  on  Cana- 
dian  products   largely   paid  by 
Canadians,    532-533,     591-594; 
relative  taxes  in  Canada  and  Ver- 
mont,  576 ;  free  trade  can  only 
exist  in  connection  with  national 
and    political    unity,  574,    576 ; 
Canada  reaps  onlj'  where  she  has 
sown,    575,    576 ;  Canada   pays 
through  the  American  tariff  for 
her  political    sovereignity,   how 
much  ?  598,  599  ;  same,  615,  618  ; 
conditions  of  lumber   trade  be- 
tween  Canada  and   the  United 
States,  616;   progress  of  manu- 
factures   in,    under     "national 
policy,"  664-668;  her  growth  in 
woolen  and  cotton  manufacture 
compared  with  the  northwestern 
States,  665  ;  report  of  Dominion 
board  of  trade  on,  665;  England's 
trade  in  cotton  goods  with,  689 
Canals,    effect  of,  150,    152,    154 ; 

Chinese  living  on,  545 
Cast-steel,  English  and  American 

prices  of,  590 
Canvas,  652 
Candles,    England    gives    Ireland 


GENERAL  INDEX. 


na 


free  caudles,  but  sews  by  a  pro- 
tected candle,  493  ;  exports  of, 
610 ;  imports  of  and  revenue, 
613 

Caps,  export,  610 ;  imports  and 
revenue,  613 

Carpenter's  tools,  596 

Carpets,  protected,  383  ;  when  in- 
troduced in  France,  639  ;  carpet 
wools  not  produced  in  United 
States,  675 ;  duty  on  carpet 
wools  is  therefore  a  revenue 
duty,  6.-8 

Capital,  its  relation  to  credit,  6  ; 
when  scarcity  in  producticm  is 
capital  according  to  Tooke, 
116;  wages  are  capital,  134; 
parts  with  labor  when,  163  ;  di-, 
vision  of  product  between  capi- 
tal and  labor,  163-166  ;  capital 
employs  only  for  profit,  169 ; 
sharing  of  returns  of  industry 
between  capital  and  labor,  172- 
181 ;  in  Great  Britain,  176  ; 
capital  replaces  wealth  con- 
sumed in  production,  180 ; 
economy  of,  in  organizing  in- 
dustry, 188,  195 ;  rates  of  profit 
depends  on  turning  frequentlj^ 
192  ;  in  particular  enterprises  de- 
clines in  rate.4  of  profit,  but  not 
in  general  industry,  195  ;  de- 
fined, 196,  197  ;  fixed  or  circu- 
lating, 198 ;  rules  labor  by  dis- 
tribution to  want,  201  ;  subdi- 
vision of,  destroys,  203  ;  accumu- 
lation of  wealth  is  lumiane,  203  ; 
is  not  the  antithesis  of  labor, 
211  ;  is  the  opposite  of  a  hoard, 
because  always  in  social  use,  211  ; 
effects  of  large  capitals  on  indus- 
try, 219 ;  how  massed  to  con- 
trol capital,  220  ;  small  capitals 
earn  large  rates  of  profit,  222  ; 
and  vice  vfrsn,  223 ;  all  repro- 
ductive capital  in  constant  social 
use,  224  ;  large  capitals  promote 
wages,  227 ;  basis  of  theory  of 
diminishing  returns,  228 ;  bal- 
anced by  theory  of  new  fields, 
229;  wages  are  capital,  234, 
235  ;  capital  the  guaranty  of 
wages,  235;  why  land  is  deemed 
an  investment  of  capital  in 
United   States  and  not  in  Eng- 


land, 241  ;  Views  of  Hamilton, 
Bastiat,  Roscher,  as  to  capital  in- 
vested in  land  being  an  element 
in  rent,  241  ;  large  capitals  in 
farming,  262-267  ;  economy  of 
tenant  farming,  268-272  ;  econ- 
omy of  large  holdings  of  land, 
268-273 ;  capital  divides  as  a 
partner  with  the  labor  it  em- 
ploys, 309-314  ;  but  in  a  mode 
governed  by  conditions,  312 ; 
will  the  tendency  of  capital  to 
share  profits  increase  ?  314 ;  ex- 
haustion of  capital  a  cause  of 
crises,  378  ;  Price  on  crises,  379  ; 
capital  as  a  power  among  democ- 
racies, 402  ;  how  represented  in 
Roman  elections,  412  ;  Calhoun 
on  representation  of  capital,  412- 
415 ;  not  well  represented  in 
British  House  of  Lords,  426 ; 
inducement  to  loan  to  govern- 
ment, 448 ;  relative  equality  of 
taxes  on  capital  and  on  incomes, 
consumption,  etc.,  456  ;  Ricardo 
on,  457  ;  Mill  on,  463,  464  ;  plu- 
ral voting,  479  ;  spoliation  of 
capitalists  in  India  leads  to  ces- 
sation of  industries  and  great 
famines,  485-488,  625  ;  loans  of, 
by  Germany,  520  ;  gains  to  both 
profits  and  wages  bj^  capital  in 
form  of  machinery  and  animals, 
540-543  ;  increased  employment 
for,  under  protection,  not  met 
by  free  traders,  560  ;  capital  and 
wages  may  both  get  higher  pay 
in  one  country  tiian  another, 
579,  582  ;  Perry's  error  refuted, 
579-582  ;  the  taxing  power  is  it- 
self a  form  of  capital  and  as  such 
may  like  all  capital  promote  pro- 
duction, 585  ;  reasons  recpiiring 
a  42  per  cent,  tarilf  to  ensure 
occupations  involving  ('([ual 
"effort"  with  those  conducted 
by  foreign  capital,  5S5 ;  great 
capitals  seeking  profit  are  the 
best  guaranty  of  high  wages, 
625 ;  dilliculty  of  arriving  at 
capital  accurately  in  census, 643  ; 
capital  invested  in  imported 
American  shii)s  would  always  be 
foreign  cai)ital,  661,  (i62  ;  capital 
invested    in    manufactures    iu 


714 


GENERAL  INDEX. 


Cauadu,  665,  666  ;  capital  con- 
verted by  steam  inventions  into 
the  chcai)est  of  all  laborers,  681 

Carolina,  Kortli  and  South,  silk 
raising  in,  631 

Carpets,  M'ages  in,  in  United  States 
and  England,  582 

Carriage,  wages  in  manufacture  of, 
in  Massachusetts  and  Great  Brit- 
ain, 582 

Carrying  trade,  betvpeen  England 
and  United  States,  brought  down 
to  free  competition  in  1816,  cap- 
tured by  England  (656)  through 
protection  to  her  iron  and  steel 
manufactures,  (648)  subsidies 
(659)  reciprocity  (655),  piracy 
(()68),  and  other  phases  of  "right- 
eousness," 608 

Catallactics,  as  a  synonym  for 
political  economy,  7 

Cattle  used  as  mon«}*,  333 

Caucus,  for  nominating  candi- 
dates, 417 

Carrying  trade,  decline  of,  656; 
causes,  640-664;  extent  of,  659 

Carriages,  exports  of,  610;  imports 
of  and  revenue  from,  613 

Cars,  railroad,  exports  of,  610 

Carthage,  453;  tribute  of  to  Rome, 
454  '^ 

Carts,  exports  of,  610 

Cash,  when  credits  turn  into  cash, 
money  being  cheap,  221 

Cashmere  wool,  672 

Causes  of  transfer  of  any  protected 
industries  to  protective  countiies, 
681 ;  made  verj^  plain  where  two 
competing  countries  liaving  the 
same  race  and  natural  facilities 
protect  opposite  classes  of  in- 
dustries, 681;  and  these  two 
classes  migrate  in  opposite  di- 
rections, but  always  toward  pro- 
tection and  from  free  trade, 682; 
of  failure  of  Confederate  States, 
688,  694 

Census,  exceptions  from,  25;  can 
not  take  note  of  losses,  71;  its 
value  in  economics,  38;  popula- 
tion of  United  States  by,  146 ; 
earnings  of  British  people  by, 
176;  failures  of  enumeration  in, 
224;  Roman  census  a  means  of 
connecting  wealth  with  voting 


power,  412;  of  1880  in  United 
States  and  1872  in  France,  486; 
no  official  census  by  Chinese  gov- 
ernment, 537,  5o8;  alleged  cen- 
suses of  China  fictitious,  538; 
their  contradictions  and  absur- 
dities analyzed,  539-543;  census 
figures  of  United  States  are  vague 
as  to  capital  invested,  643 

Centralization,  varies  in  republics, 
416;  in  France,  497;  Germany, 
514-525;  in  Canada,  531 

Ceylon  pearl  divers,  414;  Ceylon, 
England's  trade  in  cotton  goods 
with,  689 

Character,  an  element  in  economic 
success,  307;  qualities  which 
give  political  leadership  deter- 
mined by  economic  conditions, 
402 

Charity,  relation  of,  to  industry, 
199-210;  is  evoked  by  social  de- 
mand, 204;  relation  of,  to  luxury, 
213-215;  to  co-operative  schemes, 
314;  to  utility  of  social  services, 
325 ;  altruistic  effects  obtained  by 
egoistic  means,  433;  social  effects 
of  pursuing  charity  to  the  pre- 
judice of  industry,  446  ;  soup- 
kitchens  and  other  relief  during 
cotton  famine  in  England,  690 

Charts,  of  prices  of  wheat  in  Eng- 
land, United  States,  and  France 
from  1780  to  1880,  124;  of  im- 
migration into  United  States,  147; 
of  relative  values  of  gold  and 
silver  produced  in  two  suc- 
cessive periods,  365;  of  pro- 
duction of  precious  metals,  366; 
of  prices  from  1790  to  1875, 
380-1;  of  prices  and  expansion 
in  crises  of  1837  and  1857,  387 
of  growth  of  debt,  447;  of 
revenues  and  expenditures  of 
United  States  from  1790  to  date, 
469;  of  miles  of  railroad  built; 
iron  and  steel  rails  made;  total 
rails  made;  rails  imported;  con- 
sumed; pig-iron  made;  rolled 
iron  made;  prices  of  pig  and 
rolled  iron  and  steel  rails;  pig- 
iron  produced  in  Great  Britain, 
and  immigration  for  23  years  to 
1883,  651;  prices  of  wool  in  Eu- 
rope   and     United    States,    and 


GENERAL  INDEX. 


-715 


"  who  pays  duties  ou  wool,"  681; 
of  average  price  of  cotton  per 
pound  from  1790  to  1844,  6S7 

Cheapness,  distinction  between,  in 
temporary  suppl}-  and  in  per- 
manent sources  of  supjily,  117, 
508;  large  capitals  promote,  206; 
in  railway  freiglits,  '220;  of 
money,  turns  credits  into  cash, 
221;  depends  on  dimensions  in 
production,  219;  relative,  of  gold 
and  silver,  841,  342;  of  a  metal 
promotes  its  circulation  if  free 
coinage  is  given,  341,  342;  causes 
no  increase  of  consumption 
where  motive  is  display,  475;  of 
beet  sugar,  505;  opposition  of 
English  reiiners  to,  505;  J.  S. 
Mill  holds  that  if  other  nations 
could  carry  for  England  cheaper 
than  English  vessels,  this  would 
be  a  deficienc\'  needing  remedy 
by  protective  laws,  557;  not  se- 
cured by  repeal  of  corn  laws, 
558;  cheapest  to  buy  may  be 
dearest  in  use,  567;  ultimate 
cheapness  only  attainable 
through  present  clearness,  569; 
cheap  goods  and  machine  labor, 
584;  of  American  iron  and  steel 
wares  in  1868  relatively  to 
foreign,  notwithstanding  bar  and 
pig-iron  were  dearer,  596;  London 
Times  on  How  is  that?  596; 
where  cheapness  depends  on 
having  the  entire  home  market, 
protection  secures,  609;  effort  of 
American  free  traders  to  get 
cheapness  by  low  duties  caused 
the  war  of  1860-65  for  secession, 
648-650;  transient  compared  with 
permanent  cheapness,  675 

Cheese,  revenue  paid  by  foreign 
Canadian  producers  on,  586;  ex- 
port of,  610;  import  and  revenue 
from,  613 

Chisels,  English  and  American 
prices  of,  590 

Cholera,  economic  causes,  the 
origin  of,  485 

Chicago,  Board  of  Trade;,  mode  of 
doing  business  on  and  economy 
of,  102-120;  anarchists  of,  91; 
city  government  of,  405 

Chicory,  excise  on,  481 


Children,  provision  for  support 
of,  by  state,  477;  labor  in  fac- 
tories in  Russia,  527;  relative 
wages  of,  in  Massachusetts  and 
Great  Britain,  482 

Chili,  monetary  unit  of,  338;  mili- 
tary successes  against  Peru,  440; 
tarilf,  530;  England's  trade  in 
cotton  goods  with,  689 

China  (ware),  exports  of,  610;  im- 
ports of  and  revenue  on,  613; 
prices,  how  affected  by  Am- 
erican tariff  and  manufacture, 
621;  introduced  into  France 
when,  639 

China,  area,  141,  537;  immigration 
from,  148;  displacement  of 
Chinese  labor  by  English  ma- 
chinery, 209;  Adam  Smith  on 
wealth  of,  215;  unlike  conditions 
of  labor  in,  and  lower  eai-nings, 
297;  economic  and  climatic  con- 
ditions, effect  on  the  form  of 
government,  402;  political  parties 
in,  404;  tax-collectors  in,  453; 
taxes  in,  455;  opium  war  on, 
534;  loss  of  sovereignty,  as  to 
tariffs,  533;  exodus  of  the  people 
w^ould  follow  introduction  of 
English  railroads  and  banks,  536; 
sources  of  misinformation  con- 
cerning, 536;  opium  trade  detri- 
mental to  (Cobden),  536;  size  of 
army,  537;  censuses  fictitious, 
538;  analj'sis  of  their  discre- 
pancies, 538-541;  absence  of 
beasts  of  burden  and  machinery, 
540;  economic  bearnigs  of  tliis 
absence,  540-545;  limils  on  pop- 
ulation in,  547;  breatli  of  re- 
ligious toleration  in,  550;  internal 
trade  of,  renders  external  trade 
not  essential  either  to  supply  or 
prices,  552;  balance  of  trade  in 
favor  of,  against  the  I'nilcd 
States,  6()0;  iron  and  steel  lirst 
brought  from  by  camel,  645; 
England's  trade  with,  689 

Chinese  empire,  proporlion  of  area 
and  population  to  China  projier, 
541 

Chinese,  148;  immigration  of,  321; 
I)aper  money  among  ancient, 
334;  opium  trade  detrimental  to, 
536;   social   liabits   of  the,   545; 


716 


GEJ^ERAL  INDEX. 


must  take  American  agricultural 
implements  to  China,  551 

Chrematistics,  11 

Christian  world,  in  iron  and  steel, 
645,  646 

Church,  increasing  utility  and  dim- 
inishing cost  (value)  as  society 
advances  (Elder),  324  ;  eflect  of 
union  with  state,  402  ;  attitude 
of  state  toward,  in  France,  403  ; 
and  land-owning  gentry  in  Eng- 
land, 406  ;  of  iiome,  418  ;  pur- 
suit of  secular  interests  is  health- 
ier econoniicall}'  than  excessive 
addiction  to  the  enthusiasms  of 
the,  446  ;  church-rates  in  Eng- 
land, 477  ;  number  of  clergj-  in 
France,  496  ;  large  proportion  of 
women  in  orders,  497  ;  vital  in 
Russia,  530 

Cider,  England  keeps  protected 
cider  and  gives  Ireland  free 
cider,  498 

Cigars,  protection  to  manufactur- 
ers of,  in  England,  481  ;  revenue 
on,  imported  into  United  States, 
by  whom  paid,  586  ;  export  of, 
611  ;  import  and  revenue  from, 
614 

Cities,  feeble  class  in,  121  ;  again, 
219  ;  rents  in,  238-243  ;  compar- 
ative failure  of  government  of,  in 
United  States,  405  ;  in  France, 
416 ;  taxes  in,  in  United  States, 
468  ;  rates  in,  477  ;  in  England, 
built  on  trade  in  India,  486 

Circulating  capital,  investment  of, 
in  fixed  capital  may  produce 
crisis,  378 

Civilization,  relation  of  ownership 
to,  23 

Civil  service,  in  United  States, 
416;  corresponds  to  bureaux, 
416,  427  ;  in  India,  485  ;  contrast 
in  salaries  paid  to  conquered  and 
conquering  race,  485-486 

Classes,  owe  something  to  each 
other,  21  ;  value  to  working, 
of  an  extra  dollar,  583  ;  fallacy 
of  protected  and  unprotected,  in 
United  States,  320  ;  governing, 
in  republic,  416  ;  rich  and  poor, 
in  same  district,  must  be  com- 
pared as  to  crime,  442  ;  effect  of 
yank  on  crimes  of  men  and  wo- 


men, 442  ;  enterprising  class,  not 
same  as  lenders  to  government, 
449  ;  government  in  the  interest 
of  the  English  manufacturing 
class,  437,  438  ;  in  France,  496  ; 
of  population  forming  British 
empire,  516  ;  taxes  on,  in  Ger- 
many, 528  ;  social,  in  Russia, 
526  ;  free  trade  in  England  and 
United  States  as  a  class  interest, 
605,  606 

Clergyman,  invented  power  loom, 
685 

Climate,  effect  of,  on  economical 
and  political  institutions,  402 

Clocks,  American  superiority  in, 
596;  exports  of,  610;  imports 
and  revenues,  613 

Clothes,  of  wool,  672 ;  shoddy, 
672  ;  trade  in  French  and  Eng 
lish,  674 

Clothing,  520  ;  wages  in  manufact- 
ure of,  in  Massachusetts  and 
Great  Britain,  589  ;  strikes  and 
losses  in,  328 ;  revenue  on  im- 
ports of,  in  United  States,  whom 
paid  by,  586 

Clothing  wools,  679-681 

Coals,  trade  between  Belgium  and 
France,  26  ;  England,  27  ;  acci- 
dents in  mines,  32 ;  quantity 
mined  in  Germany,  520  ;  revenue 
paid  by  foreign  producers  on, 
imported  into  United  States,  586; 
exports  of,  610  ;  imports  of  and 
revenue  from,  613 ;  consumer 
does  not  pay  the  duty,  615  ; 
world's  product  of  coal  in  1883, 
650 

Coasting  trade,  defined,  653  ;  ves- 
sels in,  how  protected  by  naviga- 
tion laws  in  tjnited  States,  652- 
654*  effect  of  "free  ships"  if 
extended  to,  654,  655;  protected  in 
England  until  1849  ;  ships  built 
by  foreign  capital  could  not 
safely  take  part  in  American 
coast  trade,  661,  662 

Coercion,  in  the  state,  433 

Coffee,  free  American  import  of, 
600  ;  rise  of  price  on,  in  Brazil 
when  American  duty  removed, 
600  ;  export,  imports  of,  610,  613 

Coffee  mills,  prices,  590  ;  qualities, 
596 


GENERAL  INDEX. 


rn 


Coin,  apscrtod  to  be  a  form  of 
credit,  6  ;  amount  of  in  Unit- 
ed States  in  1861,  221  ;  not  the 
sole  money  in  certain  senses  and 
yet  the  sole  mone}'  in  others, 
330  :  standard  and  subsidiary  or 
fractional,  835;  not  of  invariable 
value  but  less  variable  than  bul- 
lion, 335  ;  coins  of  United  States, 
337;  of  England,  339-342; 
value  of  the  standard  coins  of  all 
nations  certified  by  the  United 
States  mint,  338  ;  prices  of 
rare,  340  ;  of  England,  342 ;  de- 
mand for,  produces  financial  cri- 
ses, 377  ;  history  of  debasing  the 
coinage  in  England,  339-342 ; 
over-valued  metal  seeks  the  mint, 
341  ;  under-valued  the  melting 
pot,  342  ;  total  gold  coinage  of 
France,  England  and  the  United 
States,  386  ;  paying  out  coin  as  a 
means  of  resumption,  529 

Coinage  in  United  States,  384  ;  rap- 
idity of,  from  1851  to  1875,  306 

College,  electoral,  in  United  States, 
how  superseded,  419 

Colombia,  monetary  unit  of,  338  ; 
tariff,  530 

Colonies,  British,  thrift's  of,  530  ; 
protective,  except  in  India,  531, 
064 ;  policy  towards  American 
colonies,  631,  647,  648;  tariff 
policies  of,  identical  with  that  of 
tlie  United  States — all  protective, 
664 ;  British  policy  concerning 
colonies,  689 

Colonization,  445 

Colors,  exports  of,  610 ;  imports 
and  revenue,  613 

Combinations  of  labor,  300-307  ; 
Jevons  on,  302 

Combing  wools,  679,  680 

C()ml)s,  export  of,  610  ;  imports 
and  rev(;nuc  (included  in  fancy 
arliclcs),  613 

Cornilia,  412 

Connnerce,  as  related  to  trade,  6  ; 
Gossen's  theory  of,  94;  how  all 
commerce  seeks  to  concentrate 
in  markets,  100  ;  regulating 
inter-state,  in  the  Unit(!d 
States,  159;  if  business  is  more 
commercial  tlian  maim  fact  wring, 
labor's  share  is  less,  312;    crises 


in  commerce,  371  ;  subtracting 
coin  from,  384  ;  number  of  per- 
sons engaged  in,  in  France,  496  ; 
should  be  conlined  (Jetferson)  to 
importing  articles  we  cannot  pro- 
duce, 596 ;  America's  foreign 
commerce  increases  seven-fold 
from  1840  to  1880,  while  per- 
centage carried  in  American  ves- 
sels declines  six-sevenths,  656  ; 
British  commerce,  how  "fed" 
as  to  its  main  arteries,  657 

Commodity  defined,  89,  197  ;  de- 
fined by  Marx,  91  ;  what  is  a  fin- 
ished, (371 

Common  sense,  and  national 
safety,  570 

Commonwealth  or  state,  57-60 ; 
power  over  citizens,  58 

Conmions,  House  of,  37,  133,  140  ; 
composed  of,  406 ;  origin  and 
development  of,  from  a  body  of 
petitioning  tax  suggesters  into  the 
supreme  power,  408-412  ;  minis- 
ters sit  in,  411  ;  members  un- 
paid, 424  ;  of  Ireland,  in  1799, 
plead  for  protection,  not  union, 
492 

Commune,  Communal,  Commun- 
ism, 41-54  ;  charital)le  and  re- 
ligious, 52,  54,  131  ;  use  of  land, 
134 ;  disappearance  of,  139 ; 
spirit  of  communism  in  voting 
taxes  where  but  few  of  the  voters 
are  taxpayers,  474  ;  siiare  of,  in 
education  in  France,  497 ;  in 
Prussia,  523  ;  workings  of  prac- 
tical communism  in  ]{ussia,  526 

Communal  taxes,  523 ;  an  econ- 
omy in  communal  system  in 
Russia,  529 

Competition,  as  a  price-maker, 
90-120  ;  between  railways,  160  ; 
again,  220 ;  in  rents,  237-243  ; 
of  uses  for  land,  240;  with  old 
industries  stifiestli(!  young,  319  ; 
shut  f)ff  in  trade  enforced  on  ccm- 
(juered  couiitiies,  4()3 ;  protec- 
tion to  lionic  industry  is  a  f()rn\ 
of  intcnialioiial,  5(i8  ;  competing 
commerce  between  countries 
having  like  natural  gifts  and 
conditions,  but  unlike  artilicial 
an<l  ac(|uirablc  gifts  such  as  di- 
mensions   in  i)roductiou,  anleri- 


718 


GENERAL  WDEX. 


ority,  etc.,  ■\vhicli  time  and  pro- 
tection will  supply,  forms  the 
theme  of  tariff  contention,  568, 
573  ;  effect  of  competition  be- 
tween producers  in  different 
countries  to  make  protective 
duties  a  means  of  relief  from 
taxation  instead  of  a  tax,  586  ; 
domestic  competition  repeals  all 
Increase  of  prices  caused  by  a 
duty  and  avoids  any  economic 
occasion  to  repeal  the  duty,  596  ; 
lack  of  competition  among  em- 
ployers in  countries  reduced  by 
spoliation  of  capitalists,  625 ; 
competition  between  Canadian 
and  American  producers,  effects 
of  on  burden  of  duties  and 
prices,  615-617  ;  of  Americans 
in  silk  production,  633-636  ;  in 
glass,  644  ;  in  iron  and  steel,  646 
-651  ;  Americans  first  expel  the 
English  from  carrying-trade 
through  protection,  and  are  fin- 
ally expelled  by  them  through 
free  trade,  652-664 

Condor,  338 

Confederate  States,  financial  strug- 
gle with,  221,  353-355  ;  declara- 
tion of  war  with,  417  ;  effects  of 
war  on  Northern  prosperity,  380; 
fall  in  value  of  its  notes,  353  ; 
represented  the  free  trade  and 
slave  labor  side  of  economic 
questions — causes  of  rel^ellion, 
687,  688  ;  experienced  in  making 
salt,  694 

Confederation  of  German  States, 
515,  521-525 

Conflict  among  economists,  5-9  ; 
as  to  government,  131-133  ;  as  to 
money  and  prices,  343  ;  as  to 
theories  of  equality  in  taxation, 
456  ;  as  to  incidence  of  taxes, 
459,  460,  467 

Congo,  socialism  on  the,  23  ;  also 
slavery,  23,  41-54 

Congress,  action  of,  as  to  railways, 
145-161;  as  to  contraction  of  cur- 
rency, 392 

Connecticut,  in  1790,  140,  252,  546 

Conquest,  of  barbarians  for  trade 
purposes,  profits  of,  484  ;  of 
India,  how  effected,  484 ;  of 
sovereignties     merged    in   Ger- 


many, 522  of  China  as  respects 
tariff,  534-536 ;  of  Japan  as 
respects  tariff,  553,  554 

Conscription,  437 

Constitution,  in  all  countries,  404  ; 
in  United  States,  407  ;  Calhoun's 
definition  of  constitutional  gov- 
ernment, 413  ;  power  to  declare 
war,  417  ;  executive  and  judicial 
departments  directly  govern,  leg- 
islative and  constitution  check 
or  control  these  in  governing, 
416,  417  ;  electoral  college  in 
United  States  shorn  of  its  con- 
stitutional responsibility  by  rea- 
son of  its  meeting  at  dili'erent 
points  and  voting  at  the  same 
time,  420  ;  constitution  regarded  ' 
as  distrusting  the  wisdom  of  the 
people,  420  ;  its  most  original 
and  admirable  feature,  426  ; 
constitutionality  is  habit  in  Eng- 
land, 426  ;  checks  and  balances 
of  constitution  in  United  States, 
132-135,  427,  428 

Constitution  of  United  States 
should  be  amended  (Jefferson) 
to  allow  internal  improvements 
out  of  surplus  revenue  rather 
than  reduce  duty  on  salt,  640  ; 
inhibition  on  interstate  duties 
may  be  an  economic  burden  in 
part,  665,  666  ;  of  "  Confederate 
States,"  688 

Consumer,  causes  value,  86  ;  his 
place  in  industry,  87,  94-100 ; 
how  affected  by  grain-dealing 
on  boards,  106-120  ;  consumer's 
wealth,  216  ;  riches  can  not  add 
to  capacity  to  consume  wealth, 
224  ;  relalion  of  consumer  to 
cost  of  rent  and  produce,  242  ; 
consumers  produce  prices,  320  ; 
of  British  beer  pay  more  (Sliad- 
well)  because  of  protection  to 
brewers,  than  they  would  if  they 
had  free  trade  in  beer,  482  ; 
Doctrine  that  ' '  consumer  pays 
the  duty,"  forgotten  in  Act  of 
Union,  England  taking  the 
"  taxed  goods  "  and  giving  Ire- 
land "  free  goods,"  493  ;  increase 
of  demand  of  consumer  causes 
improved  tillage  in  Germany, 
520;   consumer  does  not  always 


GENERAL  INDEX. 


719 


pay  the  duty,  533  ;  duties  which 
consumer  does  not  pay,  586  ; 
Chicago  Tribune  on  what  the 
consumer  pays,  593  ;  how  duties 
repeal  themselves  so  far  as  they 
are  protective  taxes,  596  ;  class 
of  imports  on  which  consumer 
can  not  be  charged  with  the 
duties — the  producer  pays  them, 
610-617  ;  consumer  of  French 
woolens,  672  ;  of  EngUsh,  673  ; 
consumers  of  wool  (manufact- 
urers of  woolens)  combine  with 
producers  in  framing  American 
tariff,  677,  678  ;  fallacious  esti- 
mate of  the  increased  cost  of 
wool  to  consumers,  683  ;  contra- 
dicted by  the  testimony  of  an 
association  representing  the 
entire  force  of  wool  consumers, 
681 

Consumption,  of  meat,  bread  and 
spirituous  liquors  in  the  United 
States,  25  ;  is  the  motive  to  pro- 
duction, 88  ;  of  commodities  dis- 
tinguished from  consumption  of 
wealth,  197  ;  consumable  wealth 
not  the  subject  of  avarice,  205  ; 
demand  for,  how  controlled, 
220;  total  consumption  by  people 
in  United  States,  224  ;  limits  on, 
225 ;  of  rich  and  poor,  226 ; 
effects  of  taxes  on,  458  ;  taxes 
on  consumption  of  luxuries  ad- 
vocated by  Dr.  Smith,  461  ;  con- 
sumption of  wool  in  France, 
England,  Austro-Hungary  and 
America,  672,  673  ;  influence  of, 
on  production,  256-263 ;  of  a 
domestic  product  involves  home 
consumption  of  two  products, 
foreign  of  one,  560,  578,  579 

Contracts,  freedom  and  number  of, 
grow  with  private  titles,  23 

Contraction,  after  inflations  of  cur- 
rency, 359-360,  391  ;  effect  of, 
on  prices,  392 

Convention,  House  of  Lords  once 
a,  408  ;  system  of  nominating  by, 
422 

Convicts  (in  United  States),  440 ; 
Means  of  reforming,  445 

Coopers'  totals,  export  of,  596 

Co-operation,  concealed  under  the 
forms  of  feudalism,  225  ;  experi- 


ments in,  313  ;  at  Guize,  ]\Iinne- 
apolis,  Peacedale  and  New  York, 
313  ;  to  succeed  as  a  business 
must  profit  employer,  314 

Copper,  sole  money  in  earh'  Rome, 
334;  coinage  in  England,  342  ; 
Gernviu  trade  in,  519  ;  revenue 
paid  by  foreign  producers  on 
copper  ore.  586 ;  exports  of, 
610 ;  imports  of  and  revenue 
from,  613 

Copyright  to  authors  and  pub- 
lishers a  form  of  protection  to 
industry,  675 

Cordage,  England  hangs  Irishmen 
on  free  rope  but  Englishmen  on 
a  protected  rope,  493 

Cordova  wools,  672 

Corn,  law  governing  price  of,  96  ; 
how  in  1795-6,  96  ;  price  depends 
on  demand,  96  ;  dealing  in  on 
Produce  Exchange,  105-120 ; 
effect  of  short  crop  on  price  in 
1881,  106,  117;  prices  of,  from 
1780  to  1880  in  England,  France, 
and  America,  chart  112, 115-117; 
Tooke  on  prices  of,  115,  117  ; 
effect  of  seasons  on  prices,  113; 
effect  of  cost  of  production  on 
prices,  114  ;  prices  of,  in  1620  to 
1812,  116-117;  cornering  the 
market,  104  ;  cost  of  wheat  pro- 
ducing, 219  ;  rate  of  multiply- 
ing, and  effect  of  thin  planting, 
23i  ;  of  rents  and  transporta- 
tion, 247  ;  not  made  cheaper  by 
repeal  of  protection  to,  118-121  ; 
but  crisis  produced  by  change 
of  source  of  supply,  376  ;  Ire- 
land's interest  in  duties  on  corn, 
491  ;  export  of  corn  prohil)iteil 
by  Colbert,  501 

Corn  crushers,  American  expcjrt 
and  quality  of,  596 

Corners,  in  grain,  101-111  ;  in 
labor,  300-302 

Corn  laws,  agitation  for  re])('al  of, 
aided  by  errors  concerning 
prices,  1812-1S17,  112,  119; 
Brodrick,  Shadwdl.  McCulIoeh 
Encyclopedia  liritannica,  and 
nvn\lnian  on,  117-120,  553; 
eiiect  of  repeal  of,  470 

Corporations,  ownci ship  by  a  form 
of   private   wealth,  54,   57,    131, 


';2o 


GENERAL  INDEX. 


135,  139,  151-160,  220,  221  ;  ad- 
viintages  of  corporations  over 
iudividuals  as  producing  agents, 
57  ;  shares  of,  sell  at  a  sum  on 
which  they  will  pay  double  in- 
terest, 179  ;  stock  of,  how  con- 
trolled, 220  ;  tendency  is  toward 
corporations  in  labor  enipl(jying 
rather  than  co-operation,  314 ; 
power  of  Bank  of  England  to 
avert  or  promote  crises,  389  ; 
power  of  corporations  succeeds 
that  of  eloquence  and  political 
managers,  402  ;  taxed  in  China, 
455  ;  debts  of,  held  abroad,  and 
crises,  377 

Cost,  of  liquors,  meat  and  bread 
missions  and  instruction  in 
United  States,  25  ;  of  production 
as  a  cause  of  value,  11  ;  not 
measurable,  11  ;  nor  computa- 
able,  355  ;  repudiated  by  Tooke, 
114  ;  relation  of,  to  iitility  and 
value,  81-99  ;  error  to  suppose 
prices  are  immediately  regulated 
by,  110 ;  yet  in  long  run  how 
affected,  *220  ;  of  a  credit  cur- 
rency, 356  ;  a  fiat  money  or  labor 
money  without  cost  impossible, 
358  ;  desire  to  display  cost,  475  ; 
cost  of  collecting  revenue  in 
England,  479 ;  of  beet  sugar  in 
1799,  503;  tariff  duties  some- 
times count  as  part  of  producer's 
cost,  532 ;  cost  in  effort  not 
identical  with  cost  in  mouej', 
574 ;  cost  of  supplying  the  con- 
ditions wliich  render  American 
markets  the  best  in  the  world, 
575 ;  of  machine  labor  is  not 
synonymous  with  cost  of  human 
labor,"209,  580  ;  all  costs  of  com- 
modities, services,  and  all  ex- 
penditure is  a  compensation  to 
labor.  626  ;  of  beginning  a  new 
manufacture,  639 ;  of  British 
policy  of  subsidizing  ocean-going 
vessels  (659)  compared  with  the 
profit,  663 

Cotton  (wool  or  raw  material),  price 
of,  when  crop  is  large  or  small, 
96  ;  capacity  of  one  man  to  pro- 
duce, 220 ;  growth  in  manufac- 
ture in  war  of  1812,  380 ;  pro- 
tected, 383  ;  relation  of  to  slavery, 


384 ;  value  of  destroyed  in  India 
by  failure  of  manufactures,  488; 
converted  into  manure,  488 ; 
manufacture  of,  in  Canada,  531  ; 
interior  trade  of  Chinese  in, 
552  ;  cultivation  of,  partially  ex- 
tinguished by  importations  in 
Japan,  554 ;  wages  in  manufac- 
ture of,  581 ;  in  United  States, 
France,  and  Great  Britain,  581, 
582;  fibre  of,  compared  with 
wool,  672  ;  physiology  and  an- 
tiquity of  the  cotton  plant 
in  India  and  China,  683,  684; 
modern  growth  of  the  cotton 
manufacture,  684 ;  inventions 
connected  wiJh  its  modern  evo- 
lution, 685  ;  ])roduction  of  "  cot- 
ton wool "  stimulated  by  a  pro- 
tective duty,  686 ;  invention  of 
the  gin,  686  ;  export  of  cotton, 
rapid  growth  of,  G86 ;  average 
price  of  (shown  by  chart)  from 
1790  to  1844,  and  Carey's  state- 
ment of  decline  in  values  of  cot- 
ton, 687 ;  cotton  famine  in  Lan- 
cashire during  American  war, 
689-691 

Cotton  gins,  American  export  and 
quality  of,  596  ;  invention  of,  and 
effect  on  i^roduction  of  cotton, 
686 

Cotton  goods,  protected,  383  ;  pro- 
tection of,  in  United  States  op- 
posed by  producers  of  raw  cot- 
ton, 384-385  ;  manufacttirers  of 
in  India  petition  for  the  same 
protection  fiom  English  goods  as 
England  exacts  from  theirs  and 
arc  denied,  487  ;  former  manu- 
factures in  Turkey,  490,513; 
trade  of  England  with  Zollve- 
rein  German  states  in  cotton 
goods,  519  ;  weight  of  imports 
and  exports,  519  ;  acts  to  protect 
manufacture  of,  in  England,  555; 
effect  of  import  of,  from  Eng- 
land into  India,  66,67  ;  exports 
of,  from  United  States,  610 ; 
imports  of  and  revenue  from, 
613  ;  American  cottons  lead  in 
English  markets  in  quality,  623  ; 
necessity  of  manufacturing  the 
entire  American  cotton  crop  in 
America  at  an  early  date  to  keep 


GENERAL  INDEX. 


rl\ 


labor  employed,  628-6'29  ;  manu- 
facture protected  iu  Canada, 
growth,  mills,  capital,  hands, 
product,  and  prices,  664-668 ; 
kinds  of  cotton  and  woolen 
goods  produced  in  Canada,  666  ; 
Cotton  trade  iu  tlie  germ  iu  \~t\i7t ; 
rapid  growth  of,  and  of  city  of 
Manchester,  685,686;  extent  of 
production  of  cotton  goods  in 
England  in  1861,  689  ;  American 
imports  and  exports  of,  691 

Cotswold  wools,  67'3 

County,  debts  of,  in  United  States, 
448 ;  rates  for  county  uses  in 
England  477 

Coventry,  decline  of  silk  weaving 
in,  636 

Credit,  conflict  as  to  its  being 
capital,  6 ;  grows  with  private 
titles,  23,  211  ;  credit  is  wealth, 
67  ;  Confederate  rebellion  sub- 
dued on  credit,  221  ;  credit 
money,  335 ;  relative  quantity 
used,  344  ;  exchangeable  credit 
is  quasi  money,  346  ;  credit 
attracts-  gold,  350  ;  credit  based 
usually  on  securities  or  debts 
receivable,  352  ;  vokune  of,  355  ; 
how  inflations  of  credit  may  be 
caused  by  reduction  of  tarilf 
duties,  382-385  ;  and  expansions 
in  volume  of  notes  and  dis- 
counts, 387 

Crime,  in  Great  Britain,  32  ;  in 
Ireland,  33  ;  in  Austria,  33;  homi- 
cides in  Southern  States,  34,  57- 
60  ;  crime  abated  by  war,  221  ; 
right  of  free  speech  does  not  ex- 
tend to  incitements  to  crime, 
307 ;  relation  of  crime  to  the 
state,  431  ;  extent  of,  in  United 
States,  440  ;  crime  a  problem  in 
economics,  441  ;  oif spring  of 
liberty,  444  ;  land  not  alienable 
for  crime  in  Russia,  526;  colonial 
manufactures  and  exjjorts  of 
machinery  to  American  {;<)l()nies 
made  criminal,  647,  618 

Crises,  relation  of  labor  to,  190  ; 
large  capitals  lessen  sulTering  in, 
222 ;  crises  of  various  kinds, 
371  ;  of  1857  in  England,  376  ; 
exhaustion  of  cai>ital  i)roduces, 
378 ;  cause  of    crisis  oi   1837  in 


United  States,  382-385;  due  to 
delay  of  profits  on  good  enter- 
prises, 391  ;  crises  minimize  the 
pain  of  failure  iu  industries  no 
longer  socially  needed,  396  ;  and 
steer  invention  and  capital 
into  needed  channels,  397  ;  may 
be  the  penalty  of  mismanage- 
ment or  ignorance  on  the  part  of 
government,  397  ;  of  1816-1819 
iu  United  States,  514  ;  of  1833, 
515  ;  silk  mania  and  crises  1828- 
39,  632,  633  ;  peace  and  free 
trade  crisis  of  1818-19,  641,  643 

Crockery,  decline  of  tariff  tax, 
with  increase  in  domestic  pi'o- 
duction — the  duty  not  identical 
with  the  tax,  621 

Crops,  how  values  of  increase, 
258 ;  share  of,  taken  for  taxes, 
455  ;  ratio  of  crops  to  taxes  in 
India,  486 ;  rotation  of  crops 
under  protection,  570,  571 

Crusades,   447,   550 

Cuba,  monetary  unit  of,  338 ; 
trade  of  with  United  States,  600 

Culprits,  440 

Crown,  unit  of  Denmark,  Norwav, 
Sweden,  338 

Crown,  lands,  produce  from,  479 

Cidtivation,  began  where,  645 ; 
the  quality  of,  depends  on  near- 
ness to  markets  and  position 
relative  to  demand,  241-253  ; 
extensive  cultivation  exhausts 
soils,  253-256;  intensive  improves 
soils,  256-274;  of  food  plants, 
evolution,  275-280  ;  decline  of, 
in  Ireland,  274  ;  of  land  in  India, 
486  ;  labor  turned  to  cultivation 
of  land  by  crises,  397 ;  lanil 
going  out  of  cultivation  in  Tur- 
key, 490 ;  of  vine  in  France, 
497;  of  land  in  Cermany,  52  » ; 
ratio  of  tillage  to  entire  area  iu 
Belgium,  New  Jersey,  China, 
510  ;  England,  Wales,  Kiangse, 
France,  S'unyan,  Swit/eiland, 
Illinois,  Foo-Keen,  ('oiiiiccticut. 
New  York,  iMassachusctIs, 
Ifliodc  Island,  and  Kwei  Choo 
(•oMii)ared,  546  ;  wheat-lands  of 
England  go  out  of  cultiva- 
tion after  repeal  of  corn  laws, 
559 


V2-2 


GETiEEAL  INDEX. 


Cultivators  (machines),  siiiicriority 
of  American  abroad,  59() 

Cunard  Line  of  steamers,  by  what 
means  it  killed  the  Collins  line, 
657,  664 

Currency  (see  Money),  national 
debt  is  international  currency, 
its  payment  contraction,  354  ; 
relation  of,  to  prices,  386-389  ; 
of  Russia,  suspensions  and  re- 
sumptions on  528,  529  ;  acts  to 
protect  in  England,  555 

Currj'-combs,  export  of,  596 

Customs,  revenue  from,  in  United 
States,  468  ;  chart  showing  ratio 
of  customs  to  total  revenue  in 
United  States,  469  ;  how  the 
same  duty  can  produce  both 
revenue  and  protection,  469  ; 
revenue  from,  in  England,  479  ; 
decline  in,  since  1858,  480 ;  in- 
crease on  tobacco,  480  ;  number 
of  customs  officials  in  Great 
Britain  and  United  States,  482  ; 
customs  of  France,  498 ;  cus- 
toms union  or  "  Zollverein  "  in 
Germany,  514 

Cutlery,  American  errors  taught 
in  the  colleges  but  corrected  in 
the  factories,  594-598  ;  whatever 
people  can  make  buttons  with 
which  to  buy  cutlery  can  make 
cutlery  witli  which  to  pay  for 
the  buttons,  596  ;  if  we  have  the 
bones  we  sliould  make  the  but- 
tons— if  we  have  the  ores  we 
should  make  the  steel,  598  ; 
Jefferson  says  so,  598  ;  Englisli 
maniifacturers  pay  part  of 
American  duties  on,  621 

Cut  nails,  American  report  of, 
596 

D. 

Damascus,  once  a  centre  of  the 
cotton  and  stec^l  manufacture, 
490 

Dearness,  no  check  on  consump- 
tion, but  a  stimulus,  when  tlie 
motive  of  consumption  is  dis- 
play, 475  ;  British  beer  made 
dearer  according  to  free-trade 
theorists  by  lack  of  free  foreign 
beer,   482  ;  permanent    dearness 


ensured  by  breaking  down 
domestic  sources  of  supply 
wherever  the  foreign  supply  is 
inadequate,  510 ;  is  in  inverse 
ratio  to  weight  (fine  goods  make 
small  parcels),  518  ;  better  than 
cheapness  as  to  things  nationally 
desirable  (Mill),  557  ;  in  imple- 
ments the  best  is  cheapest  what- 
ever it  may  cost  (London  Times), 
596  ;  when  protection  against 
importation  does  not  involve 
dearness  in  first  instance,  609  ; 
no  protective  duties  occasion 
dearness  but  those  that  are  stim- 
ulating a  new  industry,  624 ;  cost 
of  beginning  new  industry 
(glass),  639  ;  dearness  of  the 
cheap  goods  got  under  low 
duties  but  paid  for  by  war  of  1861 
-65  and  loss  of  American  carrj'- 
ing  trade,  648-650 

Debasing  coinage,  in  England, 
339-342 

Debt,  effects  of,  211  ;  on  value  of 
currency,  221  ;  on  credit  and 
cash  paj'ments,  221  ;  the  basis  of 
credit,  352  ;  Foreign  debt  may 
produce  financial  crises  in  coun- 
try owing  it  (■NlcCuUoch),  377  ; 
bad  economy  to  pay  debt  with 
tools  of  trade,  383  ;  debt  of 
United  States  extinguished, 
384 ;  has  certain  effects  of  con- 
traction, 394  ;  Fawcett  on,  392  ; 
MacLeod  on,  as  a  means  of 
payment,  393  ;  expenses  of,  in 
Europe  and  America,  488  ;  chart 
of  growth  of,  447  ;  aggregate 
debts  of  nations,  448  ;  aggregate 
of  public  and  private,  in  United 
States,  448  ;  Adams  and  Fawcett, 
Lord  Derby,  Iron  Age,  and 
Professor  MacLeod  on  economic 
aspects  of  national  debt,  447- 
451 ;  political  aspects  of  national 
debts,  450  ;  repudiation  or  col- 
lection, 450 ;  European  debts 
cannot  fall  due,  450  ;  are  sav- 
ings banks,  450  ;  effect  of  pay- 
ing oft"  national  debt,  450  ; 
national  borrowing  tends  toward 
socialist  expenditure,  451  ;  inte- 
rest on  debt  of  United  States 
in  1883,    468  ;  inteiest    on    debt 


GS^XERAL  INDElX. 


723 


of  England,  479 ;  expenditure 
on  debt  in  France,  497  ;  export 
of,  from  United  States  to  Ger- 
many, 518 ;  alleged  scaling  of 
debt  in  Russia,  529 

Declaration  of  Independence,  the- 
ory of  equality  in,  133 

Declarations  of  war,  practically 
obsolete,  417 

Decline,  oif  cultivation  of  wheat  in 
England,  559  ;  of  silk  nianufac 
ture  in  England  under  f  i-ee  trade 
in  silks,  634  ;  of  importation  of 
raw  silk  into  England  635  ; 
Porter  on,  635,  63(5,  637  ;  of 
American  shipping  under  free 
trade  principles  applied  to  carry- 
ing trade  and  iron  and  steel 
industries  from  1816  to  1855, 
640,  652-664  ;  of  wool  produc- 
tion and  sheep  in  America  under 
tariff  reduction  of  1883,  of  wool 
grown  in  England,  681  ;  decline 
in  price  of  cotton  caused  by 
expansion  in  its  production,  687  ; 
in  price  of  ^Michigan  salt,  695 

Deductive  methcxl,  detined ;  is 
metaphysical  and  (i  priori  ;  Mill 
and  Ricardo  are  exponents  of  ; 
begins  in  assumption  and  ends 
in   obscurity  and  error,  9-14 

Defence,  national,  things  essential 
to,  556;  conviction  of  "Con- 
federate States  "  after  the  war, 
688  ;  manufactures  essential  to, 
688 

Definitions  of  terms :  Political 
economy,  1-9  ;  economic  i)liilos- 
ophy,  1-9  ;  evasiveness  of  econ- 
omic definitions,  5,  12,  211  ; 
metaphysical  method,  9 ;  his- 
torical method,  17  ;  ethics,  22  ; 
of  statistics,  24  ;  Manchester 
school,  40  ;  wealth,  41  ;  pover- 
ty, 42 ;  Carey's  and  Fawcett's 
definition  of  wealth,  43-48  ; 
family,  60  ;  so(;ial  \V(!alth,  63  ; 
national,  67  ;  the  want  pressure, 
77  ;  value,  79-87  ;  wage  fund, 
87 ;  demand,  87  ;  commodity, 
91  ;  anarchism,  91  ;  weallh  of 
two  kinds,  92,  216;  Gossen  and 
Jevons'  theory  of  value,  94-99  ; 
markets,  99-102  ;  prices,  102- 
124  ;    title,    125-140  ;    land  sys- 


tem, 140-150  ;  railway  system, 
150-162  :  employers  and  work- 
ers, 152-168  ;  profit,  163-184  ; 
wages,  184-187 ;  reproductive 
and  enjoyable  wealtli,  216  ;  of 
value  of  land,  237  ;  of  economic 
rent,  238  ;  of  labor,  281-293  ;  by 
Devas,  Perry,  Elder,  Adam 
Smith,  Roscher,  McCulloch, 
MacLeod,  Mill,  Jevons,  Carey, 
Ricardo,  Cairnes,  281-294 ;  of 
money,  329-336  ;  bills  of  ex- 
change, 346 ;  of  free  coinage, 
361  ;  crises,  370  ;  of  despotic 
and  free  government,  404  ;  of 
monarchy,  405 ;  of  aristocracy , 
405  ;  of  bureaucracy,  406  ;  par- 
liamentary government,  406  ;  re- 
sponsible government,  406  ;  of 
republic,  412  ;  of  federal  repub- 
lic, 415  ;  of  the  industrial  state, 
443  ;  functions  of  political  state, 
433-435 ;  crime,  441  ;  farming 
the  revenues,  477  ;  poll  tax,  53  ; 
of  local  taxation  and  national  in 
United  States,  468  ;  of  rates, 
476  ;  of  ad  valorem  cluties,  481  ; 
of  British  free  trade,  491  ;  of 
German  Zollverein  as  designed 
by  List,  514,  515  ;  of  mir  and 
artel  in  Russian  communism, 
526-529  ;  of  production,  533  ; 
of  American  vessels  and  of  ocean 
and  coasting  trade,  652-653  ;  of 
the  state  as  the  sum  of  all  iiulus- 
tries  that  are  intrinsically  profit- 
less, but  socially  profitable,  700, 
701;  of  private  and  public  pur- 
poses, 702,  703 

Degrees,  sale  of  taxed,  in  China, 
455 

Delaware,  colony  of,  protected 
sheep  and  wool  manufacture, 
676 

Demand,  cause;  of  value,  88  ;  gov- 
erns distribution  of  wealth 
through  investments  of  eai)ital, 
213  ;  how  controlled  by  large 
capitals,  220  ;  causes  rents,  agri- 
cultural and  urban,  237-243  : 
views  of  economists  on,  237- 
243  ;  of  American  women  for 
silks,   633 

Democracy,  due  1o  equality  of 
economic       conditions       either 


124: 


GENERAL  INDEX. 


among  all  or  among  the  domi- 
nant class,  403  ;  entire  absence 
of  capital  is  democratic,  403  ; 
except  as  to  the  slaves,  403  ; 
largeness  of  the  class  it  means  to 
serve,  434 ;  democratic  party 
nnder  Jefferson  regard  a  surplus 
of  revenue  as  not  a  good  reason 
for  withdravring  protection  from 
salt,  640 

Denmark,  monetary  unit  of,  338  ; 
government  of,  407  ;  our  bal- 
ance of  trade  with,  599-601 

Deposits  in  bank,  849;  run  for,  and 
crisis,  371-373,  377,  385-389 

Destruction,  of  industries  the  only 
alternative  to  protecting  them, 
461-463,  561  ;  Shadwell  on,  in 
Dutch  Indies,  480  ;  Humboldt 
on,  in  Mexico,  480;  of 
opium  in  China,  534  ;  of  Chinese 
manufactures,  needs  only  a  free 
introduction  of  English  means 
of  transportation  and  lending 
money,  536  ;  destruction  of  val- 
ues by  strikes,  310,  338  ;  of 
Eoman  farming  by  distribution 
of  free  corn,  317  ;  requires  more 
"wisdom  (to  avoid  doing  injury) 
than  protection,  561  ;  of  Portu- 
guese wool  and  woolen  industry 
by  treaty,  669  ;  of  quinine  in 
United  States,  693 

Diet,  vegetable,  its  relation  to  in- 
dustry, 398  ;  of  the  poor  in  In- 
dia, 486,  487 

Dimensions,  when  cheapness  in 
production  depends  on,  it  must 
begin  at  some  relative  loss,  or 
not  at  all,  319  ;  of  iron  and  steel 
manufacture  essential  to  cheap 
iron  and  steel,  509,  653;  in  cotton 
production,  elfect  on  price,  687 

Direct  taxation,  in  England,  476  ; 
difficulty  of  telling  how  much 
any  area  pays,  478 

Discounts,  liberal,  may  produce 
the  intlations  which  end  in 
crises,  389 

Discriminating  duties,  653,665;  dis- 
criminating port  and  dock  dues 
against  American  ships,  655 

Distillers,  incidental  protection  to, 
483 

Distribution,  of  returns  of  industry 


between  rent, wages,  interest,  and 
profits,  173-184  ;  of  commoili- 
ties  distinguished  from  distribu- 
tion of  wealth,  196  ;  of  weallli 
precedes  production  of  com- 
modities, 196,  198;  economic 
distribution  is  just,  199  ;  its  re- 
lation to  philanthropy  and  char- 
ity, 300  ;  Mill,  Ingersoll,  and 
Karl  Marx  on,  300-315  ;  by  in- 
vestment and  by  luxury,  313- 
315  ;  equality  of  enjoyable  and 
consumable  products  compared 
with  inequality  in  control  of  re- 
productive wealth,  199-313,  334 ; 
crime  aims  at  a  redistribution 
by  imlawf ul  means,  441  ;  of  tax- 
es in  Great  Britain,  476 ;  of  in- 
dustries in  France,  496 ;  of 
wealth  and  work  under  the 
Commune  in  Russia,  536  ;  of  pro- 
duct as  affected  by  depriving 
working  classes  of  free  access  to 
the  land,  574 

Disunion,  allied  to  free  trade  in 
all  nations,  637-630 

Diversity  of  industries,  essential  to 
happiness  as  well  as  industry, 
317-319  ;  how  to  effect  it,  383  ; 
in  France  leads  to  self-employ- 
ing, 496  ;  is  not  inequality  of  fa- 
cility in  producing  the  same 
thing,  but  equality  in  producing 
unlike  and  exchangeable  things, 
513 ;  protection  only  increases 
prices  when  increasing  the  di- 
versity of  industries,  which  re- 
duces prices,  564;  northern  States 
grew  rich  during  war  of  1861  to 
1865,  owing  to,  while  southern 
States  were  wasted  by  lack  of,  688 

Diversity  of  natural  gifts,  gives 
rise  to  a  commerce  which  i)ro- 
tectionists  put  on  the  free  list, 
and  free  traders  in  some  in- 
stances place  high  duties  on, 
573  ;  it  is  only  artificial  gifts- 
capital,  anteriority  in  produc- 
tion, etc.,  that  protectionists  de- 
sire protection  against,  573 

Division  of  labor  incident  to  large 
capital,  compact  populations,  and 
great  diversity  of  pursuits,  319; 
effect  of  lack  of,  on  mental  con- 
dition, 317 


GENERAL  INDEX. 


725 


Dogma,  subslitnted  for  inductive 
science,  571 

Dollar,  of  United  States  standard, 
336,  337;  of  Canada,  Liberia, 
Mexico,  338:  Wendell  Phillips 
on  the  moral  value  of  a  dollar, 
583 

Dominion  of  Canada,  report  on 
manufactures,  664-668 

Donskoi  wools,  672 

Door-knobs,  English  and  Ame- 
rican, prices  of,  590 

Door-latches,  American,  export  of, 
596 

Doubloon,  338 

Drachma,  monetary  unit  of  Greece, 
338 

Draii],  of  rent  to  foreign  landlords, 
487;  of  native  wealth  to  pay  for 
forced  importations  (Japan),  554 

Drainage,  a  local  rate  for,  477 

Drink,  cost  of,  24;  of  beer  in  Eng- 
land, 482;  of  wines  in  France, 
497;  effect  of,  on  labor  iu  Russia, 
527 

Drugs,  protection  to  in  1828,  383; 
export  of,  610 

Dry  goods,  American  market  the 
cheapest,  623 

Dutch  government  in  East  India, 
order  destroying  spice  trees,  480 

Duties,  effect  on  price,  25-26;  when 
they  come  in  as  protective,  319; 
in  1861  duties  on  imports  sus- 
tained the  credit  of  government, 
353;  protective  duties  may  pre- 
vent commercial  crises,  374-390; 
under  tariff  of  1824-28,  383; 
change  from  ad  valorem  to 
specific,  383;  low  duties  produce 
universal  disaster  in  1837,  382; 
and  1857,  385;  made  protective 
to  manufactures  by  Institutes  of 
Manu  in  India, 453;  revenue  from 
iu  United  .States,  468;  Turkey 
limited  to  3  per  cent,  duties  on 
imports  from  1675  t(j  date,  effects 
of,  488-492;  duties  high  on  Irish 
goods  going  into  England,  low 
on  Englisli  goods  going  into 
Ireland  under  Act  of  Union,  493; 
Dr.  Smith  on  protective  and 
retaliatory  duties,  556;  must 
either  caii.se  nivenue  only  or  sup- 
press or  protect  production,  563; 


protective  duties  repeal  them- 
selves at  the  proper  time,  563, 
564;  are  for  revenue  only, 
"  wherever  there  is  and  can  be  no 
competing  domestic  product," 
573;  provided  domestic  com- 
petition is  not  prevented  by  law; 
in  which  case  they  are  for 
revenue  plus  the  destruction  of 
native  industry,  481  ;  paid  by 
foreign  producers,  schedule  of, 
586;  Mill's  coucession  bungling 
but  adequate  to  the  point,  587; 
duties  in  other  countries  reduce 
profits  of  English  producers, 
588;  working  of  duties  relatively 
to  bounties,  596;  importing  non- 
competing  (tropical)  products 
free  works  no  increase  in  our 
exports  to  countries  producing 
them,  600,601;  on  agricultural 
implements,  610;  articles  on 
which  duties  chiefly  paid  by 
foreigners,  610-613;  on  silk  in 
United  States,  634;  in  England, 
637,  638;  effect  of  repeal  of,  635, 
636;  on  iron  and  steel  rest  on 
manufacturers  of  iron  and  steel 
goods,  647;  discriminative  on 
iron  and  steel  carried  in  British 
ships,  648;  discriminating  duties 
on  tea  brought  in  American 
ships,  653;  progressive  duties  on 
wool  propo.sed  by  Benton,  676; 
tariff  on  since  1824,  duty  on 
carpet  wools  a  revenue  duty, 
678;  comparison  of  invoice 
prices  with  foreign  quotations 
on  wool  show  that  foreign  prices 
"  dip  "  downward  by  amount  of 
dutv  to  get  the  wool  into  Ame- 
rican market,  679,  680;  chart 
showing  who  pays  duty  on 
wools,  681;  on  salt  in  United 
States,  695;  effect  of  reducing 
American  duties  to  send  up 
foreign  prices,  695 
D^'e-stulfs,  duties  on  and  e.\iK)rt 
of,  610;  on  wool,  072;  in  France, 
674;  Tyrian  dyes,  value  of,  in 
Honian  purple,  669;  from  coal 
tar  (aniline),  669 

E. 

Earllicnware,  export  of,  610;  im- 


Y26 


GENERAL  INDEX. 


ports  of  and  revenue  from,  613; 
prices  in  New  Yorlc,  how 
affected  by  duties  and  produc- 
tion, 621 

East  Indies,  balance  of  trade 
against  United  States,  600 

East  India  Company  exported 
none  but  Englisli  clotli,  670 

Economy,  in  the  individual  con- 
curs with  progress  of  society, 
308;  of  coin  and  credit,  355-358; 
Adam  Smith  on,  356;  in  the 
wage  contract,  retailing,  etc., 
433;  economics  of  the  Chinese 
but  little  known  to  western 
nations,  548;  Chinese  economy 
has  its  credit  side,  549;  as  well 
as  its  debit  side,  543;  economy 
of  protection,  609-630;  in  iron 
and  steel,  648-650;  in  the  sub- 
sidy policy  of  England,  659-663; 
in  privateering  as  compared  with 
subsidies,  663;  false  economy  of 
United  States  mail  service  nets 
both  loss  and  disgrace,  664 

Ecuador,  monetary  unit,  338 

Edge-tools,  wages  in  American  and 
European,  581;  Canada  exports, 
668 

Education,  and  the  State,  434;  and 
crime,  441;  illiteracy  in  France, 
497;  expenditure  on,  in  France, 
497;  care  of,  in  Germany,  521, 
523;  in  glass-making,  644;  a 
mode  of  protection,  675 

Effort,  tariff  recjuired  to  protect 
where  equivalent  effort  pro- 
duces, 585 

Eggs,  j'olks  of,  duty  and  revenue 
on,  586;  exports,  610;  imports 
and  revenue,  613 

Egypt,  civilization  attended  pri- 
vate ownership  in,  23;  early  use 
of  money  in,  334;  present  unit 
of  coinage  and  its  value,  338; 
taxes  and  tribute  in  prehistoric, 
452,  453  ;  tribute  paid  to  Rome, 
454;  food  exported  during 
famine,  570;  ancient  use  of 
glass  in,  638;  iron  and  steel  in, 
645,  646;  England's  trade  in  cot- 
ton goods  with,  689 

Elbe,  change  in  commerce  on  the, 
518 

Elections,  cost  of,  in  United  States, 


414,  416;  modes  of,  in  use  prior 
to  American  constitution,  418; 
where  many  constituencies  vote 
separately  and  simultaneously, 
an  anterior  nomination  results, 
419;  electoral  commission,  421 

Eloquence,  its  period  of  ascen- 
dency in  government,  402; 
British  and  American  speeches, 
411 

Emancipation,  in  Russia  how 
effected,  526 

Emigration,  always  at  first  at- 
tended by  hardship,  318;  a  sub- 
ject for  state  aid,  417 

Empire,  British,  maintained  by 
military  force  for  profits  of 
trade,  484 

Employment  at  wages,  beginnings 
of,  164-170:  wages  system 
economical  and  equitable,  170- 
181;  conditions  of,  in  compact 
centres  of  industry,  210;  qualities 
that  promote  success  and  utility 
in,  307,  308;  employment  in  in- 
dustry is  the  only  actual  organiza- 
tion of  labor,  310;  strikes  in 
various  employments,  328;  em- 
ploying class  larger  in  France 
than  in  England  or  United 
States,  496 

Employers,  losses  to  by  strikes, 
310,  328;  in  silk  industry  in 
America,  633;  in  silk  trade  in 
England,  739 

Enforced  trade,  483-491,  516  ;  Ger- 
many has  none,  516  ;  in  India, 
483  ;  in  Turkey,  488  ;  in  Ireland, 
491  ;  in  China,  536,  553 ;  in  Ja- 
pan, 553,  685,  686,  689;  Eng- 
land's coerced  trade  five  times 
greater  than  all  others,  689 

Engine,  steam,  invention  and  effect 
ol',  680,  681,  684 

Enghuid,  trade  between,  and 
France  and  Belgium,  27  ;  rail- 
way travel  in,  28  ;  displacement 
of  labor  in  other  countries  by 
machinery  in  England  raises 
wages  in,  209  ;  possible  produc- 
tion of  wheat  in,  231  ;  relative 
wages  in,  315  ;  it  practices  not 
free  trade  but  military  protec- 
tion, 316  ;  intended  free  coinage 
of  silver  but  failed,  362  ;  Bank  of 


GENERAL   IMJEX. 


England  producing  panics  and 
crises  for  prolit,  389  ;  govern- 
ment of  England  free,  404  ;  par- 
liamentary, 406  ;  responsible, 
406-412  ;  England  practices  mil- 
itary and  subsidy  protection  to 
foreign  trade,  48i,  432  ;  an  army- 
made  state,  439  ;  monopoly  of 
opium  production,  456  ;  crises  of 
1825-6  produced  bj^  resump- 
tion, 371  ;  crisis  of  1847  by 
free  trade,  374-376 ;  crisis  of 
1857  produced  by  bankruptcy  in 
United  States  caused  by  free 
trade,  376-380  ;  crisis  of  1866, 
389  ;  methylated  spirits,  476  ;  lo- 
cal taxes  in  England  and  Wales, 
476  ;  paupers  in,  478  ;  cost  of 
paupers,  478  ;  and  of  army,  478  ; 
prohibition  of  cultivation  of  to- 
bacco in,  480 ;  highest  known 
duties  on  imports  laid  by,  481  ; 
governs  for  protits  of  trade,  484  ; 
a  career  and  a  market,  484,  485  ; 
England  gave  Bengal  a  freer  trade 
than  herself,  487  ;  same  to  Tur- 
kev.  489  ;  permitted  protection 
in 'Ireland  from  1782  to  1800, 
492  ;  Act  of  Union  a  measure  of 
free  trade  to  Ireland  and  protec 
tion  to  England,  493  ;  contended 
for  free  trade  in  Gerinan3\  514  ; 
pyramid  of  England's  industrial 
power,  516  ;  her  monopoly  of 
l)arbarian  markets,  521  ;  her 
forced  seizure  of  Chinese  mar- 
kets, 533-535  ;  population  to 
square  mile  of,  ccmipared  with 
China,  545  ;  average  crop  of 
wheat  per  acre  in  any  county  in, 
254  ;  relative  labor-cost  of  pro- 
ducing iron  in  England,  Penn- 
sylvania, and  France,  573  ;  wages 
in  England  compared  with  j\Ias- 
sachusetts,  and  with  United 
States,  581 ,  582  ;  American  bal- 
ance of  trade  against  England, 
how  adjusted,  and  net  l)alan(c 
tending  to  an  increase  of  coin, 
599-602 ;  silk  manufacture  de- 
stroyed by  free  trade  in  silks, 
6:!5-637  ;  total  value  of  manu- 
factures of  all  kinds,  637  ;  sti- 
fling American  manufaetures 
(Brougham),    642  ;    p(jpulalion, 


and  iron  and  steel  manufacture 
in,  for  a  century,  646  ;  product, 
1883,  of  iron,  steel,  and  coal, 
650  ;  course  of,  in  building  up 
her  carrying  trade,  640-660  ;  and 
in  inducing  Americans  to  allow 
and  aid  in  the  destruction  of 
American  carrying  trade,  640- 
661  ;  wool  supply  of,  from  1850 
to  1883,  673  ;  consumption  of 
wool  compared  with  United 
States,  673  ;  brief  advantage  over 
France  in  woolen  treaty,  674  ; 
Napoleon's  war  on  England  in- 
dustrial as  well  as  military,  674 ; 
triumphs  in  the  fcn-mer,  675 ; 
prices  and  incidents  of  cotton 
famine,  690 

English  spoliation  in  India  more 
disastrous  than  Parsee  or  Mo- 
hammedan conquests,  487  ;  in 
Turkey,  488-491  ;  in  Ireland, 
491  ;  early  England  in  wool  and 
woolens,  668,  669 

Enterprise,  defined,  163 ;  distin- 
guished from  loans  to  govern- 
ment, 449  ;  how  destroyed 
among  the  Hindoos,  485  ;  pri- 
vate enterprise  (IMoffat)  not 
called  on  to  make  the  sacri- 
fices required  in  initiating  a  new 
industry  against  certain  foreign 
superiority,  563  ;  Devas  on  same 
point,  568  ;  entrepreneurs,  larger 
proportion  of,  in  France,  496  ; 
small  in  China  and  India,  623- 
626  ;  conseciuences  to  labor,  625  ; 
private  enterprise  liable  to  be 
misapplied  where  state  aid  is 
also,  632 

Equality,  theories  of,  in  taxation, 
456  ;  ('(jualitvin  industrial  claims 
of  Irish  (491),  Hindoo  (488),  with 
Englisli  not  recognized,  488-491  ; 
of  effort  protected  by  tariff,  585 

E(iuilibriuin,  of  industries,  Jelfer- 
son  on,  598 

Kseudo,  coin  of  Chili,  338 

Ktliics, relation  of  economics  to, 22  ; 
no  ethical  perfection  in  govern- 
ment, 440 

Europe,  rates  of  wages  in,  581  ;  our 
balance  of  trade  against,  600  ; 
how  adjusted,  and  net  balance 
in  our  favor,   601  ;    first    glass 


■•28 


OENEHAL  INDEX. 


manufacture  iu,  G39  ;  tlic  primi- 
tive brown  race  in,  645 

Evolution,  of  historical  method, 
16  ;  scieutitic,  23  ;  of  economic 
progress  in  America,  36  ;  of 
House  of  Commons,  37,  4U8-411: 
of  civilization,  43  ;  of  society, 
49  ;  from  communism,  51  ;  to 
private  wealth,  55  ;  of  the  fam- 
il_y,  60  ;  of  national  power,  65  ; 
of  a  correct  definition  of  value, 
80-92  ;  of  true  theory  of  value, 
94-102  ;  of  markets,  100-106  ;  of 
a  sound  doctrine  of  prices,  107- 
121  ;  of  titles,  127  ;  of  monop- 
oly, 130  ;  of  laws,  133  ;  of  rights, 
135,  137,  139  ;  of  immigration, 
147  ;  of  railways,  151-160  ;  of 
true  theory  of  wages,  163-183  ; 
and  of  distribution  of  wealth, 
184-205  ;  of  capital  as  a  laboring 
agent,  208  ;  of  a  distorted  rent 
theory,  239  ;  of  the  true  doc- 
trine, 243  ;  of  cultivated  plants, 
275  ;  of  a  true  definition  of  labor, 
282-290  ;  of  money,  33U-336  ;  of 
freedom,  359  ;  of  occupations 
causes  forms  of  government, 
403  ;  of  responsible  and  parlia- 
mentary government,  401-412  ; 
of  beet  sugar,  503-506  ;  of  Ger- 
man industries,  514-521  ;  of  Ger- 
man empire,  521-525  ;  of  silk 
manufacture,  631-637,  638-644  ; 
iron  and  steel,  644-652  ;  English 
and  American  shipping,  652-G64-, 
of  Canadian  manufactures,  664- 
668  ;  of  wool  and  woolen  indus- 
tries in  Europe,  Australia  and 
America,  668-682  ;  dependent  in 
United  States  on  the  iron  and 
steel  industry,  677 

Exchange,  why  men  exchange,  91; 
in  markets  how  conducted,  99- 
120 ;  theory  of  equivalence  in 
exchange  not  an  unerring  one, 
109;  usually  equitable,  110;  title 
the  source  of,  137  ;  equivalence 
between  employer  and  employed, 
171-182  ;  the  surplus  of  one  in- 
dustry depresses  its  own  price, 
but  gives  value  and  price  to  that 
surplus  of  another  for  which  it 
exchanges,  320,  321  ;  money  as  a 
medium  of,  begins  in  treasure, 


329-331  ;  bills  of,  a  form  of 
credit  money  at  times,  335,  346  ; 
arises  out  of  diversity  of  produc- 
tion, but  not  out  of  inequality  in 
producing  same  things,  513  ; 
equivalence  does  not  dispose  of 
the  protectionist  argument  of 
two  capitals  and  two  sets  of  la- 
borers on  home  product,  one  on 
imported,  560,  561  ;  "exchange 
is  exchange  " — the  formida  that 
dispenses  with  all  other  knowl- 
edge (Perry),  571  ;  of  wool  for 
cloths  between  England  and  Bur- 
gundy, 669 

Excise,"454,  476,  479  ;  excise  du- 
ties rest  on  what  articles  in  Eng- 
land, 481  ;  none  on  tobacco,  481; 
on  l)eet  sugar  in  France,  5U5 

Executive,  a  unit  iu  all  govern- 
ments, 416  ;  large  control  over 
the  war  power,  417  ;  compared 
to  a  premier,  417  ;  or  czar,  417 

Expansion  in  volume  of  currency, 
385-388 

Expediency  of  protective  tariffs, 
565 

Expenditure,  on  government,  428  ; 
on  armies,  424  ;  on  education  iu 
Northern  States,  434  ;  in  lf)cal 
government  and  cities  iu  United 
States,  468  ;  on  war,  navy,  In- 
dians, pensions,  etc.,  468;  local 
in  England,  476  ;  on  poor,  478  ; 
on  navy  and  fleet,  478  ;  on  post- 
otlice,  480  ;  on  school  and  educa- 
tion in  France,  497  ;  on  land  and 
sea  forces  iu  France,  497 ;  on 
debt  in  France,  497  ;  of  Ger- 
many and  Prussia  compared, 
522  ;  on  schools,  523 

Exports  and  Imports,  26-28,  34; 
relation  to  prosperity,  35  ;  exces- 
sive exports  produce  English  cri- 
sis in  1857,  377  ;  of  gold  in  1851 
to  1860,  386  ;  duties  on,  in  China, 
455 ;  of  manufactured  toljacco 
to  England,  small,  481  :  of  leaf 
tobacco,  480  ;  lax  on  in  Turkey, 
488  ;  of  machinery  for  working 
flax  prohibited,  489  ;  export  du- 
ty on  cloth  laid  by  Irisli  parlia- 
ment, 492  ;  of  food,  raw  materi- 
als and  manufactures  from 
France,  500 ;  of  beet  sugar  to 


GEI^ERAL  INDEX. 


729 


Euglaud,  505  ;  change  of  exports 
from  raw  materials  to  fiuishcd 
products  in  Germany  under  pro- 
tection, 517  ;  value  of  exports  in 
inverse  ratio  to  weight,  518  ;  of 
bonds  from  United  States  to  Ger- 
many, 518 ;  of  lumber  from 
United  States,  533  ;  every  pro- 
tected article,  incapable  of  dom- 
estic production  at  first,  becomes 
capable  of  export  at  last,  564 ; 
countries  which  export  food  not 
therefore  growing  ones,  566  ; 
habitual  export  of  food  tends 
towards  famines  in  the  food  pro- 
ducing countr}-,  570  ;  the  exports 
and  imports  free  traders  encour- 
age are  those  in  which  both 
countries  have  the  same  natural 
facilities  and  differ  only  in  ante- 
riority, 573  ;  protectionists  alone 
desire  a  commerce  based  on  dif- 
ference in  natural  facilities,  573; 
export  in  large  quantities  of  an 
article  proves  a  higher  or  equi- 
valent price  abroad  to  that  pre- 
vailing in  the  country  of  export. 
591,  592,  609  ;  but  is  not  in  con- 
flict with  a  small  import  from  pro- 
ducers locally  favored  as  to  near- 
ness, cost  of  production,  etc., 
593  ;  in  such  case  the  duties  col- 
lected on  the  import  are  a  de- 
duction from  a  producer's  price 
which  is  not  made  greater  by 
them,  593 ;  and  are  an  interna- 
tional tax,  59-1 ;  American  export 
of  iron  and  steel  wares  displac- 
ing those  of  Birmingham  with 
Jess  than  eight  years  of  protection, 
596  ;  no  more  exports  desirable 
than  will  paj^  for  what  we  lack 
the  natural  (not  acquired)  facili- 
ties to  produce,  598  ;  exports  are 
not  dependent  on  our  willing- 
ness to  import  any  competing 
product,  599-601  ;  exporters 
have  essentially  nothing  to  do 
with  importers,  601  ;  capacity  to 
export  limited  to  liighly  Irans- 
ptjrtable  goods,  602  ;  exjiurt  of 
glass  in  1818,  641  ;  of  macliiiiery 
and  artificers  from  England 
made  a  felony,  647,  648  ;  Amer- 
ican exports  and  imports,  how 


carried,  656 ;  export  of  wool 
from  England  prohibited  for  165 
years, 670;  present  export  of  wool- 
en goods,  673  ;  large  ratio  of  ex- 
ports of  cotton  to  domestic  con- 
sumption in  Great  Britain,  685  ; 
effect  of  export  trade  in  cotton 
goods  on  Great  Britain's  foreign 
policy,  689  ;  of  butter,  696 

F. 

Factory,  relation  of,  to  the  farm, 
320  ;  to  home  manufactures  in 
Russia,  527  ;  increase  of,  in  Can- 
ada, 667,  668 

Failures,  diminish  as  means  of 
payment  increase,  221 

Fairs,  precede  markets  and  cities, 
100 

Fair  trade,  Thorold  Rogers  on,  557 

Fallacies,  in  Mill,  10-15;  in  histories 
of  political  economy,  8;  alleged 
in  mercantile  school,  18,  19 ; 
Cossa  as  to  statistics,  24 ;  of  ef- 
fect of  disproving  statistics,  24  ; 
of  taking  part  for  the  whole  as 
to  American  cost  of  drinks  rela- 
tive to  food,  25  ;  Springer  as  to 
tariff  duties,  26  ;  in  Fawcett  as 
to  effect  of  cheap  bread  on  crime, 
26  ;  as  to  safet}-  of  railway  trav- 
el, 29 ;  prosperity  of  free  and 
slave  States.  33  ;  liomicides  in 
South  and  federal  intervention, 
national  prosperity  not  measura- 
ble by  foreign  trade,  36  ;  of  rest- 
ing value  on  labor,  84  ;  of  Dr. 
Smith's  theory  of  invariable  val- 
ue of  labor,  85  ;  of  Karl  jVIarx's 
tlieory  of  value,  91  ;  of  theory 
tliat  speculation  raises  prices, 
100-110  ;  of  getting  cheap  bread- 
stuff's by  importation,  117;  of 
resting  title  on  labor,  129;  of 
ideal  theories  of  equal  taxation, 
456 ;  of  schemes  of  taxation 
which  suppress  a  domestic  pro- 
duction yet  profess  to  take  no 
money  out  of  the  pockets  of  the 
jx'ople  except  what  goes  into  the 
treasury,  462;  of  the  incidence 
of  taxalion,  462-4(i7  ;  of  trying 
to  infiict  "suffering"  or  "sacri- 
fice" on  the  rich  by  taxes,  463, 


r3o 


GENERAL  IXBEX. 


467;  of  Mr.  Mill  as  to  customs  du- 
ties being  inadequate  to  produce 
botii  protection  and  revenue,  469; 
of  Adam  Smith's  notion  that  cer- 
tainty of  taxes  causes  economy 
in  voting  them,  474  ;  of  Bastiat 
concerning  scarcity  obstacles, 
etc.,  506-513  ;  of  equivalence  in 
exchange  argument  for  free 
trade,  561  ;  in  George's  land  con- 
fiscation scheme,  126-129 ;  in 
socialistic  scheme  of  railways, 
160;  in  Dr.  Smith's  theory,  "labor 
causes  all  values,"  167-175;  in 
theory  of  declining  profits,  191- 
195,  228-230 ;  in  theory  that 
wealth  must  be  distributed 
equally  or  injustice  is  done,  201- 
228  ;  in  jMalthus's  theory  of  pop- 
ulation, 231-235  ;  in  Eicardo's 
theory  of  rent,  238-243 ;  dear 
labor  underworking  cheap  labor, 
267  ;  in  JMalthus's  theory  of  pop- 
ulation tending  to  outrun  means 
of  subsistence,  295-297  ;  in  the 
distinction  between  raw  mater- 
ials and  finished  products  except 
as  to  a  single  industry,  311;  of 
increasing  wages  by  diminishing 
workers  and  consumers,  320  ; 
of  protected  and  unprotected 
classes,  320  ;  concerning  Gresh- 
am's  law,  368,  373  ;  of  objections 
to  balance  of  trade  doctrine 
founded  on  statistical  omissions, 
395  ;  of  M.  Quetelet's  ground  of 
assuming  that  crime  is  not  pro- 
portionate to  poverty,  442 ;  of 
Dr.  Smith's  giving  his  own  opin- 
ion concerning  Colbert  and  Tur- 
got  as  that  of  "  the  most  intelli- 
gent meuiu  France,"  501 ;  of  com- 
puting the  saving  on  the  non-pro- 
duction of  a  commodity  which 
a  country  has  all  the  natural  fac- 
ilities to  produce  which  are  pos- 
sessed by  any  other,  504  ;  of  sup- 
posing cheapness  controls  the 
trade  of  counti'ies  whose  trade 
conditions  grow  out  of  past  wars, 
treaties,and  other  historic  sequen- 
ces, 517;  of  Chinese  census,  538- 
550;  of  tariff  for  I'evenue  only, i.e., 
without  either  protection  or  sup- 
pression, 564 ;   of  Perry's  argu- 


ment that  importing  foreign 
goods  is  not  employing  foreign 
labor,  572  ;  of  the  "  profit  argu- 
ment "  for  free  trade,  576,  577  ; 
of  Perry's  application  of  Ricar- 
do's  theory,  that  dear  human 
labor  can  underwork  cheap 
human  labor,  267  ;  of  the  error 
that  the  import  and  payment  of 
duty  on  a  small  part  of  a  coun- 
try's supply  raises  the  price  of 
the  whole  domestic  sujiply,  591 ; 
reductio  ad  absurdum,  that  it  con- 
verts the  whole  income  of  Ameri- 
can producers  of  every  kind  into 
a  collection  of  protective  taxes 
from  each  other,  592  ;  of  predic- 
tions by  McCulloch  that  free  im- 
portation of  foreign  .silks  would 
not  destroy  English  manufact- 
ure, 637;  of  domestic  price  of 
every  imported  or  importable 
article  being  the  foreign  price 
plus  the  duty,  682 

Family,  relation  of,  in  various  per- 
iods, 60-65  ;  unequal  wealth  of, 
in  England,  273  ;  regulation  of, 
by  government,  431 ;  harmony  of, 
in  China,  552  ;  resemltlauce  of 
family  unity  to  national  unity, 
575 

Famine,  in  India,  331  ;  causes,  ex- 
tent, and  number  of,  in  India, 
485  ;  in  Ireland,  491  ;  would  re- 
sult in  China  if  opened  to  rail- 
roads, 536,  547  ;  export  of  food 
continues  during  famines,  570  ; 
cotton  famine  in  England,  690 

Fanaticism  as  a  social  waste,  446, 
447 

Fancy  articles,  export  of,  610  ;  im- 
ports of  and  revenue  from,  613 

Farmers,  cost  of  meat  among,  25  ; 
ejectment  of  tenant  farmers  in 
Ireland  on  repeal  of  protection 
to  corn,  26  ;  in  Persia,  51  ;  ryots 
of  India  affected  by  loss  of  man- 
ufactures, 67  ;  small  and  large 
farms,  73  ;  prices  of  crops  af- 
fected by  scarcity,  96  ;  relative 
power  of  consumption  and  pro- 
duction, 97  ;  how  affected  by 
trade  in  grain  in  great  boards 
and  produce  exchanges,  103, 112; 
profit  made  by  them    on  short 


GENERAL  INDEX. 


731 


crop  of  1881,  peas  and  oats,  107  ; 
production  of  farmers  deter- 
mined by  market  prices,  108  ; 
prices  not  determined  by  labor 
or  cost  of  production,  108 ; 
products  of  as  affected  by  sea- 
sons, wars,  currency,  protection, 
etc.,  110-120  ;  decline  of  acreage 
planted  by  farmers  in  Great 
Britain  under  free  trade  in  corn, 
118-120  ;  profits  of  farmers  in 
England,  ITS ;  inequality  of 
conditions  among,  equalized  bj' 
migration,  214 ;  farming  less 
favorable  to  the  poor  than  city 
life,  219  ;  economy  of  Dakota 
and  bonanza  farms,  219  ;  Dr. 
Smith  on  farm  rents,  288  ;  true 
cause  of  rent,  288,  242,  243  ; 
how  rent  and  transportation 
balance  each  other  as  taxes  on 
farmers,  247-253 ;  how  many 
are  tenant  farmers  in  United 
States,  267  ;  capitals  in  farms, 
267  ;  farmers  being  elim- 
inated in  Ireland,  274  ;  decline 
of  crops  and  animals  after  pro- 
tection withdrawn,  275  ;  sim- 
plest organization  of  farm  labor 
is  working  oix  shares,  311  ;  num- 
ber engaged  in,  in  United  States, 
320  ;  farmers  of  the  revenue  in 
Asia  and  Africa,  453  ;  farmers  of 
India,  how  destroyed,  485  ;  of 
Turkey,  how  taxed,  488  ;  coni- 
l^etition  between  farmers  and  its 
effects,  513  ;  can  have  no  trade 
with  competing  farmers,  513 ; 
in  Prussia  advance  in  tillage, 
520  ;  employed  by  the  commune 
(mir)  in  Russia  526  ;  farmers' 
prices  and  imj)ort  duties,  591  ; 
butter,  potatoes,  grain,  and  tlour 
not  rai.sed  in  price  in  United 
States  by  dutii'S,  501  ;  nor  wool, 
salt,  coal,  and  lum])er,  591,  592  ; 
farmers  of  Am(Mica  are  not  the 
promoters  of  any  free  trade  agi- 
tation whatever — importers  not 
authorized  to  speak  in  their 
name,  C04,  605  ;  .share  of  duties 
paid  by  farmers,  according  to 
Thos.  G.  Shearman,  less  than 
from  1  to  3  per  cent,  of  tlie  total, 
613;    farmers  of  Great  Britain 


sacrificed  to  the  manufacturers, 
076  ;  products  of,  exported, 
610  ;  yet  a  reveniie  derived  from 
their  importation,  613  ;  rates  of 
dutj-  on  farmers  j^roducts,  610 

Farmmg  the  revenues,  in  China, 
453  ;  A.sia  and  Africa,  453  ;  in 
Rome,  454 

Federal  union  in  United  States 
and  Germany,  how  formed,  514 

Fertilitj'  of  man  relatively  to  ani- 
mals and  plants,  231-235  ;  as  an 
element  in  rent,  238-242 ;  de- 
cline of,  in  certain  countries  and 
advance  in  others,  254-262 ; 
fertility  changing  to  desert  in 
Turkej'  through  free  trade  and 
bad  government,  490 ;  how  in- 
duced in  Prussia,  520 

"Fiat"   (see  Money) 

Fig  tree,  taxed,  but  imports  free 
in  Turkey,  489 

Finance  of  United  States,  in  1861 
to  1875,  352-355,  386 

Finished  products,  value  of  ex- 
porting, rather  than  raw  mate- 
rials, 322 

Fire-arms,  wages  in  maiuifacture 
of,  581  ;  superiority  of  Ameri- 
cans in,  596 

Fire-wood,  revenue  from,  586 

Fisheries,  taxes  on,  454  ;  English 
statutes  to  protect,  555 

Fish,  exports  and  imports  of  and 
revenue  from,  610,  613;  con- 
sumer does  not  pay  the  duty  on, 
615 

Flannels,  protection  to,  383 

Flax,  duties  on,  383 ;  in  Russia, 
527 ;  wages  in  tlax  manufac- 
ture in  Massachusetts  and  Great 
Britain,  582;  fiber  compared 
witli  wool,  672 

Florence,  woolen  manufacture, 
669 

Florin,  338  ;  in  England,  339 

Food,  rate  of  production  of,  232  ; 
evolution  of  soui'ces  of  food, 
275-280  ;  no  food  fund  in  nature, 
295  ;  fallacies  of  the  fear  of  man 
outrunniui?  means  of  subsis- 
tence, 29() ;  elfect  of  free  corn 
on  farniei's  of  Italy,  317;  con- 
sumer makes  jirie(>,  320  ;  of  Hin- 
doos, 486 ;  imports  and  exports 


132 


GENERAL  INDEX. 


of,  in  FraucL',  500  ;  from  Ger- 
many, 515,  520  ;  in  cotton  goods, 
520  ;  export  of,  in  raw,  ceases 
when  embodied  in  tinislied  prod- 
ucts, 520 ;  countries  exporting 
food  are  not  necessarily  growing 
countries,  566  ;  dependence  of  a 
country  on  foreign  countries  for 
food,  570  ;  excess  of  food  in  a 
food-exporting  country  no  guar- 
anty that  its  people  will  not 
starve,  570  ;  wages  in  food  prep- 
aration in  Massachusetts  and 
Great  Britain,  582  ;  strikes  and 
losses  in,  from  1881  to  1887,  328  ; 
butter  in  United  States,  effect  of 
dut_y  on  price,  586 

Foreigner,  how  made  to  contrib- 
ute revenue  under  protective 
duties  (Sidgwick),  565  ;  depen- 
dence on,  discussed  by  McCul- 
loch  and  Devas,  570  ;  on  what 
articles  foreigner  pays  the  duty, 
586 

Foreign  salt,  lessened  consump- 
tion of,  in  United  States,  693  ; 
price,  697 

Foreign  ships,  carry  our  imports 
and  exports  (659),  because  of 
the  total  withdrawal  of  protec- 
tion from  American  carriers, 
642,  653  ;  causes,  659,  660 

Foreign  trade,  protected  by  Great 
Britain  effectively,  316  ;  effects 
of  in  United  States,  381-385  ; 
how  classified  in  France,  500  ; 
limitations  and  restrictions  hav- 
ing other  than  a  protective  de- 
sign not  to  be  charged  to  the 
protectionist  principle,  500,  501  ; 
limited  relatively  to  home  trade 
by  cost  of  transi)ortation  to  arti- 
cles combining  small  bulk  and 
easy  portability  with  large  value, 
600 ;  restricted  by  the  small 
number  of  products  it  can 
take,  602 ;  involves  military 
aggression  and  a  universal 
and  incessant  drumbeat,  685, 
686 

Forests,  waste  of  and -extent  of  in 
United  States,  148  ;  taxes  ou 
in  Roman  empire,  454 ;  wo 
men  working  in,  in  Germany, 
525 


Forfeiture  of  foreign  vessels  tak- 
ing part  in  coasting  trade,  652 

Franc,  unit  of  France,  Belgium, 
and  Switzerland,  338 

France,  silk  trade  of,  26  ;  travel  in, 
28  ;  military  statistics  under 
Napoleon  III.,  30;  marriage  in, 
30 ,  cost  of  wars  in,  70  ;  value  of 
agricultural  products  of,  230 ; 
relative  wages,  315  ;  coinage  of, 
from  1851  to  1856,  380,  386; 
monetary  unit  of,  338 ;  change 
in  social  forces,  403 ;  French 
government  responsible,  407 ; 
as  a  republic,  416,  mayors  and 
police  prefects  appointed,  416 ; 
expenditure  on  army  in,  438 ; 
M.  Quetelet  on  crime  in,  442 ; 
comparative  loss  of  life  by  indi- 
vidual crime  and  social  strug- 
gles, 446 ;  credit,  how  main- 
tained, 448  ;  payment  of  German 
indemnity  by,"  450  ;  producing 
tobacco,  456';  but  permitting 
subjects  also  to  produce,  481  ; 
employers  numerous  in,  496 ; 
relative  to  Great  Britain,  497 ; 
land-owners  numerous,  497  ; 
value  of  wine  manufacture,  497; 
of  all  manufactures,  497 ;  of 
foreign  trade,  497  ;  government 
centralized,  497  ;  protective 
duties  in,  498  ;  free  and  dutiable 
articles,  499  ;  France  and  protec- 
tion discussed  by  Adam  Smith, 
500-503;  beet  sugar,  503-506; 
her  military  relations  to  Ger- 
many, 515  ;  proportion  of  land 
cultivated  to  population,  546  ; 
labor  cost  of  making  iron  com- 
pared with  that  in  England  and 
Pennsylvania,  573 ;  unity  of, 
630;  under  Colbert  introduces 
manufacture  of  china,  glass, 
carpets,  and  tapestry,  639  ;  pro- 
duction of  iron,  steel,  and  coal 
in,  650  ;  lines  of  steamers  sus- 
tained by,  658;  merino  wools  of , 
672,  Mauschump,  wool  of,  672; 
wool  supply  of,  673  ;  beginning 
of  the  wool  industry  under  Col- 
bert, 673;  brief  mistake  of 
French  statesmen  in  1786  con- 
cerning woolens,  674  :  triumph 
of  Napoleon's  protective  policy 


GENERAL  INDEX. 


r33 


in  Europe  generally  since  1816, 
675;  Enuiand's  trade  in  cotton 
goods  with,  6S9 

Frankfort,  514,  515 

Free  coinaue,  341,  342,  358-369; 
detined,  361 

Freedom,  relation  of  prices  to, 
121  ;  diniinisliL's  in  compact 
centres,  with  increase  in  power, 
but  can  still  be  had  on  the  out- 
skirts, with  relaxing  power,  210; 
capital  emancipates  labor,  212 ; 
how,  213;  freedom  of  speech, 
when  the  intent  of  speech  is  to 
promote  crime,  307 ;  relation  of 
monej^  to,  329 ;  created  by  the 
extra  dollar  (Phillips)  after  satis- 
fying wants,  583 

Fi-eelist,  of  England,  483  ;  of  India, 
487  ;  of  Turkey,  488  ;  of  Ireland, 
493  ;  of  Frauce,498,499;  coffee  on, 
in  United  States,  not  in  England, 
600 ;  American  free  list  covers 
six-sevenths  of  all  articles  not 
producible  in  America,  601  ;  but 
importing  them  free  has  no  ten- 
dency to  increase  our  exports  to 
the  countries  which  produce 
them,  601  ;  we  sell  them  only  a 
fifth  as  much  as  we  buy  from 
them,  601 

"Free  ships,"  as  a  pretended 
American  policy,  a  fraud,  661, 
662  ;  the  counterpart  of  the  Tro- 
jan Horse,  662 

Free  trade,  associated  with  the 
Laissez  faire  doctrine,  15;  mak- 
ing one  world's  UKirket  woidd 
impair  w^ages  in  high  standard 
countries,  315  ;  how  under  the 
nam(!  free  traclc;  protection  may 
be  ]>racticed,  316  ;  the  argument 
that  "  all  trade  is  ])arter"  vindi- 
dates  protection,  322  ;  true  free 
trade  measured  by  freedom  in 
paying  for  what  we  buy  with 
what  we  have  to  buy  with,  322  ; 
crises  produced  by  free  trade 
policy  in  England  in  1847-8,  and 
I'nited  States  in  1854-7,  in 
1819-1837,  374-3S1  ;  tends  to 
over-trading,  377  ;  produces 
crisis  of  1837,  382  ;  and  of  1857, 
385  ;  imports  increase  and 
revenue    relatively    to    imj)orts 


fall  under  free  trade,  469-472 ; 
how  far  British  tariff  is  a  free 
trade  scheme,  482  ;  internal  trade 
of  England  less  free  than  in 
United  States,  482,  483 ;  effects 
of  forcins;  Eni2;lish  trade  on 
India,  483-488  T  free  list  in 
France,  499 ;  free  trade  puts 
high  duties  on  imports  not  pro- 
ducible in  the  country  laying  the 
duty,  480,  508 ;  free  trade  soon 
brings  dearness  and  scarcity, 
509  ;  wherever  the  domestic  sup- 
ply is  the  only  one  adequate  to 
the  demand,  510 ;  list  of  Ger- 
many, at  lirst  an  advocate  of  free 
trade,  514  ;  how  changed,  514  ; 
free  trade  theory  covers  coerced 
trade  in  practice,  553 ;  exempli- 
fied in  China,  534  ;  and  Japan, 
553,  554  ;  lowest  duties  known 
save  in  Turkey,  533  ;  exceptions 
to  free  trade  (Mill),  557  ;  an  argu- 
ment of  protectionists  that  no 
free  trader  can  refute  except  by 
refusing  to  state  it,  560 ;  free 
trade  in  fact  only  a  criticism,  not 
a  policy,  602  ;  while  it  professes 
to  let  industries  alone  in  the 
country  adopting  it,  it  really 
cloaks  war  on  all  nations,  6'^8 ; 
its  tendencies  disintegrating, 
629,  630  ;  displacement  of  labor 
by,  in  silk  manufacture  in  Eng- 
land, 635 ;  American  ocean  ves- 
sels left  to  free  competition  with 
foreign  since  1816,  642,  6.-i3 ; 
does  not  kill  until  foreign  ship- 
builders can  build  a  cheaper 
ship,  656  ;  then  it  proves  fatal, 
656  ;  free  trade  pressed  but  de- 
clined in  all  British  colonies, 
664,  668 ;  absolute  free  trade;  in 
wool  and  woolens  kills  the  wool 
and  woolen  industricK  of  ]\)rtu- 
gal  and  lira/.il,  670  ;  shoi't  career 
of  mischief  in  France  in  1786-93, 
674  ;  free  trade  in  United  States 
trai)sfers  American  shijis  to  Eng- 
land, and  free  trade  in  England 
transfers  millions  of  farmers, 
wool-growers,  and  silk-makers 
to  United  States,  682  ;  free  trade 
the  corner-stone  of  the  Con- 
federate  rebellion,  687,   698  ;  in 


r3  4 


GEI^'ERAL  INDEX. 


quiuiue,  692 ;  free  trade  is  the 
creed  of  untlirift  in  the  United 
States,  and  derives  its  chief  sup- 
port from  the  thriftless  classes, 
699  ;  the  uniform  sequence  of 
prosperity  after  protection  caus- 
es denials  that  sequence  implies 
causation,  post  hoc,  etc.,  703-707 

Free  traders,  irritable  and  super- 
cilious tone  of.  555-558  :  their 
error  of  style  arising  from 
bumptious  intolerance  combined 
■vvith  limited  research,  558 ; 
Jevons  and  Perry  do  not  meet 
the  "one  and  two  capitals" 
point,  560,  572  ;  when  free 
traders  are  not  unpatriotic 
(Devas),  570;  can  not  claim  the 
"diversity  of  natural  gifts" 
argument,  as  it  belongs  wholly 
to  the  protectionists,  572-573  ; 
the  free  trade  contention  is  for 
free  admission  of  competing 
products,  and  high  duties  on 
products  dependent  on  unlike 
natural  conditions,  573 ;  Mr. 
Shearman  contends  that  manu- 
facturers in  United  States  pay 
from  97  to  99  per  cent  of  tarilf 
duties,  611-612  ;  downfall  of 
American  ocean  carrying  trade 
due  to  free  traders'  efforts  to  get 
cheap  iron  and  steel  by  importa- 
tion while  England  was  getting 
it  bj'  protection,  648-650 

Freight  earnings  must  be  added  to 
exports  of  carrying  nations  to 
state  balance  of  trade  correctly, 
395  ;  of  English  ships,  663  ; 
how  obtained,  659,  663 

French  school  of  economists, 
Bastiat,  3,  42,  234  ;  Say,  9  ;  La- 
Vasseur,  80  ;  demand  the  cause 
of  labor,  Boisguillebert,  82 ; 
Condillac,  82  ;  Cournot  on  mar- 
kets, 100;  Dupin,  70;  Cordier, 
70  ;  Wolowski,  78  ;  Godard, 
189;  Fontenay,  242;  DeCandoUe, 
275-280;  Editor  of  Le  Devoir, 
313  ;  M.  Godin,  313  ;  Le  Play, 
331;  Baron  de  Rothschild,  364; 
Cernuschi,  373  ;  Quetelet,  441- 
445;  Bastiat,  506,  514;  Colbert 
and  Turgot,  500,  503,  639,  650, 
673;  Napoleon,  673,  675 


Fruits,  exports  of,  610  ;  imports  of 

and  revenue  from,  613 
Fuel,  in  making  iron,  645 
Furniture,  wages  in  manufacture 

of  in  Massachusetts  and  Great 

Britain,  582 ;     strikes    in,    328  ; 

revenue   from  in  United  States 

paid   by  foreign  producers,  586 
Furs,  exports  of.  610  ;  imports  of 

and  revenue  from,  613 
Futures,  dealing  in  on  boards  of 

trade,  economic    aspects  of,  104 

G 

Gas-l3ttings,  export  of,  596,  610 

Gaul,  taxes  in,  454 

Genoa,  woolen  indu.stry,  669 

Georgia,  silk  raising  in,  6yl,  632  ; 
present  production  of  iron,  646  ; 
Robert  Toombs  of  Georgia  helps 
effectively  to  destroy  American 
merchant  marine,  657,  658  ;  and 
earns  contempt  of  British  free 
traders  by  his  subserviency,  658  ; 
woolen  coat  made  in  one  day  in, 
671 

German  economists,  Roscher,  24, 
43,  50,  64,  122,  178,  240,  330  ; 
Karl  Marx,  on  value,  88-94,  184, 
189,  240  ;  Soetbeer,  363,  366;  H. 
H.  Gossen,  94;  Heine,  Heeren, 
Hegewisch,  Niebuhr,  139;  Griin- 
lund,  212,  176,  179,  306;  List, 
514-530 

Germans,  subscribed  to  French 
indemnity,  450  ;  indemnify  the 
empire  for  its  ab.solutism,  524 

Germany,  accidents  in  mines, 
32  ;  fairs  in,  102  ;  value  of 
agricultural  product,  230  ; 
relative  wages  in,  315  ;  experi- 
ence in  changing  from  silver  to 
gold,  362-363  ;  monetary  unit, 
338 ;  emperor's  power,  406 
parliament  advisory,  40  > 
expenditure  on  army  in,  438 
empire  founded  by  its  army, 
439  ;  production  and  export  of 
beet  sugar  in,  503-506  ;  national 
unity  and  German  empire  pro- 
moted by  protection  to  German 
industries,  514-520:  trade  of  with 
England  prior  to  1827,  515  ;  in 
raw    materials     kept    Germany 


GENERAL  INDEX. 


^35 


poor,  515  ;  its  war  -with  Austria 
iu  1866-7  caused  no  debt,  516  ; 
war  of  187U  with  France,  516  ; 
industrial  conditions  of,  516  ;  no 
enforced  trade,  516 :  Germany 
leads  in  specified  particulars, 
521  ;  causes  of,  521  ;  history  of 
evolution  of  German  Empire 
industrially,  514-521:  politically, 
521-525  ;  heterogeneity  and  dis- 
union of,  under  free  foreign 
trade,  521,  522  ;  revenues  of, 
522 ;  rates  of  wages  in,  581  ; 
American  balance  of  trade 
against,  600  ;  unity  of  Germany 
a  result  of  proleciion,  630 ; 
superseding  English  in  silk 
manufacture,  636 ;  product  of 
iron,  steel,  and  coal  in  1883,  650 

German  Empire,  monetary  unit  of, 
338  ;  political  evolution  of,  521- 
525  ;  indvjstrial  growth  of,  514- 
521  ;  vindicated  in  parliament, 
524 

Gie-mill,  invention  of,  and  eifect, 
681 

Gimlets,  export  of,  596 

Gin,  Whitney's  cotton,  effect  of 
invention,  and  nature  of,  686 

Ginseng,  export  of,  610 

Glass,  trade  in  between  England 
and  Belgium,  27 ;  duties  on, 
383  ;  in  France,  498,  502,  503  ; 
German,  519  ;  Victoria  protects, 
530  ;  beginning  manufacture  of 
iu  Pittsburg,  578;  rates  of  wages 
in  glass  manufacture  in  America 
and  Europe,  581  ;  England  pro- 
tects her  own  glass,  but  with- 
draws protection  from  Irish 
glass,  493  ;  exports  of,  610  ;  im- 
ports of  and  revenue  from,  613  ; 
history  of  manufacture  of,  in 
Egypt,  Europe,  and  United 
States,  638-644  ;  liegun  under 
Colbert's  auspices  in  France, 639; 
in  Scotland,  England  and 
American  colonies,  639  ;  Alexan- 
ander  Hamilton's  report  on,  039  ; 
white  green.  Hint,  German, 
crown,  and  cut  glass,  640,641; 
total  product  of,  from  1824  to 
date,  643,  044 

Glue,  revenue  i)aid  ])y  foreign 
producers  on,  586;  export  of,  610 


Gold,  tie  between  government 
credit  and  gold  in  1861-5,  221  ; 
as  an  ornament,  331  ;  followed 
silver  iu  England,  334  ;  the  cur- 
rency of  capital  and  large  invest- 
ments in  reproductive  wealth, 
339  ;  quantity  in  use  as  money, 
344  ;  Adam  Smith  on  relative 
values  of  gold  and  silver,  345  ; 
rate  of  production  of,  relatively 
to  silver,  366,  367  ;  how  affected 
by  drain  to  India,  373;  can  not 
afford  to  pay  debts  in  gold  when 
it  removes  an  implement  of 
business,  383;  in  arts,  383  ;•  gold 
penny,  339 

Gourde,  monetary  unit  of  Ilavti, 
value,  338 

Government,  on  what  qualities  in, 
growth  of  wealth  depends, 
68;  origin  of,  131-135; 
changes  in,  133  ;  debts  of,  352  ; 
is  involuntary,  instinctive,  and 
beyond  the  collective  power  of 
society  to  dispense  with,  398- 
399 ;  among  savages  is  tribal, 
402  ;  grows  out  of  their  economic 
condition,  as  being  without  capi- 
tal, 402  ;  if  economic  conditions 
are  unec|ual  becomes  aristocratic, 
402  ;  climate,  402  ;  occupations 
mould  the  form  of,  403  ;  remains 
an  affair  of  party,  404  ;  despotic 
when,  404;  free,  404;  judicial 
department  most  coercive,  416  ; 
the  official  class  slightly  larger 
in  republics  than  in  monarchies, 
423  ;  temporal  and  spiritual  and 
secular,  428  ;  general  and  local, 
429  ;  functions  of  local  are 
largely  economic,  429,  430  ;  in 
all  employment,  432  ;  right  to 
govern,  440 ;  functions  of  ex- 
I)and,  455  ;  its  share  of  i)rodue- 
tion,  454-455  ;  practice  of,  some- 
times better  than  theories,  457- 
460 ;  local,  in  England,  477 ; 
IJritish  Empire  governed  for  pro- 
tits  and  not  for  revenue,  484 ; 
little  local  government  in  France, 
497  ;  of  William  and  Bismarck 
appnived,  514-525;  taxes  on 
li(ju()rs  identify  government  with 
trailic  in  certain  ways,  527 ; 
workings    of    Russian   govern- 


736 


GENERAL  INDEX. 


mentas  to  emancipation,  resump- 
tion, and  paupers,  520,  531  ;  of 
China  right  in  excluding  forces 
tending  to  disruption  of  Chinese 
internal  trade,  547;  is  the  sum  of 
all  intrinsically  prolitless  and 
socially  necessary  industries, 
700,  701 
Grains,  duties  on  imports  of,  from 

Canada,  591 
Graziers,  taxed  in  Turkey,  488 
Great  Britain,  crime  in,  82  ;  origin 
of  its  House  of  Commons,  37  ; 
commons  and  private  lands,  189; 
earnings  of  entire  people,  176 ; 
value  of  agricultural  products, 
230 ;  total  gold  coinage  of,  in 
1851  to  1856,  386;  monetary 
unit,  pound  sterling,  value  of, 
338  ;  extent  of  deposits  in  private 
banks,  of,  389;  total  bank  depos- 
its of, 389;  culture  of  the  nobility 
and  land-owning  gentry  in,  406  ; 
history  of  government  in,  408- 
412  ;  credit,  how  maintained, 
448  ;  local  taxation  in,  476-479  ; 
general  taxation  in,  479-483 ; 
tyranny  in  prohibiting  cultiva- 
tion of  tobacco,  480  ;  derives  no 
revenue  from  outside  dominions 
except  profits  of  trade,  484  ;  rates 
of  Avages,  blacksmith  and  irou- 
puddlers,  in  1867,  511;  change  in 
trade  of,  with  Germany,  pro- 
duced by  protection  in  Germany, 
515  ;  relation  of,  to  her  colonies, 
530-533  ;  unable  to  prevent  their 
adoption  of  protective  policies, 
530-533;  course  of,  toward  China 
and  Japan,  533-554  ;  British 
protective  laws,  555;  and  what 
occupations  they  protected, 
555  ;  rates  of  wages  in,  compared 
with  United  States  and  Mas- 
sachusetts, 581-582  •.  total  value 
of  British  manufactures,  687  ; 
small  product  of  iron  and  steel  a 
century  ago,  646  ;  and  imports, 
646;  population  of  in  1788,  646  ; 
Great  Britain  indebted  to  her 
protection  to  iron  and  steel  and 
ship-building  for  her  carrving 
trade,  648,  649  ;  product  (1888) 
of  iron,  steel,  and  coal,  650  ;  pro- 
duct of  pig  iron  from  1860  to  1883, 


651;  how  Great  Britain  "  fe?ds 
the  main  arteries'of  British  com- 
merce," 657  ;  but  can  not  influ- 
ence the  tarilf  policies  of  her 
colonies,  664  ;  British  legislation 
always  animated  bj'  a  ]irotective 
motive,  675,  676  ;  but  it  was  a 
protection  to  the  stronger,  at  the 
cost  of   the  weaker  class,  670 

Greeks,  ignorant  of  use  of  sugar, 
beer,  cultivated  strawberry, 
buckwheat,  maize,  275-279 ; 
allotments  of  land  by  Lycurgus, 
138;  economic  condifions  of, 
gave  form  to  governments,  402 

Greece,  ownership  of  land  in,  23  ; 
family  relation  in,  61  ;  monetary 
unit  of,  389  ;  earliest  money  of, 
331,  333  ;  government  of,  407;  al- 
leged bankruptcy  of  modern, 448; 
early  iron  and  steel  in  Homer,' 
Schiiemann, Gladstone, and  Gold- 
ziher,  645 ;  wool  culture  and 
sheep  in,  668 

Gresham's  law,  368 

Groat,  339 

Guesswork,  as  a  basis  of  proof, 
683 

Gunpowder,  export  of,  610 ;  im- 
port and  revenue,  613 

Gypsum,  revenue  paid  by  im- 
porters, 586 

H. 

Hair,  export,  of,  610  ;  import  and 
revenue,  613 

Hamburg,  523 

Hammered  coins,  340 

Hand-made  goods  in  India  super- 
seded by  English  machine-made, 
effects  of,  66 

Hanover,  for  free  trade  in  1818, 
514,  515,  522 

Hard  times,  372,  374-3T6,  381  ;  in- 
crease of  imports  leading  to, 
384,  385  ;  of  1854-7,  385 

Hard  ware,  wages  in, inUnitedStates 
and  Europe,  581  ;  effect  of  im- 
ports of  hardware  from  England 
into  India,  66,  67  ;  prices  of  san- 
itary hardware  in  New  York, 
how  reduced  by  x\merican  com- 
petition under  protection,  621, 
622 


GEXEBAL  INDEX. 


737 


Hatchets,  English  and  American, 
prices  of,  590 

Hats,  wages  in  United  States  and 
Great  Britain,  582  ;  export,  610  ; 
imports  and  revenue,  613 

Havre  (American)  steamer  line  de- 
stro3'ed,  657 

Hay,  rakes,  export  of,  596;  export 
of  hay,  610  ;  import  and  reve- 
nue, 613  ;  importer  pays  duty, 
615 

Hayti,  monetary  unit  of,  338 

Hebrews,  taxes  among,  453  ;  di- 
vision and  allotment  of  land, 
138  ;  year  of  jubilee  not  an  ex- 
ample of  communism  or  state 
ownership,  138 

Hemp,  under  tariff  of  1816-1824- 
1828  in  Russia,  527 ;  exports 
from   United   States,   610 ;    im- 

•  ports  and  revenue,  613 ;  com- 
pared with  wool,  672 

Hesse,  515 

Hides  and  skins,  export  of,  610  ; 
import  of  and  revenue  from, 
613 

High  duties,  England  on  tobacco, 
480  ;  free  trade  policy  lays  on 
tropical  and  non-competing 
products,  573' 

Highways,  430,  432 

Hindoos,  486,  516  (see  India) 

Hinges,  English  and  American 
prices  of,  590 

Historical  school,  13;  notcontined 
to  opinion,  17  ;  limitations  on, 
20  ;  importance  of  historical 
method  on  questions  of  revenue 
and  protection,  469 

Hoard,  can  not  be  affirmed  of  en- 
joyable wealth,  205;  oidy  of  re- 
productive or  social,  207  ;  oppo- 
site of  capital,  211  ;  in  stockings, 
224  ;  rich  have  no  hoard,  224, 
304-307  ;  silver  ornaments  in  In- 
dia as  refuge  against  famine, 
331 

Hoes,  export  of,  596 

Holland,  government  of,  407 ; 
credit,  448 ;  Amcn-ican  Ijalance 
of  trade  against,  599 

Hoiiic,  markets,  3H1-382  ;  home 
l)cttcr  secured  in  Russia  than 
Ireland,  430 

Jlome  trade,  512,  560,  567;   takes 


more  products  than  foreign,  602; 

and  is  freer  as  to  means  of  pay- 
ments, 604 
Home    production,    employs  two 

capitals  and  two  sets  of  laborers 

where  imported    employs    one, 

572 
Hops,   revenue    paid    bj'   foreign 

producers,  586  ;  export  of,  610; 

imports  of  and  revenue  from, 

613 
Horses,  excise  duties  on,  481 
Horse-nails,  export  of,  596 
Hosiery,  duties  on,  in  1828,  383  ; 

success  of  foreign,  691 
House  tax  in  England,  483 
Hundred  rates,  477 
Hungary,  food   exported    during 

famine,  570 


Idleness,  when  compulsory,  511, 
513,  569 

Identity,  not  diversity  of  natural 
gifts  between  United  States, 
England,  France,  Germany,  etc., 
573 

Illinois,  land  system  in,  142; 
Railroads,  aid  to,  155;  railway 
earnings  and  division  of,  be- 
tween capital  and  labor,  173, 
311;  transportation  from,  221; 
corn,  production  in,  252;  farm 
products  in,  261;  tenant  farms 
in,  269;  taxes  in,  468;  manu- 
factures of,  664,  666 

Immigration,  145  ;  past  and  future, 
145-146  ;  chart  of,  147 ;  money 
brought  by,  148  ;  assorted  and 
exclusion  of,  148  ;  exclusion  of, 
as  a  measure  to  promote  wages, 
320,  321  ;  change  in  consump- 
tion by,  321  ;  protection  to  Amer- 
ican industries  favora])le  to,  473; 
from  Switzerland  into  Ireland 
during  i)r()tection,  492  ;  of  Chi- 
nese into  other  countries  coex- 
tensive with  destruction  of  au- 
tonomy and  industries  in  their 
own,  536 ;  figures  of  Chinese, 
548;  coinpared  Willi  European, 
5^8 ;  total  inunigralion  from 
1860  to  1H83  shown  by  tables  and 
chart,  651 


788 


GENERAL  INDEX. 


Impcaclimciit,  409 

Implemeuts,  agricultural,  in  Unit- 
ed States,  262-267 ;  Germany, 
525  ;  China,  547  ;  wages  in  man- 
ufacture of,  in  United  States  and 
Europe,  581  ;  American  articles 
supplanting  those  of  Birming- 
ham in  foreign  markets,  596 ; 
protected  but  exported,  610 ; 
prehistoric,  for  defense,  644 

Imports,  duties  on  lioman,  454;  in 
United  States  from  1821  to  1881, 
average  amount  of,  and  revenue 
produced,  469-472;  gold  dis- 
coveries increase,  470;  quantity 
of  imports  reouired  under  low 
duties  to  produce  as  much  re- 
venue as  high,  471;  chart  of  im- 
ports and  revenue  from  1820 
to  1860,  471;  of  food,  raw 
materials  and  manufactures  in 
France,  500;  change  in  Germany 
from  finished  products  to  raw 
materials,  517;  of  lumber  into 
United  States,  532;  increase  ten- 
fold of  imports  of  silk  into  Eng- 
land under  free  trade  in  silks, 
636;  of  wool  and  woolens  com- 
pared with  domestic  product, 
677-678 

Importations,  excessive  produce 
commercial  crises,  374,  376,  382, 
385,  388;  importing  English  iron, 
is  importing  English  crops  con- 
densed into  iron,  579;  it  dis- 
places American  crops  to  the 
value  of  the  iron  imported,  579; 
importation,  where  domestic 
production  is  adetiuate,  dis- 
places it,  but  does  not  increase 
suppiv  nor  lower  prices  (silks), 
635,  636 

Importers  and  foreign  manufac- 
turers inspire  (he  free  trade 
criticism,  604,  605;  in  Jefferson's 
period  wanted  duty  taken  oft" 
salt,  640;  importers  of  conipeting 
goods,  interests  not  identical  with 
those  of  American  labor,  642 

Improvements,  455 

Incidence  of  taxes,  459;  a  final 
subtlety  of  slight  practical  value, 
460;  can  not  be  known  if  "con- 
venience" is  consulted,  461—167; 
of    import  duties    on    products 


ami)ly  siipplied  at  home,  609- 
623;  incidence  of  tariff  duties  on 
iron  and  steel,  647;  on  wool  and 
woolens,  678-680 

India,  former  wealth  of, and  present 
poverty,  66;  relative  wages  in, 
315;  intluence  of  drain  of  silver 
to,  over  its  ratio  of  value  to  gold, 
346;  silver  standard,  monetary 
unit  of,  338;  value  in  annas,  338; 
ancient  taxes  in,  453;  land  tax 
or  rent,  455;  tax  on  salt,  455; 
economic  effects  of  British  as- 
cendency in,  483-488;  revenue 
paid  by,  485;  salaries  of  English 
and  native  officers,  485;  India 
was  compelled  to  take  free  trade 
in  silks  and  cottons  while  Eng- 
land kept  protection,  487;  Eng- 
land vetoes  prptective  legislation 
in,  533;  food  exported  during 
famine,  570;  England's  trade  in 
cotton  goods  with,  689 

India-rubber  goods,  exports,  610; 
imports  and  revenue,  613 

Indiana,  land  system  in,  142; 
fertility  in,  242;  corn  produc- 
tion in,  252;  farm  products  in, 
261;  tenant  farmers  in,  269;  in 
silk  raising  mania  of  1826  to 
1839,  632;  in  plate  glass,  644; 
economy  of  protection  to  its 
manufactures  against  Eastern 
(Sidgwick),  562,  665,  666 

Indians,  23,  49-54,  645 

Indirect  taxes  on  luxuries  com- 
mended by  Smith,  461 

Individual  debts  in  United  States, 
448 

Industry,  incentives  to,  62;  begins 
how,  162-166;  distinction  be- 
tween it  and  lab(jr,  163;  how 
stimulated  by  abundant  means 
of  payment,  221;  annual  pro- 
duct of,  in  United  States,  224; 
comprehends  all  economic  effort, 
290;  all  new  industries  unprofit- 
able at  first,  318;  women  in,  325, 
328,  382;  crises  in  United  States, 
382;  industries  more  affected 
usually  by  local  than  general 
government,  430;  failure  in,  the 
chief  cause  of  crime,  441;  in- 
dustry a  surer  source  of  well- 
being  than  charity,  446;  effect  of 


qHnebal  index. 


V39 


public  debt,  448;  prohibition  of 
au  industry  as  a  means  to  pre- 
vent a  tax  from  protecting  it, 
461;  subversion  of  industries  in 
India,  485;  transfer  of  industries 
from  Turkey  to  England,  490; 
relation  of  legislation  to  industry 
in  France,  487-513;  in  Germany, 
514-525;  home  industr^'in  hemp, 
flax,  linen,  and  woolen  in  Rus- 
sia, 527;  relation  of  government 
to,  455;  Adam  Smith  on  pro- 
tection to,  555;  Mill  on  pro- 
tection as  a  means  to  naturalize 
a  foreign  industry,  556;  not  an 
advantage  to  a  country  to  turn 
all  its  energy  into  one  channel, 
567;  inducements  to  organize  a 
varied  home  industry  (Moiiat), 
567;  new  industries  require 
shelter,  Devason,  568,  577,  578; 
how  protection  aids,  609-629;  silk 
industry  in  England  and  United 
States,  631-637;  glass  industry  in 
United  States,  638-644;  iron  and 
steel,  644-652;  ships  and  ship 
building,  652-663  ;  carrying 
trade,  663;  wools  and  woolens, 
664-670  ;  cotton  and  cotton 
goods,  670-680 
Industrial  independence,  671 
Industrial  war,  between  England 
and  India,  66-67;  between  Ger- 
many, France,  United  States, 
and  England  in  silk  manufac- 
ture, 631-638;  between  England 
and  United  States  in  silks,  635- 
637;  in  manufactures.  642; 
Brougham  on,  642;  in  iron 
and  steel,  646-647;  England's 
industrial  war  against  American 
conunercial  marine;  succeeds, 
640-666;  through  "free  trade" 
reciprocity,  655;  subsidies,  659; 
piracy,  663;  England  scores  a 
short  free-trade  blow  at  France, 
674;  France  triumi)hs  under 
Napoleon,  674;  whose  views 
rule  Europe,  075 
Incomes  of  people  of  all  nations 
(Mulhall),  36;  in  England,  176: 
growth  of,  2'(3;  incomes  as  a 
basis  of  taxation,  456;  inconu; 
ta:c,  479-482;  total  income  of 
railways   reporting    in    Illinois, 


173-311;  of  English  railways, 
174;  of  manufactures  in  United 
States,  176-312;  of  English 
people  compared  with  Hindoos, 
66;  in  salt  manufacture,  312; 
textile  fabrics,  312;  iron  and 
steel,  312;  meat  packing,  312; 
woolen  goods,  312;  lumber, 
leather,  312  ;  ship-building,  313; 
silk  manufacture,  313;  tax  on 
incomes  called  class  tax  in  part 
in  Germanj-,  522;  average  in- 
come of  Hindoos,  486 

Inequalities,  and  crime,  442 ;  in 
taxation,  463 

lutlation,  as  a  cause  of  crises, 
385  ;  produced  by  war  debts, 
392,  394 ;  loans  to  government 
are  inflation,  450 

Inquisition  in  France,  502,  550 

Insolvency,  of  individuals  abated 
by  issues  of  government  money, 
221  ;  of  nations  may  follow  from 
owing  abroad,  377  ;  may  be  pro- 
duced by  excess  of  imports,  382  ; 
and  even  of  gold,  385  ;  during 
free  trade  periods,  377,  385 ; 
but  not  in  protective,  389  ;  of 
nations,  448 

Instruments,  musical,  519  ;  pro- 
tected in  Victoria,  530  ;  mathe- 
matical and  musical  in  United 
States  export  of,  610  ;  import  of, 
and  revenue  from,  613 

Interest,  pecuniary,  the  aggregate 
of  all  private  interests  is  the 
public,  36-40  ;  per  cent  of,  less- 
ens as  fund  increases,  178  ;  ratio 
of  to  returns  of  industry,  178  ; 
equal  to  one  half  of  average  rate 
of  profit,  193;  ratio  of  interest  to 
rent,  194  ;  rale  of,  is  in  inverse 
ratio  to  amount  of  capital  of 
lender,  222 ;  interest  defined, 
238  ;  may  be  high  where  pro- 
duction is  slow,  261  ;  on  loans 
nuist  be  added  to  exports  in  stat- 
ing lialance  of  trade  of  money- 
lending  nations,  395  ;  on  United 
State  debt  in  1883,  468  ;  interest 
and  wages  may  both  be  high  if 
product  of  industry  is  great, 
579-581 

Internal  improvements  in  United 
States,  150-158,  220  ;  in  Canada, 


uo 


GENERAL  INDEX . 


531 ;  in  United  States  Jefferson 
thought  federal  government 
should  be  empowered  to  make 
rather  than  disturb  the  tariff  on 
account  of  a  surplus,  640 

Internal  revenue,  or  taxes,  in  Rome 
and  Gaul,  454  ;  in  United  States, 
amount  of,  468,  475  ;  taxes  on 
whiskey  and  tobacco  popular  in 
United  States  475  ;  dilfieulty  of 
repealing  in  United  States, 
475  ;  extent  of  taxes  on 
internal  commerce  in  Eng- 
land, 482,  483 ;  internal  taxes 
heavy  in  Turkey,  488  ;  inter- 
nal trade  freer  in  England 
than  in  France  prior  to  1798, 
501  ;  but  not  between  England 
and  Ireland,  501  ;  internal  trade 
most  free  where  protection  from 
foreign  trade  is  best  assured, 
514  ;  on  liquors  in  United  States 
and  in  Russia  make  the  manu- 
facturers of  liquors  collectors  of 
revenue  in  effect,  527 

International  competition,  319 ; 
payments  made  by  export  of 
debt,  353-359 ;  crisis  in  one 
country  spreads  to  others,  377  ; 
can  be  taxed  457,  607,  630  ;  in 
silks,  633-637  ;  in  glass,  644 ;  in 
iron  and  steel,  646  ;  in  prices  of 
iron  and  steel,  647  ;  in  shipping 
and  ocean  carrying  trade,  652- 
664 ;  dispersion  of  industries 
among  nations  better  than  con- 
centrating them  into  one,  674, 
675 

International  contempt,  shown  by 
eminent  English  free  traders 
toward  their  American  dupes, 
657,658 

International  iniquity,  446,  483- 
487, 488-490,  491-495,  533-548 

International  taxation,  457  ; 
through  profits  of  a  conquered 
and  enforced  trade  in  India, 
Turkey,  and  Ireland,  483-491  ; 
C!hina's  struggle  to  avoid,  540- 
548  ;  how  much  Canada  pays  in, 
593,  594,  615-617 

International  values, 450;  and  trade, 
Mill's  theory  of,  10-14  ;  opposed 
by  Carey,  16 

Invasion,  to  compel  "  free  trade," 


China,  534;  Japan,  553  ;  of  silk 
industry  of  England  and  des- 
truction by  free  trade  in  silks, 
035-637 

Inventions,  state  sphere  concern- 
ing, 431  ;  inventive  spirit  crushed 
by  irremovable  poverty,  597  ; 
most  of  the  great  inventions  of 
England  made  in  strongly  pro- 
tected industries  and  periods, 
654,  648,  649,  680,  681,  684,  685  ; 
few  of  moment  since  1846,  596, 
597  ;  London.  Times  on,  596 ; 
American  invention  of  pressed 
glass,  643 ;  in  France  during 
protective  periods,  674,  675 ; 
rapidity  of  in  England  in  pro- 
tective periods,  680,  681 

Iowa,  land  system  in,  142;  cost  of 
transportation  from,  compared 
with  English  farm  rents  as  a  tax 
on  fiirmers,  250,  251;  corn  pro- 
duction in,  252;  value  of  lands, 
257;  farm  products  in,  261; 
tenant  farms,  269;  banking  in, 
352;  woolen  manufactures  in, 
666 

Ireland,  relation  of  crime  to  pov- 
erty in,  33  :  population  being 
eliminated,  274-275  ;  home  not 
secured  by  its  local  system,  430; 
effect  of  prohibition  of  tobacco 
raising  in,  461,  462;  famine  of 
1846-1849  in,  and  effect  on 
American  exports,  470;  taxes  in, 
476;  prohibition  of  culture  of 
tobacco  in,  481;  never  has  had 
protection  to  industry  from  a 
British  parliament,  491;  Englisli 
efforts  to  suppress  manufactures 
in,  492-495;  liow  it  throve  under 
home-rule  protective  policy  from 
1783  to  1800,  492;  subversion  of 
her  industries  under  Act  of  Union, 
494;  free  corn  in  1846  reduces 
her  acreage  to  corn  one-half, 
559;  prohibited  from  iiroducing 
tobacco  in  order  tliat  duty  on 
may  not  protect,  562;  food  ex-, 
ported  in  famine,  570  ;  our  bal- 
ance of  trade  with,  599-601 
Iron,  cai)acity  of  one  man  to  pro- 
duce, 220;  division  of  product 
in  iron  and  steel  manufacture  in 
United  States,  313;  iron  used  as 


GENEBAL  INDEX. 


m 


money,    334;    rate  of  exchange 
of  iron  for  -wheat  during  -war, 
380;  tariff  of  18:24-28  as  to  iron 
and  steel,  382,  383;  English  pro- 
tection of  her  iron  and  steel,  489; 
in  France,  498-503  ;  slow  growth 
of    American     iron    and     steel 
and    tiual     high     prices    under 
low   duties,    rapid    growth   and 
linal  low  prices  under  high  du 
ties,  500;    iron   and   steel   made 
with  less  labor  cost,  though  at 
liigher  money  cost,  in  Pennsyl- 
vania   than     in    England,    511; 
Hewitt's    facts    refute   Bastiat's 
sophisms,  511;   wages  of  black- 
smiths and  iron  puddlers  in  Am- 
erica and  Europe  in  1867,  rates 
of,  511;  quantities  of  pig  and  bar 
made  in  German}',  520;  iron  and 
steel  wages    in    Germany,    523; 
galvanized,   protected     in   Kew 
South  Wales,  530;  grates,  stoves, 
etc.,  protected  in  Victoria,  530; 
statutes  maintained  in  England 
to  protect  iron  and  steel  manu- 
facture,   555;     j\Iichigan  would 
profit  (Sidgwick)    in  producing 
iron,  by  protection  from  Pennsyl- 
vtmia,  565;  relative  labor  cost  of 
producing  iron  in  Pennsylvania, 
England  and  France,  573;    im- 
porting English   iron  is  an  im- 
portation of  the  crops,  etc.,  con- 
den.sed    into    the   iron,  and  dis- 
places  American    crops  to  that 
amount,  579;   wages    in  rolling 
mills    in     United     States    and 
Europe,    586;     revenue    on  im- 
portation of  pig  iron,  whom  paid 
by,  586;  bar  iron   in  part,    587; 
Mill  on   division  of  imjiort   du- 
ties, 587;  wrought  iron,  English 
and    American    prices  of,   590; 
American  iron  and   steel   wares 
pronounced  superior  b}-  Birming- 
ham   board    of    tradi;    in    1868, 
London    TinicH  tells  why,    596  ; 
export    of    agricultural    imple- 
ments, values  of,  610;  exports  of 
iron  and  steel  wares  from  United 
States,  610;  American   iron  and 
steel   manufacture    and   foreiuii 
pay   duties   on,     611,   612,    647; 
ini]iorts   of   and   revenue   from. 


613;  iron  and  steel  manufacture 
older  than  agriculture,  644; 
mythological  antiquity  of,  645; 
Schliemaun,  Homer,  Gladstone, 
and  Goldziher  on,  645;  relation 
of  Vulcan  to,  645;  small  use  of 
iron  and  steel  in  Great  Britain 
in  1788,  646;  growth  of  since 
1796  in  England,  646;  better 
protected  in  England  than  in 
United  States  from  1790  to  1845, 
648;  disastrous  effects  of  this 
fact  on  American  shipping  after 
1855,  648;  world's  product  of 
iron,  steel,  and  coal  in  1883,  650; 
total  production  of  iron  and  steel 
rails,  pig,  rolled,  prices  of  steel 
and  iron  rails  in  United  States, 
miles  of  railroad  built,  produc- 
tion of  pig  iron  in  Great  Britain, 
and  immisrration  from  1860  to 
1883,  651  ;''Liverpool  Cotton  Cir- 
cular on  effects  of  American 
tariff,  664 

Italian  economists,  Cossa,  24; 
Genovesi,  82;  Beccaria,  82;  Count 
Rosconi,  836 

Italy,  monetary  unit  of,  338 ; 
parties  in,  404 ;  cove  rumcnt, 
406,  407;  in  College  of  Cardinals, 
418  ;  cost  of  army  in,  438  ;  low 
credit  of,  448  ;  tariff  of,  530  ;  its 
balance  of  trade  against  the 
United  States,  600  ;  product  of 
iron,  steel,  and  coal,  650  ;  Eng- 
land's trade  in  cotton  goods  with, 
689 


Jamaica,  cane-sugar  growers  seek 
xmion    with     United    States    or 
Canada,  505 
Japan,  unit  of,  338  ;  loss  of  sover- 
eignty as  to  tariff,  533,  553,  554; 
averts  an  armed  invasion  in  1864 
by  conforming  her  tarilT  to  for- 
eign demands,  553  ;    balance  of 
trade  against  United  States,  600 
Java,  England's  trade  witii,  689 
Jeffersonian  jn-oteclionism,  640 
Jennv,    sjjinning,    invention    and 

effect  of,  681-(i84 
Jewelry,  exports  of,  610;    inqiorts 
and  revenue,  613 


742 


GENERAL  INDEX. 


Judicial  department  most  coercive 

on  the  citizen,  416 
Justice,    atlmiuislratiou    of    made 

subordinate  to  revenue  in  India, 

486 

E. 

Kansas,  silk  culture  in,  632 
Kentucky,  glass,  644  ;  hemp,  653 
Kniglits  of  Labor,   relation  to  the 

organization     of     labor,      310 ; 

strikes  ordered  by,  828 
Kopeck,  338 

L. 

Labor,  conflicts  in  defining,  4,  12, 
14 ;  bureaus  of  statistics  of,  in- 
creasing, 22  ;  relation  of  labor 
class  to  price  of  bread,  26  ;  rela- 
tive inducements  to,  in  commun- 
al and  private  ownership,  41-54  ; 
how  supply  of  affects  price,  98  ; 
how  affected  by  machine  power, 
122  ;  in  Asiatic  countries,  123  ; 
relation  of  to  title,  125-130  ;  can 
not  give  rise  to  titles,  129  ;  divi- 
sion of,  due  to  private  title,  135- 
136  ;  modes  of  division  of  product 
with  capital,  1G3 ;  when  labor 
time  became  a  commodity,  166  ; 
not  the  sole  producer,  167 ; 
dividing  product  in  railways  and 
manufacturing,  172-181  ;  capi- 
talizing the  productive  value  of 
labor,  181  ;  is  not  muscular 
elTort,  but  organized  obedience, 
182  ;  produces  only  its  own 
wages,  and  no  surplus,  188  ; 
capital  the  chief  laborer  in  civi- 
lized industry,  208 ;  displace- 
ment of  labor  in  one  country  by 
machinery  in  anf)ther,  209  ; 
helpless  laborers  find  work  most 
easily  in  cities,  219  ;  how  affected 
by  large  capitals,  219  ;  capacity 
to  produce  food,  219  ;  in  iron, 
Moolen,  and  other  industries 
when  aided  by  capital,  220  ;  is 
freer  where  capitals  are  large 
227  ;  first  organizations  despotic, 
233;  labor  on  farms,  253-261  ; 
value  declines  directly  as  dis- 
tance from  consumer  of  product 


increases,  259-262  ;  distinction  of 
labor  from  sport,  from  services 
sold     to     an     employer,    from 
crime,  from  effort  put  forth  to 
produce,  from  capital,  from  im- 
plements ;  is  servile  effort,  281- 
284 ;     also    distinguished    from 
work,  284  ;  from  pleasure,  285  ; 
must  be  irksome  and  painful,  286  ; 
aversion  to,  286  ;  necessary  con- 
trast between  labor  and  pleasure, 
287  ;  less  broad  than  production, 
290  ;  is  obedience,  290  ;  is  only  a 
part  of  industry,  290  ;  combina- 
tions of  laborers,  300-303  ;  explo- 
sion of  wage  fund  doctrine,  290  ; 
profits  the  true  source  of  wages, 
293  ;    population   not   a  check, 
295  ;  countries  of  dear  and  cheap 
labor,  297-300  ;   is   the  ultimate 
receiver     of    all    wealth,    305  ; 
works  as  even  partner  with  capi- 
tal   on    farms,     railways,    and 
manufacturing,      309-315  ;       is 
compensation    of,  increased   by 
profit-sharing  ?   314  ;  labor   not 
protected   by   excluding   or  les- 
sening     population,      321  ;     do 
wages   of  social  labor  increase 
with  their  social  utility?  (Elder) 
323  ;  strikes  and  their  cost,  328  ; 
woman's  labor  and  wages,  325- 
328  ;     affected      by     war     and 
prices,  380 ;     slave    labor    rises 
with  profits,  384  ;  the  wage  con- 
tract economical  to  tjie  worker, 
433  ;  how  effected  by  spoliation 
of  the  capitalist  class  in  India, 
485  ;  labor  cost,  not  the  same  as 
money  cost,  511  ;  of  children  in 
Russia,     527 ;    value    of,  made 
eight    time    greater    in    United 
States  than  in  China,  by  adding 
animal  and    machine  power   in 
production  to  human,  540-543  ; 
quality   of  Chinese   labor,  547 ; 
labor  troubles  which  would  ensue 
from  the  premature  introduction 
of   foreign   machinery  and  pro- 
cesses in    China,    548 ;     double 
employment  of  labor   on  home 
products  than  on  imported,  560  ; 
laborers     protected     by     tariff" 
duties,    609  ;  no  other   ultimate 
destination  exists  for  wealth  of 


OENEEAL  IXDEX. 


743 


auy  kind  or  in  any  hands  except 
to  compensate  labor  and  relieve 
want,  626  ;  loss  of  employment 
in  silk  manufacture  in  England 
imder  free  trade  in  silks,  635-637; 
loss  of  employment  in  United 
States  in  1816  to  1819  by  glut 
of  English  goods,  642 

Laborers,  protected  bv  tariff  duties, 
when,  609 

Laces,  383 

Laissez  faire,  the  doctrine  defined 
and  its  decline  referred  to,  15  ; 
Carey  assailed,  16 ;  England 
dropped  in  practice,  17 ;  its  ex- 
tension to  social  classes  by  Prof. 
Sumner,  21  ;  losses  by,  149 ; 
how  the  school  of  was  founded, 
199  ;  contrast  between  the  actual 
English  policy  and  Laissez 
Faire,  66,  67,  316,  317-431,  432- 
435  ;  extent  of  English  interfer- 
ence shown  by  loc;d  rates,  477  ; 
and  by  prohibiting  tobacco  rais- 
ing, 480-481  ;  interference  in 
foreign  countries,  484-488,  489- 
491;  in  Ireland,  491-495; 
doctrine  of  Laissez  Faire  ig- 
nored and  violated  in  China  and 
Japan,  533-555 ;  even  to  keep 
the  peace  discriminates  against 
tliose  whose  occupation  would 
be  to  break  the  peace,  578 

Lamps,  exports  of,  610 

Land,  relation  of  title  to,  to  tillage 
of,  125-130 ;  distribution  in 
United  States,  139  ;  division  and 
allotment  of,  in  Canaan,  138  ; 
Sparta,  138  ;  Rome,  138  ;  mode 
of  surveying,  142  ;  records  of, 
143  ;  rent  and  its  relation  to  in- 
terest on  capital,  protits  of  en- 
terprise, and  wages  of  labor, 
171-194  ;  when  capital,  210  ;  in 
cities  where  land  is  dearest  the 
poor  have  thcbest  chance  to  live, 
219;  wheat  on  Dakota  land, 
219  ;  land  of  less  value  than 
wages  to  one  without  capital, 
235  ;  title  to,  begins  in  possession, 
237 ;  always,  held  by  highest 
bidder,  237  ;  how  rent  arises,  ac- 
cording to  Mill,  Hamilton,  Mac- 
leod,  Foiitenay,  J(;voiis,  Fawcctt, 
Sidgwick  and  Trice,  monopoly 


theory  leads  to  the  confiscation 
conclusion,  243  ;  large  holdings 
ami  bonanza  farming,  265-274; 
Large  holdings  in  the  United 
States  and  England,  270-272; 
permanent  land-holdings  pro- 
mote nobilities,  402  ;  lands  and 
local  government,  430;  taxes  on  in 
China,  455  ;  India,  455  ;  jMill's 
desire  to  tax  the  unearned  in- 
crement of  value,  463 ;  taxes 
on  land-owners,  465-473  ;  reve-^ 
nue  from  sales  of,  in  United* 
States,  468-474  ;  effect  of  taxing 
occupant  or  owner  on  rents, 
474  ;  when  owner  pays  the  land 
tax.  476  ;  plans  for  transferring 
title  from  owner  to  tenant, 
477  ;  crown  lands,  479  ;  land 
tax  in  England,  479-482  ;  small 
value  of  land  %\here  national- 
ized, 488 ;  land  breaking  up 
into  small  holdings  in  Germany, 
52.)  ;  land  communism  in  Rus- 
sia, 526 

Land-owners,  protected    by  tariff 
duties,  when,  6(J9 

Lard,  export,    import,    and  reve- 
nue, GlO-613 

Laurel,  340 

Laws,  of  economics,  are  natural 
laws,  2,  3,  4;  unity  of  with  physi- 
cal laws,  4;  Mr.  Mill's  alleged  law 
of  equation  of  international  de- 
maud  is  a  verbal  circle  and  not 
an  economic  law,  13  ;  Laissez 
faire,  an  obsolete  "law,"  15; 
wage  fund  theory  a  verbal  cir- 
cle and  not  a  relation  of  cause 
and  effect,  16;  "  profits  the  leav- 
ings of  wages"  also  true  only  in 
the  physical  sense,  17  ;  law  of 
the  value  of  economic  facts  is 
identical  with  the  law  of  weight 
of  physical  substances  (gravity), 
20;  moi'al  obligations  contract  as 
]M'rsonal  freedom  increases,  20, 
21;  sujKriority  of  law  over  em- 
l)iricism,  22  ;  how  arrived  at,  23; 
rtlation  of  hypothesis  and  ex- 
periment to  study  of  economic; 
law,  24;  Fawcett's alleged  "law" 
of  coincidence  of  i)rosperity  of 
lal)orers  and  cheapness  of  bread, 
26;  law  of  the  bias  of  statistics 


;u 


GENERAL  INDEX. 


through  widely  extended  in- 
terests, BO;  of  acclimating  consti- 
tutions to  unhealthy  influences 
exploded,  32  ;  of  the  constancy 
in  ratio  of  crime  to  poverty,  32, 
33;  and  to  inharinony  of  races, 
34;  supposed  ratio  of  prosperity 
to  imports  and  exports  exploded, 
35;  morals  grow  with  the  means 
to  be  moral,  48;  intellectual  rise 
from  barbarism  to  civilization 
is  identical  with  an  economic 
transition  from  ownership  in 
common  to  private  ownership, 
53  ;  production  springs  from  ex- 
change, 54  ;  growth  in  wealth 
and  individual  freedom  causes 
growth  in  corporations  and  vice 
versa,  57  ;  within  certain  limits 
morality  grows  with  liberty, 
crime  increases  with  restraint, 
59  ;  endurance  in  the  state  is 
proportionate  to  integrity  in  the 
family,  62  ;  family  influence  as 
permanent  as  heredity  is  natural, 
63;  with  growth  in  wealth  second- 
ary motives  (moral  qualities) 
grow,  63  ;  as  occupations  multi- 
ply more,  men  work  at  work 
they  love,  64  ;  fighting  force  of 
nations  is  proportionate  to  their 
productive  power,  65 ;  an  im- 
portant part  of  a  nation's  wealth, 
though  not  of  relative  wealth 
among  the  citizens,  68 ;  law 
of  equivalence  in  exchange 
expresses  only  a  probability,  (i9, 
109;  of  evanescence  of  all  wealth, 
70  ;  of  extinction  as  enjoyable 
wealth  of  all  that  is  converted 
into  and  remains  reproductive 
wealth,  71;  the  more  social  the 
use  the  less  the  perishability  of 
wealth,  72;  evanescent  in  the  de- 
gree that  it  is  vital,  73;  wealth 
the  fruit  of  abstinence,  but  great 
fortunes  imply  also  that  it  has 
been  reproductively  used,  74;  the 
pressure  of  want  a  perpetual 
spur,  since  the  moi'e  we  get  the 
more  we  want.  77;  Carey's  law, 
that  as  society  advances  values 
decline  and  utilities  increase,  dis 
cussed,  84  ;  producers  create 
commodities,  consumers   confer 


values,  86 ;  demand  causes  pro- 
duction, 88;  economic  error  pro- 
duces social  insanity.  91 ;  it  may 
ensue  from  the  error  that  labor 
causes  value,  91 ;  law  of  declining 
utility  of  enjoyable  commodities 
causes  exchange,  92,  95;  aided  by 
the  law  of  unlimited  capacitj'  to 
feel  secondary  wants,  93 ;  Gos- 
en's  law  of  pleasure  and  satiety, 
94;  law  of  rise  of  price  in  dispro- 
portion to  scarcity,  95,  96,  97, 
115;  law  of  rise  of  utihty  as  com- 
modity approaches  consumer,  98, 
99;  labor  only  determines  value 
in  the  degree  that  by  producing 
a  glut  it  impairs  value,  99;  buy- 
ing futures  in  grain  equalizes 
prices,  104;  price  is  governed  by 
the  profit  of  future  uses,  not  liy 
cost  of  past  exertion,  110;  war 
only  raises  prices  when  it  changes 
the  volume  of  monej'  (Tooke), 
113;  increase  in  rapidity  of  cir- 
culation afl'ects  prices  like  in- 
crease in  volume  of  money,  114; 
cost  of  production  is  no  regu- 
lator of  price,  114;  cheapness  in 
sources  of  supply  will  maintain 
a  lower  average  price  than  the 
mere  cheapness  in  the  supply 
itself,  117;  the  latter  may  be  tem- 
porary, former  is  permanent, 
118-120  ;  freedom  clepends  on 
profits  rather  than  on  relative 
prices  of  raw  materials  and 
finished  products,  121  ;  law  of 
sur\ival  of  poor  in  cities,  122;  of 
declining  values  and  wages  as 
we  go  eastward,  122;  causes,  123; 
of  destruction  of  industries  by 
competition,  124  ;  that  promises 
decline  in  value  in  proportion  to 
their  magnitude  and  lack  of 
assets  for  their  redemption,  127  ; 
individual  liberty  grows  with 
private  titles,  1-8,  139;  and  with 
the  number  and  extent  of  private 
monopolies  or  personal  titles  as 
distinguished  from  communal 
ownership,  130,  131  ;  and  with 
the  evolution  of  law  and  the 
state,  132;  laws  grow  and  rights 
arise  as  a  compromise  between 
usurpation  and  resistance,  133- 


OENERAL  INDEX. 


V45 


135;  private  title  causes  exchange, 
137,  138  ;  the  state  will  aid  every 
industry  which  the  majority  of 
the  people  desire,  but  in  which 
they  can  not  prolitablv  invest, 
151-155 :  profit  the  economic 
cause  of  wages,  168 ;  as  much 
eciuivalence  in  exchange  applies 
to  the  wage  contract  as  to  any 
sale  of  commodities,  172;  employ- 
ment at  wages  tends  toward 
equality  of  division  or  working 
on  shares  between  the  aggregate 
capital  and  aggregate  labor,  176- 
178  ;  rent  tends  to  take  a  fourth 
of  the  produce  of  land,  interest 
a  fourth,  and  wages  half,  177- 
180  ;  profits  tend  constantly  to 
fall  to  level  of  rent  and  interest 
or  to  be  eliminated,  179-182;  rate 
of  profit  is  directly  as  the  excess 
and  inversely  as  the  time  in 
which  it  is  made,  191;  profits 
average  twice  the  rate  of  interest, 
193;  distribution  of  wealth  causes 
production,  198 ;  wealth  means 
not  commodities,  but  inequality 
among  men  in  the  possession  of 
commodities,  202  ;  the  greater 
the  accumulations  the  greater 
the  diffusion,  204 ;  laboring 
power  is  proportionate  to  and 
measured  by  capital,  208 ;  as 
capital  (machinery)  grows,  labor 
changes  from  toiling  to  knowing, 
208,  209,  299,  300  ;  and  combines 
command  of  implements  with 
obedience  to  orders,  209;  luxury 
relieves  the  distant,  econoni}-  the 
near,  214  ;  rates  of  interest  de- 
cline as  accumulations  increase, 
220-224 ;  money  stays  longest 
with  those  who  make  it  most 
productive,  217  ;  capital  earns  a 
declining  rate  in  any  one  occupa- 
tion, but  returns  to  its  high  rate 
in  some  others,  230;  man's  food 
increases  faster  than  man,  231; 
Malthus'  alleg(!d  law  an  error, 
231,  292,  29(5;  the  more  the  mer- 
rier is  ecc^noniic  law,  234;  what- 
ever iini)airs  tiie  value  of  cajiilal 
inii)airs  rates  of  wages,  235:  land 
is  always  held  by  higiiest  bidder, 
238-240  ;  rent  is  the  sharing  the 


produce  earned  with  the  capital 
that  expels  less  productive  oc-- 
cupatious,  242,  249  ;  rent  bal- 
ances transportation,  249-253 ; 
and  disperses  the  less  competent 
so  that  the  more  competent  may 
have  the  space,  252  ;  values  of 
land  per  acre  values  of  land  pro- 
ducts per  capita  and  values  of 
labor  on  land  all  grow  as  farmers 
are  few,  and  decline  as  they  are 
many,  relatively  to  those  wlio  do 
not  farm,  256,  265  ;  release  of 
labor  by  machinery  multiplies 
occupation;;  while  lessening  toil, 
264,  265  ;  with  machiner}-,  the 
less  men  work  the  more  they 
get,  266  ;  the  bigger  the  farms 
the  cheaper  the  wheat,  267-272; 
large  estates  make  low  rents,  272 
-275  ;  the  irksomeuess  of  labor 
economizes  human  effort,  lin)it- 
ing  it  to  the  line  in  which  it  satis- 
fies social  demand,  286  ;  in  the 
economic  sense  commodities  are 
produced  by  entrepre items  and 
the  wage-worker  produces  only  a 
diversion  of  the  wages  to  liimself, 
290;  the  alleged  wage  fund  law 
a  circuit  of  words,  and  not  a  true 
law  of  cause  and  effect,  291;  the 
wage  fund  can  not  cause  the 
wages,  since  it  is  the  wages  in 
total,  294;  profits  are  the  cause 
and  measure  of  rent,  interest,  and 
wages,  294;  tendency  toward  a 
minimum  in  old  channels  offset 
by  a  tendency  toward  the  max- 
imum in  new  channels,  228,  294  ; 
difference  of  average  comfort 
among  men  much  less  than  dif- 
ference of  wages  or  income,  298  ; 
there  is  an  economy  in  being  slow 
as  well  as  in  being  fast,  298  ;  but 
the  fast  economy  is  in  the  lead, 
543,  545 ;  regulating  rates  of 
wages  im])lies  state  enqiloj^ment, 
301  ;  trade  unions  "  corner"  tlie 
labor  market  on  the  same  plan  as 
brokers  corner  grain,  301 ;  a  com- 
bination among  many  may  be 
destructive  of  industry,  tiiougli 
its  aim  l)e  one  wliicii,  if  pursued 
by  each  one  singly,  would  be  pro- 
motive of  industry,  302  ;  arbitru- 


'40 


GENERAL  INDEX. 


tion  cannot  determine  future  rates 
of  wages  or  prices  of  commodi- 
ties, ;503,  304  ;  agitations  for  social 
revolution  exist  wherever  there  is 
economic  incapacity  and  miscon- 
ception, 305  ;  money-making  is  a 
free  art, as  to  it  anarchy  in  the  main 
already  rules,  307,  309  ;  society 
puts  each  man  in  his  most  useful 
place,  308,  309  ;  cajiital  and  enter- 
prise only  can  organize  destitute 
laborers,  310;  destitute  laborers 
can  organize  strikes,  310 ;  but 
they  can  not  organize  labor,  310, 
328  ;  all  wages  work  is  product 
sharing,  at  the  halves  or  nearly 
so,  312,  313  ;  labor  markets  can 
not  become  one  market,  315  ;  mil- 
itary protection  to  foreign  trade 
may  protect  home  wages  in  an 
exporting  country,  316,  431,  483- 
495  ;  increasing  the  diversity  of 
industries  in  an  importing  country 
by  protective  tariffs  also  protects 
wages,  318  ;  there  can  be  no  un- 
protected classes  in  a  protective 
countrj^  320  ;  excluding  immigra- 
tion, unless  of  particular  occupa- 
tions, would  not  protect  wages, 
821;  trade  can  only  be  made  free 
as  we  are  furnished  with  the 
means  to  trade  with,  323  ;  wo- 
man as  a  worker  tends  toward 
the  family  order  and  from  the 
competitive  sphere,  327 ;  the 
sources  of  the  low  wages  of  em- 
ployed women  is  the  reserve  of 
unemployed,  327  ;  money  is  the 
mainspring  of  industry,  332 ; 
coined  money  of  depreciated  met- 
al will  remain  at  par  partly  on  the 
credit  which  stamps  it,  336  ;  a  cur- 
rency chiefly  of  coin  tends  to- 
ward adulteration,  339-342  ;  rela- 
tive value  of  silver  to  gold  seems 
to  depend  on  relative  quantities 
by  weight  in  which  they  are  pro- 
duced, the  total  values  of  both 
metals  in  use  being  the  same,  345- 
366,  373  (see  charts,  p.  367) ;  ex- 
changeable credit  affects  prices 
as  paper  or  coin,  346.  391,  392  ; 
money  tends  constantly  toward 
idealization,  the  substitution  of 
faith  for  value,   349,  355;    well 


sustained  national  debt  will  act 
as  money  in  international  trade 
between  the  borrowing  and  cred- 
itor countries,  354  ;  cost  of  credit 
money  is  the  cost  of  maintaining 
the  credit,  not  of  engraving  the 
note,  356  ;  fiat  money  overlooks 
the  true  sources  of  credit,  350, 
350  ;  contraction  in  volume  of 
money  enslaves,  expansion  in 
good  money  frees  men,  359  ;  an 
economic  illusion  may  i^roduce 
substantial  effects,  360;  good  times 
may  attend  bad  money,  361  ; 
gold  standard  can  not  be  violently 
established,  362  ;  the  world  tends 
toward  an  ecjuipoise  of  the  two 
standards  as  between  different 
countries,  if  it  cannot  have  the 
double  standard  in  all,  363  ;  line 
of  fluctuation  of  prices  is  made 
more  uniform  by  the  equilibrium 
of  the  two  money  metals,  364,  368; 
a  country  gains  in  both  trades 
by  successfully  maintaining  the 
double  standard,  making  a  profit 
on  the  sale  of  the  dearer  coin  and 
the  purchase  of  the  cheap,  always 
if  the  parity  of  the  two  is  restored, 
364-365  ;  Gresham's  law,  that 
adulterated  money  causes  an  ex- 
port of  pure  coin,  or  bad  money 
drives  out  good,  has  no  applica- 
cation  to  the  case  of  a  fall  in  the 
value  of  the  bullion  of  which  one 
kind  of  money  is  made,  368  ;  a 
run  for  deposits,  being  the  taking 
out  of  one  to  put  into  the  other, 
becomes  futile  if  all  banks  stand 
together,  370,  371;  a  resumption 
of  specie  payments  after  a  long 
suspension  is  an  inflation,  and 
tends  to  a  speculative  crisis,  371  ; 
the  maxim,  a  crisis  due  in  En- 
gland every  ten  years,  in  America 
every  twenty,  fails  in  1887,  374  ; 
freer  importation  tends  to  produce 
a  crisis  within  three  years,  whe- 
ther in  England,  375-376,  377, 
378,  389,  390  ;  or  in  the  United 
States,  381,  382-385,  386-388;  the 
law,  that  a  country  is  drained 
when  the  balance  of  trade  is 
against  it,  admits  of  no  real  ex- 
ceptions, the  alleged  exceptions 


GENERAL  INDEX. 


141 


being  only  failures  to  get  at  flic 
true  balance  sheet,  393-395  ;  mon- 
etary and  commercial  crises  are 
largely  due  to  niisgovernment, 
and  the  advantages  they  confer 
are  the  adaptation  of  business  to 
misrule,  397  ;  governments  arc 
natural  and  inevitable,  399-40(5  ; 
the  political  state  takes  its  form 
from  the  occupations  of  the  peo- 
ple, and  is  military,  hereditary,  or 
elective,  as  occupations  are  war- 
like, agricultural,  or  diversitied, 
401-429,  432-435  ;  political  gov- 
ernment by  males  is  co-extensive 
with  the  extent  to  which  govern- 
ment is  coercive,  435,  436  ;  attrac- 
tive functions,  such  as  reigning, 
where  a  premier  governs  educ'a- 
tion  and  all  forms  of  culture  by 
government  superintendence,  are 
non-sexual,  434  ;  do  not  enforce 
themselves,  436  ;  difference  in  the 
feasibility  and  economy  of  laws 
generally  assented  to  and  those 
enacted  by  narrow  majorities, 
436  ;  division  of  function  between 
the  sexes  is  economic  of  the 
welfare  of  both,  436 ;  saving 
money  by  dispensing  with  armies 
is  a  doubtful'  experiment  in  the 
economic  aspect,  437-439  ;  all 
States  are  army-made,  439  ;  crime 
an  economic  problem,  441  ;  over 
long  periods  human  utilities  and 
mischiefs  are  more  nearly  equal- 
ized than  over  short,  445-448  ; 
facility  in  negotiating  state  loans 
tends  toward  socializing  state 
functions,  449-451;  a  theory  of 
taxation  ideally  equal  in  the  view 
of  all  minds  is  a  chimera,  456, 
457  ;  none  can  follow  the  final 
incidence  or  burden  of  taxes,  403- 
405  ;  the  productixcness  or  bene- 
fits of  taxation  is  traceable,  405- 
468 ;  protective  tariffs  always 
produce  the  largest  ratio  of  ivv- 
enue  to  iini)ortations,  409-472  ; 
and  sliniulat(;  iminigralion  by 
raising  wages,  473  ;  universal 
suffrage  taxes  capital,  474;  limited 
suffrage  and  aristocratic  govern- 
ment tJLX  vulgar  constHnjition, 
480  ;  facility  in  raising  local  loans 


and  laying  local  taxes  favors  so- 
cialistic expenditure,  in  England, 
478  ;  in  United  States,  150-155, 
474  ;  import  duties  can  only  be 
limited   to   a    revenue    function 
purely  by  prohibiting  the   dom- 
estic  prodiu'tion,    480  ;  hence    a 
country    which    could    produce 
everything  could  not  lay  a  pure- 
ly   revenue      duty,     562     (pre- 
face) ;    a     human-labor   countr}^ 
can     not    give    free-trade    to  a 
machine-labor    country    without 
being  ruined,    484-496;  it  must 
at    all  cost   import   the   machin- 
ery or    process    instead    of    the 
product,    484r-496  ;  foreign    con- 
quest makes  great  landlords,  270, 
484-486,  520,  521  ;  persistent  pro- 
tection to  many  industries  mul- 
tiplies  land-owners  and  self-em- 
ploying small  proprietors, 496, 497, 
520,  521;   true  protection   begins 
by     protecting     raw     materials, 
France,  ^8  ;    protection  a   short 
road    to    cheapness     and    abun- 
dant   supply,    505  ;    France     in 
beet   sugar,  20    years,    515-521; 
United     States     in     cutlery     (8 
years),  596;  if  scarcity  or  dearness 
is  like  that  produced  in  spring  by 
sowing  seed  instead  of   consum- 
ing, it  is  better  in  the  long  run 
than    the    transient    plenty   pro- 
duced by  consuming  seed    that 
needs    to    be    sown  ;      Bastiat's 
sc'arcity    and    abundance    argu- 
ment therefore  is  too  simple   and 
single  to  meet    the   protectionist 
argument,     508-510  ;       law     of 
miniiition  of  labor  and   capital, 
146.  229,     274,  492-511;    protec- 
tion in  proper  cases    maximizes 
the     Hiturn    and    minimizes   the 
effort  to  the  world  at  large,    511; 
production   of     unlike    products 
not  of  unlike  values  creates  com- 
merce,   513;     hence     commerce 
between  (countries  having   equal 
facilities    for     ])i'()ducing    differ- 
ent   ])roductsis  iJrolitabK'  to  both, 
but  that  between  t'ountries  hav- 
ing  different   facilities    for  pro- 
ducing   the     same    products    is 
juinous  to  one,  513;  a    country 


•748 


GENERAL   INDEX. 


which  exports  its  raw  materials 
remains  poor  ;  it  grows  rich  as 
it  advances  to  the  export  of  its 
finislied  products,  515-521;  mili- 
tary energy  is  proportionate  to 
economic  wisdom,  516;  national 
power  and  unity  proportionate 
to  its  fidelity  to  tlie  protection  of 
its  own  industries  and  popula- 
tions, 515-521;  Tlie  policy  of 
maliing  one  country  tlie  worli- 
shop  of  tlie  world  requires  con- 
stant aggressions  on  tlie  rights 
of  barbarian  and  hand-labor 
nations,  533-554 ;  free  trade  in 
competing  products  may  change 
the  place  of  production,  but 
has  no  permanently  cheapening 
effect  on  prices,  559-560;  pro- 
tection can  only  raise  prices 
while  it  is  increasing  domestic 
competition  wliicli  will  reduce 
prices,  563;  free  trade  (the  sub- 
stitution of  importation  for  pro- 
duction) employs  one  domestic 
capital  where  protection  employs 
two,  and  results  in  one  domestic 
supply  for  consumption  where 
protection  results  in  two,  571- 
574;  law,  that  as  wages  rise  pro- 
fits fall,  is  disproved  in  theory 
and  fact,  579-584;  protective 
duties  collect  revenue  from  for- 
eign producers  in  part,  584; 
wherever  foreign  producers  can 
not  add  duty  to  their  price,  but 
can  deduct  it  from  tlieir  profits 
and  still  leave  a  profit,  they  con- 
tinue to  import  notwithstanding 
they  pay  the  duty,  585-594;  a 
wisely  laid  protective  duty  never 
can  need  repeal,  as  it  repeals  it- 
self as  fast  as  it  produces  cheap- 
ness, 596 ;  exports  depend  on 
cheapness  in  their  productions, 
not  on  willingness  to  buy  of 
their  foreign  purchasers,  599, 
600;  home  trade  is  freer  than 
foreign  because  it  takes  pay  in 
more  products,  602;  matters  of 
public  interest  are  always  mat- 
ters of  private  interests  publicly 
considered,  603;  law  of  effect  of 
import  duty  on  the  price  of 
domestic    article,  610-617;    can 


only  raise  tlie  price  where  it  is 
forcing  a  new  industry,  617; 
the  law  of  decline  of  the  tariff  tax 
stated,  618;  it  bears  a  like  propor- 
tion to  the  portion  of  the  duty 
paid  by  foreign  producers  as  the 
deficit  in  domestic  supply  bears 
to  the  whole  domestic  demand, 
619-622;  the  greater  the  national 
surplus  relatively  to  a  uniform 
demand  the  less  the  value  of  the 
aggregate  product  (cotton),  687; 
economy  of  a  rise  in  prices  due 
to  a  lessened  supply,  689;  the 
smaller  the  quantity  obtainable 
the  greater  its  aggregate  value, 
690 

Lead,  German  imports  and  ex- 
ports of,  519;  revenue  paid  by 
foreign  producers  of  lead  im- 
ported into  United  States,  586; 
white  lead,  revenue  on,  paid  by 
foreign  producers,  586;  exports 
of,  610;  imports  and  revenues, 
613 

Leather,  manufacture  in  United 
States,  division  of  product  in, 
312  ;  in  France,  498,  499,  503  ; 
Germany,  520;  Ireland  given 
freer  leather  than  England,  490; 
revenue  on  imports  into  United 
States,  whom  paid  by  ?  584 ; 
exports  of,  610  ;  imports  and 
revenue  from,  613;  American 
leather  trade.  697,  698 

Legislation,  infiuence  of  private 
interests  upon,  36-38;  functions 
of  state  in,  136 ;  absence  of, 
against  waste  of  lands,  forests, 
148;  concerning  rivers,  149;  ef- 
fects of  neglect  as  to  highways, 
149-150;  by  states  and  Congress 
as  to  railways,  150-161;  as  to 
rates  of  wages,  166  ;  restricting 
banks  from  issuing  notes,  349; 
act  of  1844  concerning  issues  of 
notes,  377;  suspension  of,  377; 
tariff  of  1810-1824-1828,  382, 
383 ;  proposal  to  emancipate, 
384;  tariff  of  1846  and  effects, 
385-388  ;  in  England,  how  con- 
ducted, 411  ;  a  check  on  the 
executive  power,  416;  affects 
the  citizen  at  wliat  points,  417  ; 
English  habit  of  legislation  by 


GEyERAL  INDEX. 


749 


piecemeal,  478  ;  protective, 
denied  to  Indian,  487;  act  of 
of  union  a  scheme  to  destroy 
Irish  manufactures,  49^-494  ; 
summary  of  protective  laws 
maintained  by  Great  Britain  for 
440  vears,  555;  concerning  wool, 
669-671 

Leicester  wools,  672 

Liberia,  dollar,  388 

Lime,  export  of,  610  ;  import  and 
revenue  from,  618  ;  in  iron  man- 
ufacture, 645 

Lincolnshire  wools,  673 

Linseed  oil,  revenue  on,  paid  by 
foreign   producers,  5b6 

Liquors,  taxes  on,  475  :  effect  of, 
on  labor  in  Russia,  227;  taxes  on, 
in  Russia,  527 

Lira  and  Lire,  monetary  unit  of 
Italy,  838 

Liverpool,  customs  officials  in, 
482  :  growth  of,  490 

Loans,  to  the  state,  inducement 
to  (Adams),  448  ;  a  form  of  in- 
flation, 449  ;  local  loans  in  Eng- 
land, 476  ;  in  India,  486  ;  by 
Germany,  518-520 

Local,  taxation,  4")9  ;  government, 
429  ;  in  United  States,  4(38  ;  in 
Great  Britain,  476  ;  in  France, 
497  ;  but  little  craved  in  Russia 
except  in  the  commune,  580 ; 
effect  of  local  taxation  to  reduce 
protection,  694 

Locks,  door,  chest,  cupboard  and 
drawer,  export  of,  596 

Locomotives,  519 

London,  city  government  of,  405- 
482 ;  made  great  hj  threc;- 
cornered  trade,  601;  decline  of 
silk  industry  in,  636 

Loom,  invention  of,  484  ;  power 
loom,  681-685 

Lords,  House  of,  426;  how  con- 
trolled by  Commons,  427 

Loss,  as  an  economic  force,  188-191 ; 
proportion  of  losers  to  winners, 
89;  losses  to  wage-workers  and 
employees  by  strikes,  810,328; 
indirect  profits  involved  in  loss, 
211  ;  taxes  on,  456 

Lumber,  manufacture  of  in  L'nited 
States,  returns  to  labor  and  caj)- 
ital  and  division  of  product  in, 


312  ;  strikes  in,  310-328:  reve- 
nue on  imports  of,  paid  by  foreign 
producers,  586  ;  exports  of,  Oil  ; 
imports  and  revenue  from,  614- 
652 ;  Canadian  producers  bear 
the  tax,  610-618 

Lunacy,  individual  and  social,  445- 
447;  may  consist  in  economic 
error,  91 

Luxemburg,  514-521,  650 

Luxury,  relieves  a  more  distaflt 
and  precarious  laborer  than  in- 
vestment, 214 ;  its  relation  to 
happiness,  215  ;  taxes  on,  456, 
461;  fallacy  of  basing  taxation 
on  distinction  between  luxuries 
and  necessaries,  461,  517 

Lynn,  shoe  and  boot  production  in, 
'697,  698 

M. 

Macedon,  359,  417 

Machinerj',  displacement  of  labor 
in  one  country  by  machinery  in 
another,  209;  makes  capital  the 
laborer  and  labor  only  the 
knoicer  in  civilized  countries, 
208;  on  farms,  219;  in  iron, 
woolen,  wheat,  bread,  printing, 
building,  boots  and  shoes,  etc., 
220;  growth  of,  in  extensive 
farming, 262-267;  aids  large  hold- 
ings and  cheap  production,  262- 
275;  cast-iron  plows,  264;  gang 
plows,  264;  harvesters,  265; 
effects  of  on  labor,  267;  does  it 
lessen  demand  for  labor,  297- 
299;  effects  in  determining 
wages,  312;  absence  of  machine 
power  in  China  and  economic 
effects  of,  540-553;  do  machines 
and  animals  by  exempting  man 
from  toil  increase  his  thinking 
powers  in  like  degree,  542,  543; 
economic  power  of  United 
States  measured  against  that  of 
China,  548;  effect  of  premature 
introduction  of  machinery  by 
foreigners  on  native  industries  of 
China,  547;  wages  in  manufac- 
ture of  machinery  in  United 
States  and  Eurojje,  581,  582;  ex- 
port of  sewing,  sausage,  weigh- 
ing, washing,  mowing  and   kib- 


750 


GENERAL  INDEX. 


bling  macliinory  from  United 
States,  596;  weighing  macliinery, 
exports  of,  611 

Mail  steamers,  of  America,  how 
lost,  657;  of  England,  France 
and  Germany,  how  subsidized 
and  sustained,  657-664 

Majority,  modes  of  determining, 
403;  may  be  of  military  force, 
of  capital,  or  of  both,  412;  close 
'  approach  of  the  two,  66;  when 
numbers  only  count,  414;  Cal- 
hovm's  plan  of  government  by 
concurring  majorities,  414;  all 
majorities  reduce  to  one  eiHcient 
vote,  421 ;  the  rest  are  inefficient 
or  surplus,  421 

Malt,  excise  duty  on,  481 

Malthus'  law,  of  population,  230; 
rate  of  increase  in  man  and  his 
food,  231 

Mahbub,  monetary  unit  of  Tripoli, 
338 

Man,  rate  of  increase  of,  and  his 
food,  231;  his  weakness  as  a 
savage,  232  ;  requires  diversified 
industries  for  his  culture  and 
happiness,  317,318:  Elder  on  rise 
in  rank  of  labor  according  as  it 
fixes  itself  in  things,  institutions, 
or  man,  323;  growth  of  value  of 
human  life,  445;  his  secular  in- 
terests rescue  him  from  suffering 
brought  on  by  fanaticisms,  446- 
447;  '  'man  is  man," — this  (Perry) 
dispenses  with  economic  facts, 
571 

Manchester,  school  of  political  eco- 
nomists, 15  ;  who  oppose  its  the- 
ories, 16  ;  its  chief  function,  40  ; 
trade  ])uilt  up  by  subversion  of 
Hindoo  industry,  486  ;  growth 
of,  simultaneous  with  that  of 
power  spinning.  685,  686 

Manufacturers,  foreign  inspire  the 
free  trade  criticism,  604,  605  ;  of 
sugar  pay  the  duties  on  crude 
sugar,  618 

Manufactures,  in  United  States, 
147;  profits  of  English,  178; 
how  aided  by  division  of  labor, 
219  ;  how  manufactures  affect 
values  of  farm  lands,  wages  of 
farm  labor,  and  prices  of  farm 
products,  256-262  ;  profit   shar-    ' 


ing  in,  311,  312  ;  beginnings  of, 
319  ;  number  engaged  in,  in 
United  States,  320  ;  strikes  in, 
328 ;  growth  of  cotton  manu- 
facture diu'ing  war,  380  :  make  a 
home  market  for  breadstuffs,382; 
wreck  of,  under  tariff  of  1833, 
382  ;  same  under  that  of  1846, 
382-386  ;  tobacco  manufacture 
heavily    protected    in  England, 

481  ;  also  rum,  slightly,  482  ; 
brandy  and   patent    medicines, 

482  ;  Hindoo  manufactures  sub- 
verted, 484 ;  by  forcing  free 
trade  in  English  goods  on  India, 
while  England  retained  protec- 
tion against  Indian  goods,  487 ; 
same  policy  pursued  by  England 
with  Turkey,  488-491  ;  excel- 
lence of  Turkish  manufactures 
until  undermined,  489  ;  decline 
of  since  1812,  490  ;  decline  of  in 
Ireland  since  Act  of  Union,  491- 
495 ;  number  engaged  in,  in 
France,  496  ;  of  beet  sugar  in 
France  and  Germany,  503-506  ; 
manufactures  as  a  force  in  eman- 
cipating serfs  in  Russia,  527  ; 
effects  of  premature  introduction 
of  steam  manufactures  by  for- 
eign owners  in  China,  547  ;  skill 
of  Chinese  as  manufacturers, 
552  ;  statutes  enacted  in  aid  of 
manufactures  in  England  for  440 
years,  555  ;  manufactures  made 
for  all  the  world  not  of  good 
quality,  567  ;  foreign  manufact- 
ures, how  driven  out  of  the  field 
at  their  own  cost,  588  ;  foreign 
manufacturers  and  producers 
the  exclusive  promoters  of  free 
trade  in  United  States,  604,  605  ; 
of  copper,  brass,  etc.,  imports, 
exports,  and  revenues,  610,  613  ; 
list  of  protected  products  which 
are  both  imported  and  exported 
from  United  States,  610,  613  ; 
their  relation  to  the  tariff'  and 
farmers  as  stated  by  Shearman, 
611  ;  value  of  British  manufact- 
ures, 637  ;  Hamilton's  report  on 
glass  manufacture.  639  ;  growth 
of  in  1806-15  during  non-inter- 
course, 641  ;  views  of  Hamilton^ 
Madison,  and  Jefferson  on,  640. 


GENERAL  IXDEX. 


•51 


642  ;  quantities  and  values  of 
glass  mauufactures  in  United 
States,  644  ;  nianufaeture  begins 
in  iron  and  steel,  (j44,  64o  ;  rela- 
tive position  of,  in  i^ngland  and 
United  States   in  1740," 653 

Marble,  exports,  imports  and  reve- 
nues from,  613 

Mark,  388 

Markets,  the  index  of  values,  99  ; 
detined  bv  Jevons,  Cournot,  and 
others,  99-102  ;  leading,  of  the 
world,  99-101  ;  grain  markets 
and  their  effects  on  prices  and 
production  beneficial,  107-120  ; 
effect  of  market  prices  on  pro- 
duction, 114  ;  effect  of  di.stance 
from,  on  modes  of  production, 
247-262  ;  obstructions  between 
independent  labor  markets  essen- 
tial to  preserve  higher  i)rices  in 
one  than  the  other,  315  ;  Andrew 
Jackson  on  American  markets, 
382  ;  taxes  on,  455  ;  for  English 
goods,  the  object  of  colonization 
and  conquest,  484  ;  in  Prussia, 
520  ;  distance  of  markets  lowers 
the  quality  of  manufactures, 
567  ;  value  of  markets  depends 
on  past  political  and  collective 
action  of  the  nation  in  which 
they  are,  574,  575  ;  hence  for- 
eigners have  rights  in  them  sub- 
ject to  the  national  will,  576  ; 
Birmingham  supplanted  in  its 
old  markets  in  iron  and  steel 
wares  by  American,  596 ;  free 
trade,  dividing  the  home  mar- 
ket, causes  dearness  where  the 
home  market  must  be  the  chief 
source  of  supply,  609  ;  protection 
secures  the  whole  market  and 
divides  payment  of  the  revenue, 
free  trade  divides  the  market  and 
obliges  American  consumers  to 
pay  all  the  revenue,  612-615 

Marriage,  statistics  of,  30 ;  elfect 
of  on  woman's  work,  326;  mono- 
gamy, relation  to  race,  food, and 
economic  c(jnditions,  402 

Massachusetts,  population  in  1790, 
140;  aid  to  railways,  153;  ad- 
vance in  fertilitv  of  soil,  252, 
254,  328;  cultivated  land,  546; 
rate.s  of  wages  in,  and  in   Great 


Britain,  582  ;  beginning  of  silk 
manufacture  in,  632  ;  as  a  colo- 
ny protected  sheep,  wool  and 
wool  manufacture,  676 

Matches,  export  of,  610  ;  import 
and  revenue  from,  613 

Mathematical  instruments,  exjiort 
of,  610  :  import  of  and  revenue, 
613 

Maximilian,  and  foreign  bondhold- 
ers in  Mexico,  450 

Meat,  cost  of,  25  ;  consumption  of 
in  United  States,  224  ;  relative 
shares  of  cai)ital  and  labor  in 
first  division  of  product,  312, 
520 

Mecklenburg,  515 

Medicines,  patent,  British  duties 
on,  482;  American  export  of,  610 

Men,  in  war,  437 

Mercantile  debt  in  United  States, 
448 

Merchandise,  glut  of,  may  produce 
inllation,  384 

Merchants,  qualities  essential  to 
success,  400  ;  debts  of,  in  United 
States,  448 ;  liable  to  mistake  a 
tax  collector  for  a  thief,  453  ; 
English  merchants  in  C'liina  al- 
ways backed  by  English  troops, 
536 

Merino,  wools,  672  ;  Napoleon  on, 
674  ;  in  America,  high  prices  on 
merino  sheep,  676 

Metals,  division  of  wages  in  312  ; 
English  and  American  wages  in, 
582  ;  strikes  in, 328  ;  imports  of 
and  revenues  from,  613 

Methods  in  political  economy, 
9-36;  the  metaphj'sicai,  12; 
the  scientific,  23  ;  metajjhysical 
school  of,  13,  9-36 ;  bias  re- 
flected in  economic  discus- 
sion, 330 ;  on  final  incidence 
of  taxes,  460  ;  futility  of  meta- 
physical aphorisms  in  the  case  of 
a  i)r()leclive  tariff  producing 
levenue,  469-472  ;  Perry's  dog- 
ma "  the  facts  are  too  many — it's 
simpler  without,"  571  ;  liow  big 
an  inverted  jiyramid  can  topi)le 
on  an  "if"  in  Pcrrv's  treatment 
of  the  tariff,  5WI  ;""  reasonable 
suppositions"  substituted  lor 
science,  589 


GENERAL  INDEX. 


Mexico  and  Mexicans,  tribal  own 
ersliip  in  ancient,  28  ;  production 
of  precious  metals  in,  ^66  ;  Uni- 
ted States  dependent  on  for  coin 
from  1790  to  1852,  384  ;  moneta- 
ry unit  of,  338  ;  centralization  in, 
416  ;  import  and  export  duties, 
416  ;  effort  of  bondliolders  to 
seat  Maximilian,  450  ;  tariff, 530; 
cultivation  of  silk  in,  631 

Michigan,  economic  gain,  (Sidg- 
wick),  by  protection  against 
Pennsylvania,  562,  665,  666; 
wools  of,  672;  salt  production 
in,  and  state  aid  of,  693-697;  ef- 
fect of  competition  to  compel 
importers  to  pay  duties  on  im- 
ported salt  (diagram),  696 

Migration  of  labor  owing  to  lack 
of  employment,  146-148,  274, 
275,  492,  494,  511;  of  profits, 
229 

Military,  strength  of  protective 
policy,  515 ;  in  Germany  and 
France,  515  ;  military  coercion 
in  enacting  tariffs  of  China  and 
Japan,  533;  military  protection 
to  export  trade,  608,  628  (see 
India,  Ireland,  Turkey,  China, 
Japan),  675 

Milk,  export  of,  610;  import  and 
revenue,  613 

Mills,  coffee,  English  and  Ameri- 
can prices  of,  590;  number  of 
mills  in  Canada,  665,  666-668  ; 
in  cotton,  in  England,  689 

Milled  coins,  340 

Milreis,  338 

Mineral,  door-knobs,  English  and 
American  prices  of,  590 

Mines,  mortality  in,  in  Germany, 
32;  production  of  gold  and  silver 
in  mines  of  all  countries,  366; 
quantity  of  coal  mined  in 
Germany,  520 ;  taxes  on,  454; 
number  employed  in,  in  France, 
496;  women  work  in  mines  in 
Germany,  525;  in  United  States, 
327;  natural  conditions  alone  do 
not  insure  success  in  mining, 
573;  mines  probably  first  paid 
rent,  645 

Ministry,  government  by  responsi- 
ble, 410 

Minority,  rights  of,  441 


Mint  of  Bombay,  ornaments 
brought  to,  331 ;  of  United  States 
on  coins,  338;  of  London,  342; 
rate  of  coinage  in  United  States, 
384 

Mir,  of  Russia,  526-530 

Missouri,  glass,  644 ;  compromise 
on  slavery,  688 

Mohammedanism,  opposed  to  tax- 
ing foreigners,  488;  large  ele- 
ment in  British  Empire,  516; 
ascendancy  of  Mohammedan 
races  in  iron  and  steel  manufac- 
ture in  middle  ages,  646 

Molasses,  520;  export  of,  from 
United  States,  611;  import  and 
revenue,  614 

Monarchy,  relation  of  to  liberty, 
404-405;  when  absolute,  not- 
withstanding a  parliament  exists, 
406;  when  advisory  and  parlia- 
ment absolute,  406;  how  the  one 
vote  determines  majorities,  422 

Money,  conflict  in  defining,  6; 
Lord  Liverpool  on,  opposed  by 
Carey,  16;  views  of  mercantile 
school  on,  18;  social  uses  of,  75; 
how  circulation  of,  influences 
prices,  122;  brought  by  immi- 
grants, 148;  as  a  force  in  abol- 
ishing slavery,  164;  in  prosecut- 
ing war,  221;  organization  of 
society  by  money  wages  super- 
sedes that  by  rank,  225;  money 
defined,  329-333;  by  Jevons, 
Sidgwick,  Walker,  Hume,  Ca- 
rey, Roscher,  Devas,  White, 
329,  330;  meaning  varies  in  dif- 
ferent uses,  330;  begins  as 
hoarded  treasure  uncoined,  331; 
its  potency,  333;  supersedes  not 
peaceful  barter  but  forcible  seiz- 
ure, 333  ;  oxen  used  as,  333  ;  its 
three  forms,  335;  value  of  coin 
not  wholly  dependent  on  value 
of  bullion,  336;  Count  Rosconi 
on,  336;  evolution  of  British 
coinage,  339-341;  relation  of 
money  to  prices,  343 ;  proportion 
of  coined  to  credit  money  in  use, 
344;  what  constitutes  the  vol- 
ume of  money,  344 ;  ratio  of 
value  of  silver  to  gold  and  how 
affected,  345;  bills  and  notes, 
346-349;    deposits  and    checks. 


GENERAL  IXDEX. 


753 


351;  banknotes,  350-352;  na- 
tional debt  as  international  cur- 
rency and  alloctiug  prices,  353- 
355;  cost  of  credit  money,  355- 
357  ;  volume  of,  358;  in'tiucnce 
of  expanding  volume  of,  359- 
361;  Hume,  Alison,  and  "Walker 
on,  358-361;  how  affected  in 
dearnessby  scarcity,  372;  mone}- 
manufactured  rapidly  during 
war,  380;  inflation  in  1833-37  in 
United  States,  causes  of,  382- 
385;  sudden  dearth  of  money  in 
1837,  money  an  implement  and 
not  safely  exportable  from  a  coun- 
try except  within  stringent  limits, 
383-385;  paper  money  in  United 
States,  384 ;  too  many  goods  in 
market  may  cause  inflation  of 
paper  money  and  discounts,  334; 
rapid  production  of  gold,  inflat- 
ing credits  and  importations 
may  produce  crisis,  384;  expan- 
sion in,  387;  relation  of  govern- 
ment bonds  to,  449;  cost  in  money 
not  the  same  as  cost  in  effort,  511 ; 
experience  of  Russia  in  suspend- 
ing and  resuming  on  paper 
money,  528,  529;  money  cost 
and  not  relative  cost  in  labor  or 
effort  may  determine  a  new  coun- 
try's ability  to  compete  with  an 
old  in  a  new  industry,  573; 
Hewett  on  labor  cost  of  Ameri- 
can, English,  and  French  iron, 
573  ;  money  a  greater  king  than 
cotton,  688 

Mongolia,  tribal  ownership  in,  23 

Monomctalism,  361-369 

Monopoly,  and  title,  130;  and 
the  state,  131;  not  feared  in 
sparse  settlements,  145 ;  Mill 
holds  rent  to  result  from,  242;  of 
opium  production  by  England, 
tobacco  1)y  France,  etc.,  456;  of 
bar])arian  trade  l)y  military  force, 
521 ;  efl'ec;t  of,  on  wages,  623- 
626;  early  English  laws  to  pre- 
vent mono]X)ly  of  profits  of 
wool  raising,  669 

Montreal,  Board  of  Trade  and  Corn 
Exfliangc,  secT'ctary's  report  on 
Canadian  manufaclurcs,  665 

Morals,  state  regulation  of,  431  ; 
the  more  exacting  the  law  the 


more  lax  its  enforcement,  435 ; 
no  ethical  perfection  in  govern- 
ment, 440 ;   morals    and    crime, 
441  ;  in  France,  442 ;  in  China, 
545,  552  ;  moral  value  of  an  ex- 
tra  dollar   to   the  workman   on 
Saturday  night,  583 
Morrill  Tariff,   effects  of,  469-472 
Moslemism,  can  accept  no  revenue 
from    foreigners   and    therefore 
practices  free  trade,  488 
"Motive"  is  motive  (Perry),    571 
Mulberry  speculation,  632 
Municipal  debts  in  United   States, 

448 
Murders,  constancy  of,  32,  443 
Musical    instruments,    export    of, 
610  ;  imports  and  revenue  from, 
613 
Mutton,  exports,  imports,  and  reve- 
nue, 610,  613 

N. 

Nails,  export  of,  596 

Nassau,  513 

Nation,  profit  to,  not  identical 
with  profits  to  individuals,  67  ; 
national  wealth,  -what  is,  68  ;  re- 
lative profits  of  national  indus- 
tries, 36 ;  nationality  of  immi- 
grants, 148;  crisis  in  one  nation  af- 
fecting another,  377,  H85, 389,391; 
debts  of,  448;  of  United  States, 
448  ;  state  corpoi'ate  and  private, 
448  ;  national  unity  in  Germany 
a  result  of  protection,  514-525  ; 
national  policj^  inCanada  allied  to 
protection,  531  ;  national  unity  in 
France,  Germany,  United  States, 
etc.,  yjromoted  by  protection, 
628-630;  national'  quality  of 
ships,  654  ;  national  apprentice- 
ship  in  new  industries,  569 

Nationalization  of  land,  advocated 
by  George,  125-129  ;  in  India, 
486  ;  destroys  values  of  land  and 
wages  of  labor,  relatively  to  pri- 
vate ownershij),  481-488 

Naval  stores,  export  of,  610 

Navigation  laws,  of  England,  ap- 
proved by  .1.  S.  Mill,  557  ;  Jeff- 
erson Ibouglit  navigation  a  "pro- 
tulxTant"  interest,  598;  laws  to 
encourage,  in  United  Slates,  653 


V54 


GENERAL  INDEX. 


Navy,  expense  of  navy  department 
in  United  States,  468  ;  of  navy 
in  England,  478  ;  compared  with 
the  paupers  of  England,  478, 
479  ;  expenditure  on,  in  France, 
497 

Necessaries,  461 

Netherlands,  monetary  unit  of, 
338 ;  woolen  manufacture  in, 
669  ;  trade  of,  for  English  wool, 
669 

New  England,  as  affected  by  free 
trade  with  Canada,  574-576 

New  Jersey,  140,  261  ;  railways  in, 
154,  264  ;  value  of  land  in,  com- 
pared with  India,  488  ;  propor- 
tion of  land  and  tillage  to  popu- 
lation, 540  ;  glass  manufacture 
in,  689 

New  South  Wales,  530  ;  tariff  of, 
compared  with  Victoria,  530 

New  York,  railway  transportation 
in,  220 ;  railway  consolidation 
in,  220;  infant  railways  in,  151, 
153,  155.  217;  freights  to,  221; 
size  in  1790,  141  ;  in  1781,  150 ; 
effect  of  canal  policy,  150;  its 
statehood,  municipal  only,  in  in- 
ternational affairs,  415  ;  cultiva- 
tion in,  232,  546;  land  values, 
246 :  fertility,  252,  254  ;  laud 
cultivated  in,  546  ;  glass  manu- 
facture in,  639  ;  salt  production 
and  state  tax  on,  693-697 

New  York  City,  change  of  rents 
in,  by  removal  of  dry  goods 
trade,  70 ;  markets  in,  100  ; 
railway  freights  from  Chicago 
to,  221 ;  Chase  and  its  bankers  in 
1861,  221;  its  city  government, 
405;  taxes  in,468  ;  glass,  639,  643  ; 
prices  of  wool  in,  679-681 

New  Zealand,  445 

Nihilists,  of  Russia,  not  an  econo- 
mic parly,  and  do  not  represent 
poverty,  530 

"North"  the,  in  the  war  about 
slavery,  415,  687,  688 

Nobles  (half,  qr.),  340 

Nobility,  and  land,  402  ;  in  Eng- 
land, their  part  in  government, 
406 

Norway,  monetary  unit  of,  338 ; 
American  balance  of  tratle 
against,  600 


Notes  (see  Bills) ;  relation  of  bank 
notes  to  crises,  371-385 

Nova  Scotia,  667 

Nuts  and  bolts,  American  super- 
seding foreign  in  1868,  596 


Obedience,  or  subordination,  is  the 
essence  of  the  wage  contract, 
184  ;  amount  of,  required  in- 
creases as  centers  of  industry  be- 
come compact,  210 ;  habits  of 
discipline  fit  one  to  command, 
307 ;  obstructions  to  equaliza- 
tion of  labor,  315,  316  ;  essential 
in  business,  400  ;  disobedience  in 
its  relation  to  crime,  444  • 

Obstacles  to  production,  do  not 
cause  production  directly,  511 

Occupant,  relation  of  occupancy 
to  title,  51-52 ;  to  labor,  125- 
130  ;  to  conversion  of  public 
land  to  private,  141  ;  to  rent, 
243  ;  taxes  on  occupant  of  land 
in  England,  459  ;  as  to  United 
States,  473  ;  rates  paid  b}^  in 
England,  476 ;  land  tax  and 
house  duty,  479 

Occupations,  only  a  master  of  an 
art  can  teach  its  theory,  8  ;  not 
all  interested  in  low  prices  of 
food,  26 ;  as  society  advances 
occupations  become  more  con- 
genial, 64  ;  tendency  of,  to  col- 
lect in  one  center  and  make  mar- 
kets, 100  ;  rate  of  returns  in,  100; 
necessity  of  capitalists,  227  ; 
principles  governing  the  re- 
wards of  various,  243,  244  ;  agri- 
cultural and  manufacturing  oc- 
cupations are  the  natural  mar- 
kets each  for  the  other,  256-266; 
new  occupations  multiply  with 
machinery  and  capital,  265-266  ; 
division  of  returns  in,  312-316  ; 
protected,  320 ;  women's,  326- 
329  ;  strikes  in,  328  ;  effect  of 
taxes  on,  to  create  a  monopoly, 
464  ;  forms  of  government, 
moulded  by,  403  ;  house  duty, 
income  from,  in  England,  479  ; 
occupation  changing  to  desola- 
tion and  desert  under  free  for- 
eign trade  and  internal  taxes  iu 


GENEIiAL  INDEX. 


h-  - 
I  00 


Turkey,  490  ;  number  in  all  oc- 
cupations in  France,  496  ;  occu- 
pations of  German  women,  i)24, 
525  ;  wages  in  various  occupa- 
tions in  United  States,  Great 
Britain,  France,  Russia,  and 
Prussia,  etc.,  581,  582;  relative 
wages  of  women  and  children  in 
Massachusetts  and  England,  583 

Ocean-sailing  craft,  growth  of,  in 
United  States  under  protection  in 
1T89  to  1816,  652-656;  tinal  down- 
fall of,  under  free  competition  in 
carrying,  due  to  vigorous  protec- 
tion to  English  iron  and  steel 
industry  and  no  protection  to 
American,  640,  656  ;  subsidies  to 
English  ocean-going  vessels,  659, 
662,  663  ;  denial  of  subsidies  to 
American  ocean-going  vessels, 
657-658 

Officers,  423,  424 ;  of  customs  in 
England  and  America,  482  ; 
native  and  English  officers  of 
army  in  India,  486 

Offices,  sale  of,  taxed  in  China,  455 

Ohio,  land  sj-stcm  in,  142;  railroad 
aid  in,  254;  corn  production  in, 
252;  farm  products  in,  261;  ten- 
ant farms  in,  269;  manufactures, 
664,  666;  agricultural  report  on 
wheat,  254  ;  woolen  manufac- 
turers of,  666;  salt  production 
in,  693 

Oils,  exports  of,  610;  imports  of 
and  revenue  from,  613 

Olive  trees  taxed,  l)ut  imports  free, 
in  Turkey,  489 

Ontario,  manufactures,  667 

Opium,  forced  on  China  by  war, 
534 

Organizations,  of  working-men  to 
resist  employers,  309-311  ;  co- 
operation, 311-314  ;  of  industrv, 
432,  433  ;  of  home  industry,  5()7  ; 
of  all  opposition  to  establisiied 
industries  uses  same  means  as 
protection,  569 

Organization,  labor,  their  motive 
in  America  since  1ST3,  597;  of 
societj'  depends  on  ij'on  and  steel, 
645, 646 

Ornaments,  of  gold  and  silver,  33 

Ottoman  Empire, revenu(5  policy  in, 
320  ;  monetary  unit,  338  ;  econ- 


omic  condition  and  free  trade 

career  of,  488,  491 
Over-trading  and  crises,  377 
Oriental  and  Levant  Trading  Co., 

490 
Owner  and  occupier,  which  pays 

taxes,  467,  476 
Oysters,     exports,    imports,     and 

revenue,  610,  613 

P. 

Paintings  and  engravings,  exports, 
610  ;  imports  and  revenue,  613 

Paints,  exports  of,  610 ;  imports 
and  revenue,  613 

Paper,  393  ;  English  duties  on 
Irish  fourteen  times  higher  than 
Irish  duties  on  English,  493,  515, 
519 ;  protected  in  New  South 
Wales,  530  ;  wages  in  paper 
manufacture  in  America  and 
Europe,  581  ;  United  States 
revenue  on  paid  by  foreign  pro- 
ducers, 586  ;  exports  of,  610  ; 
imports  and  revenue,  613  ; 
American  duties  on,  sustained, 
622  ;  who  pays,  610-613 

Parasols,  export  of,  611 ;  imports 
and  revenue,  614 

Paris,  lacemakers  of,  214  ;  rents  in, 
242  ;  city  government  of,  4()5  ; 
fertility  of  its  pavements,  122 

Parish,  rates  and  their  \ise,  476 

Parliament,  acts  of,  as  to  wages, 
166 ;  as  to  bank  notes,  349 ; 
government  by,  406-412;  election 
of  members,  418 ;  relations  to 
the  ministry,  410  ;  absolute, 
426;  practical  assertions  of,  426 ; 
mocle  in  which  Commons  control, 
427 ;  protective  laws  passed  by, 
555 ;  its  intpiiries  concerning 
decline  of  silk  industry,  how  an- 
swered, 636-637;  early  protective 
measures  towards  wool  and 
woolens,  669,  670 

Partnership,  between  capital  and 
labor,  163-215  ;  between  govern- 
ment and  tliose  who  as  manu- 
facturers of  li(]Uors  collect  the 
taxe  thereon,  528 

Parsimony,  218 ;  not  always  econ- 
omical, 226;  of  American  gov- 
ernment squanders  its  maritime 
wealth,  652-664 


756 


GENERAL  INDEX. 


Party,  all  government  carried  on 
by,  403 ;  majority,  how  deter- 
mined, 403  ;  in  France,  403 

Passenger  receipts,  excise  on,  481 

Passion,  its  sphere  in  government, 
398-399  ;  its  relation  to  crime, 
443 

Patents  to  inventors,  a  form  of 
protection  to  industry,  675 

Paterson,  city  of,  640 

"Pauper  labor  of  Europe,"  phrase 
originated  with  A.  Jackson,  643 

Paupers,  382  ;  in  England,  475  ; 
avoided  in  Russia,  526  ;  schemes 
of  raising  silk-worms  by  labor  of, 
631,  632 

Payment,  demand  multiplies  means 
of,  231;  social  workers  of  higher 
class  can  not  be  paid  in  a  part  of 
the  product,  323 ;  money  as 
means  of,  329-339  ;  by  bills  and 
notes,  345-348 ;  money  of  ac- 
count, 348  ;  debt  as  means  of, 
393  ;  for  public  service,  424  ; 
national  debts  as  means  of,  447- 
451 

Peace,  effect  of,  on  industry,  380  ; 
in  Turkey,  490  ;  effects  of  peace 
of  1816  on  American  manu- 
factures, 641,  642 ;  motto  of  Cob- 
den  Club  not  sustained  by  the 
aggressive  tendencies  of  free 
trade,  534-555,  630 

Penitentiary  system,  440-445 

Penknives,  xlmerican  superiority 
in,  596 

Pennsylvania,  influence  of,  on  Ger- 
man political  economy,  514 ; 
manufacture  of  glass,  638,  641  ; 
as  a  colony  protected  sheep,  wool, 
and  woolen  manufacture,  676 

Penny  and  Pence,  339,  340 

Pens  and  pencils,  imports  of  and 
revenue  from,  613 

People,  sense  in  which  they  rule, 
417 

Perfumery,  exports  of,  610  ;  im- 
ports of  and  revenue,  613 

Peru,  ancient  mode  of  ownership, 
23  ;  diamond  hunters  of,  214  ; 
monetary  unit  of,  338 ;  recent 
reverses  of,  440;  subservience  to 
bondholders,  450 

Peseta,  338 

Peso,  dollar  of  South  America,  338 


Petroleum  lamps,  Americans  su- 
perior in,  596 

Philadelphia,  city  government,  405 

Phoenicia,  453,  455 

Piaster,  monetary  unit  of  Egypt 
and  Turkey,  338;  standard  coin 
of  Tripoli,  338 

Pickaxes,  English  and  American 
prices  of,  590 

Pickles,  etc.,  imports,  exports,  and 
revenue  from,  613 

Pig  iron,  duties  on,  paid  by  manu- 
fixcturers,  611  ;  in  England,  646; 
in  United  States,  647 ;  relative 
prices  in  both  countries,  647; 
who  pays  duties  on,  647;  colonial 
export  of,  encouraged  by  Eng- 
land, 647  ;  protective  policy  of 
Great  Britain  contrasted  with 
low  duties  in  America  from  1800 
to  1846,  648 ;  effects  of,  649  ; 
world's  production  in  1883,  650  ; 
production  of  in  United  States 
from  1860  to  1883,  651 

Piracy,  directed  by  statesmanship 
and  aided  by  American  sub- 
servieiic}',  scores  a  net  gain  by 
the  destruction  of  American 
carrying  trade,  663 

Pitch,  520 

Pittsburg,  glass  manufacture  in, 
639,  640,  643 

Planes,  English  and  American 
prices  of,  590 

Plated  ware,  export,  import,  and 
revenue,  610,  613 

Pleasure  and  Pain,  economics 
treated  as  a  theory  of,  94 

Plows,  American  inventions  in, 
264  ;  labor  saving,  264  ;  superi- 
ority of  American  in  foreign 
markets,  596 

Plumbers'  brass  ware,  American 
export  of,  596  ;  prices  reduced 
by  tariff,  621,  622 

Plural  voting,  on  local  taxes,  478- 
479 

Plutology,  7 

Poland,  partition  of,  less  injurious 
than  free  foreign  trade  in  Tur- 
key, 490 

Police,  of  China,  537 

Political  economj',  defined,  1-9  ; 
causes  of  its  declining  influence, 
9  ;  conflicts  in,  1-9  ;  influence  of 


GENERAL  INDEX. 


151 


Carey  and  American  school  on, 
16 ;  relation  of  to  ethics  aucl 
jurisprudence,  18 ;  mercantile 
school,  18  ;  relation  of.  to  ethics, 
22;  practical,  where  studied, 
36-40  ;  of  the  waujes  question, 
287-303 

Politics,  of  India,  66  ;  of  United 
States,  66 ;  of  German  social- 
ism, 91,  301  ;  of  internal  im- 
provement as  advocated  by 
American  statesmen,  100  ;  of 
American  railwa3-s,  150-160  ;  in 
Frauce,  403  ;  Russia  and  China, 
404  ;  England,  411  ;  in  United 
States,  418-429  ;  of  Indian  em- 
pire, 483-488  ;  of  the  Irish  ques- 
tion, 494-499  ;  of  Germany,  524; 
of  Russia,  526 ;  of  British 
colonies,  530-533  ;  ignorance  of 
western  nations  concerning  poli- 
tics and  economics  of  China, 
548 ;  of  Democratic  party  in 
United  States  in  1854  to  1858 
concerning  free  foreign  trade 
and  slave  home  labor,  553  ;  pro- 
tectionist claim  that  the  domestic 
production  of  an  article  employs 
more  domestic  labor  than  its  im- 
portation, not  fairly  met  by 
Jevons,  560 

Poll  tax,  453,  463  ;  of  China,  545 

Poor,  state  care  of,  4:>1  ;  cost  of  in 
England,  478 ;  what  the  poor 
most  need  to  sustain  wages,  625 

Population,  Maltluis  on,  16; 
feebler  and  more  perishable 
class  may  endure  in  cities, 
121  ;  in(Tease  of,  in  colonies, 
140 ;  predictions  of,  in  United 
States,  145;  future,  145;  chart 
of,  146  ;  increase  of,  with  wages, 
169  ;  inellicient,  delinquent,  and 
incompetent  survive  most  easily 
in  cities,  219 ;  earth's  capacitj^ 
for,  229;  Malthus'  law,  230; 
means  of  subsistcmce  increase 
fast(;r  than,  234  ;  relation  of,  to. 
rent,  237-241  ;  views  of  Smith, 
Ricardo,  Ciirey,  Basliat,  Mill, 
Rosclier,  Locke,  and  Fontenay 
on  rent  and  population,  238- 
242 ;  ratio  of  capital  to,  fixes 
the  wages  fund,  according  to 
Cairiies,    290 ;  alleged    tcmlciuy 


of,  to  increase  with  rise  of 
rewards  of  labor,  292 ;  is  popu- 
hition  a  check  on  wages'?  295  ; 
diminisliing  population  has  no 
economic  tendency  to  increase 
wages,  320,  321  ;  fluctuating 
population  increases  crime,  442  ; 
moves  toward  protective  tax- 
ation, 473  ;  of  England  in  1882, 
479  ;  under  the  sway  of  Great 
Britain,  483;  increase  of,  in  Ire- 
land under  protection,  492;  pro- 
portion in  towns  in  France,  497; 
under  the  Zollverein  and  in 
modern  Germany,  515;  of  Brit- 
ish Empire,  how  distributed,  516; 
of  China  woidd  be  reduced  an(i 
scattered  by  a  disruption  of 
Chinese  fndustries  by  substitu- 
tion of  English,  536;  of  China  as 
indicated  by  size  of  army,  537; 
exaggerations  concerning  popu- 
lations easily  exposed,  538-541; 
opinions  of  Malte  Brun,  Sir 
G.  Staunton,  R.  M.  Martin,  J. 
R.  McCulloch,  De  Guignes,  John 
Francis  Davis,  Dr.  Medhurst, 
Dr.  Morrison,  S.AVells  Williams, 
Marco  Polo,  Adam  Smith,  Behm 
and  Wagner,  ^linister  Seward, 
and  S.  Aug.  Mitchell,  concern- 
ing Chinese  population,  538-550; 
probable  actual  population  of 
China,  547;  ignorance  of  western 
nations  concerning  popidation  of 
China,  548;  population,  may  be 
attracted  by  protection,  5(i6  ;  of 
Great  Britain  and  America  in 
1788,  646 ;  moves  from  free 
trade  to  protection,  witness 
American  ships  and  English 
farmers,  silk  weavers  and  wool 
growers,  682 

Porcelain,  tax  on  manufacture  of, 
455  ;  in  France,  502,  503 

Pork,  revenue  on,  paid  by  im- 
porters, 586  ;  exports,  inqjorts, 
and  revenue,  610,  613 

Porter,  duty  on  and  export  of, 
()]();  import  of  and  revenue  from, 
613 

Porto  Rico,  trade  with,  600 

Portugal,  ornaments  of  tlie  people, 
831  ■  monetary  unit,  338  ;  al- 
leged   bankruptcy    ol,  44S.  516; 


758 


GENERAL   INDEX. 


English  treaties  with,  500  ;  bal- 
ance of  trade  with,  600;  woolen 
industry  ruined  by  tariff  treaty, 
670 
Post  office,  revenue  from,  480 ; 
British  post  ottice  on  the  cost  of 
sending  ocean  mails,  657,  658  ; 
American  post  office,  664 
"  Post  hoc  ergo  propter  hoc,"  703- 

706 
Postage,  subordinate  to  subsidies 
in  English,  French  and  German 
ocean     mail     service,    657-664 ; 
supreme    in   American   non-ser- 
vice and  dis-service,  658 
Potato,  revenue  on  imports  of,  into 
United  States  paid  by  importers, 
585,  586,  591;    imports   and   ex- 
ports of,  and  revenue  from,  610, 
613 
Potato  rot,  in  Ireland,  causes  of,  491 
Potash,  protected  in  United  States, 

but  exported,  610 
Pottery,  effect  of  import  of  from 

England  into  India,  66,  67 
Pound  sterling, 338;  variouslycalled 
sovereign,  double  angel,  unite, 
broad,  and  guinea,  340-341 
Poverty,  relation  of  to  crime,  33, 
43;  abolition  of , would  be  wealth, 
75;  caused  by  war  in  France,  70; 
function  of,  as  spur  to  service, 
77,  78,  89;  how  affected  by  mon- 
opoly, 130;  essential  to  existence 
of  wealth,  201 ;  is  the  true  oppo- 
site of  capital,  211;  rarity  of  ex- 
treme, 216;  consistent  with  hap- 
piness, 216;  the  poor  survive  best 
in  compact  populations,  219;  is 
greatest  in  countries  of  least  cap- 
ital and  fewest  monopolies,  227; 
poorer  countries  use  a  currency 
of  silver,  339;  periods  of  poverty 
and  distress, and  causes,  382-386; 
throughout  United  States  in  a 
free-trade  period  relieved  by 
soup-houses,  386;  poverty  not  a 
feature  of  the  depression  of  1873 
to  1879;  influence  of  poverty  of 
the  whole  or  a  class  in  shaping 
government,  402;  what  the  poor 
pick  up  in  streets  of  Paris,  122; 
poverty  and  crime,  441;  salt,  tax 
on  in  India,  455;  cost  of  poor  in 
England,  478;  poverty  of  Hindoo 


people,  486;  of  Germany  under 
free  trade  prior  to  1827,  515; 
siifl'ering  poverty  prevented  in 
Russia  "largely,  526  ;  relieved 
within  the  family  in  China,  552; 
the  extra  dollar  removes,  583  ; 
unfavorable  to  invention,  if 
excessive,  597  ;  during  cotton 
famine  in  England,  690 

Powder,  gun,  exports,  610 ;  im- 
ports and  revenue,  613 

Power,  love  of,  as  a  motive  in  gov- 
ernment, 455;  cotton  as  a  power 
in  politics,  688 

Power  loom,  invention  and  effect, 
681,  685 

Predictions,  fallacious  and  sound, 
373.  374 

Premier,  453 

President,  of  United  States,  pow- 
ers of,  417;  mode  of  election  de- 
signed by  the  Conslitution,  418; 
how  it  was  ignored  and  disused, 
419;  effect  of  such  departure  the 
convention  system  and  direct 
vote,  420,  421 ;  evils  and  anoma- 
lies incident  to  it,  421,  422;  the 
few  who  select  are  not  the  con- 
stitutional few  who  were  intend- 
ed to  select,  423 

Prices,  law  of  rise  in,  by  diminished 
production,  95;  Jevous,  Thorn- 
ton, Tooke,  Chalmers,  Carey, 
and  agricultural  reports  on, 
96 ;  relation  of,  to  value  and 
utility,  94-100  ;  markets  deter- 
mine, 94-114;  freedom  necessary 
to  fair,  102;  as  made  in  grain 
and  stock  markets  more  econom- 
ical than  privately  made,  108, 
109;  not  regulated  by  cost  of  pro- 
duction, lib;  but  by  dividing  ad- 
vantage, 111;  exaggerated  state- 
ments" attributing  high  prices  to 
protection  which  were  due  to 
wars  and  affected  all  prices  and 
all  countries,  112;  chart  of  prices 
of  grain  and  flour  in  England, 
France,  and  America,  112,  124; 
Tooke  on  effect  of  scarcity  on 
prices,  113-117;  effect  of  war  on, 
113;  seasons,  113;  rapidity  of  cir- 
culation, 114;  Carey  on  prices 
and  freedom,  121;  countries  of 
high  and  low  prices,  122;  of  land 


GENERAL  INDEX. 


V59 


in  United  States,  145;  are  condi- 
tions of  production,  167-181;  af- 
fected  ultiuiatoly  by  cost,   '220; 
by  war,  221;  l>y  nearness  of  con- 
sumers, especially  of  bulky  pro- 
ducts, 252-263;  prices  for  labor 
must  be  higher  where   greater 
freedom  is  to  be  maintained,  315; 
of  coins,  340;  aftected  by  volume 
of  money,  343;  relation  of  to  cri- 
ses, 371-375;  of  provisions,  372; 
effects  of  war  on,  380;   and  of 
prices  on  prosperity,  380;  chart 
of  prices  from  1790  to  1880,  380- 
381 ;  prices  follow  volume  of  cur- 
rency,387;  chart  of  prices  and  cir- 
culation from   1834  to  1864,  387; 
falling  prices  cause  cessation  of 
production  and  hard  times,  390- 
393;  stimulated  by  government 
loans,  449;  of  sugar  in  Paris  un- 
der Napoleon,  503;  low  prices  of 
beet  sugar  in  1884,  506;  prices 
of  Canadian  exports  to  United 
States,   how  affected  by  tariff, 
532;  breadstuffs  not  reduced  in 
price  by  repeal  of  corn  duties  in 
England,  558;  protective  duties, 
if  wisely  laid,  never  need  repeal 
in  interest  of  prices,  563;  their 
effect    on    price    repeals    itself 
through  home  competition,  563, 
564 ;    made    more    even    under 
protection,    570  ;     cheap    goods 
mean  cheap  liuman  labor,  unless 
they  are  the  product  of  machin- 
ery' 583,  584;  price  not  affected 
by  the  duty  where  tiie  domestic 
production  is  adcriunte  to  supply 
the  domestic  demand,  585,  586, 
615;  duty  cannot  in  many  cases 
be  added  to  Ihe  price,  and  in  all 
such  cases  it  comes  out  of  the 
profits  of  producer,  587,  588;  ex- 
ample in  cutlery,  587;  of  Eng- 
lish and  American  iron  and  steel 
wares  in  1882,  of  steel  rails,  fall 
in,  590;  law  of  the  ratio  of  wiiole 
supply  to  the  wiiole  demand  ap- 
plied to  the  effect  of  tariff   on 
prices,   591,   592,  593;  repeal  of 
revenue  duties  on  coffee  in  United 
States  did  not  produce  (•((iiivalent 
fall   ill,   GOO;    on    breadstulls   in 
United  States    not    affected  by 


duty;  prices  during  silk  arid 
moris  multicaulis  mania  in 
United  States,  632;  of  pig,  and 
iron  and  steel  rails  in  United 
States  from  1860  to  1883,  651; 
extraordinary  price  of  fine  wool- 
ens in  aneieiit  Kome,  669;  high 
price  on  merino  wools  and  sheep 
in  United  States,  676;  why  the 
duty  on  wool  does  not  raise  its 
price  by  amount  of  duty,  and 
under  a  sufficiently  ample  pro- 
duction not  at  all",  678-680;  of 
foreign  and  domestic  wools  com- 
pared, to  show  that  duty  is  not 
added  to  American  price  (see 
chart  of  prices),  679,  680,  681; 
effect  of  abundant  production  on 
(cotton),  687;  economy  of  a  rise 
in  prices  due  to  a  lessened  sup- 
ply, 689;  in  cotton  famine  of 
1861-5,  689-691;  of  quinine  be- 
fore and  since  the  supersedure  of 
American  by  foreign  manufac- 
ture, 692 

Priesthood,  power  of  socially,  re- 
flected in  state,  413 

Primogeniture,  144 

Printing,  wages  in  England  and 
America,  582 

Printing  presses,  export  of,  610 

Private  purposes,  defined,  702,  703 

Problems,  can  abundance  promote 
ultimate  poverty,  and  scarcity 
ultimate  uain  V  see  Tooke  on, 
116;  of  national  debts,  447-^51 

Producers,  when  protected  without 
rise  in  prices,  609 

Production,  as  related  to  trade,  6; 
cost  of  production  as  a  cause  of 
value,  11;  social  and  moral  ef- 
fect of,  41-54;  decreased  affects 
prices  by  what  law,  95;  cost  of 
does  not  regulate  price  (Tooke), 
114;  but  past  and  present  price 
deterniines  how  much  cost  can 
be  expended  in  future,  115  ; 
scarcity  sonietinies  has  effects 
like  those  of,  116;  domestic  pro- 
duction and  money  cost,  124; 
and  monopoly,  130;  how  affect- 
ed by  distrilnitioii  of  land,  140; 
no  ])ro(ine1ioii  of  forests,  148; 
begins  with  appropriation,  162- 
166;    depends    ou    capital,  167^ 


760 


GENERAL  INDEX. 


and  on  prices,  169;  and  on  sub- 
ordina.tion  of  wills  and  obedi- 
ence, 182-~i88;  which,  and  not 
muscular  effort,  is  the  essence  of 
labor,  l'i2-188;  laborer  produces 
only  his  wages,  187;  involves 
opposing  distributions  of  wealth 
and  of  products,  196;  reproduc- 
tive wealth  only  the  subject  of 
avarice,  206;  humanity  of  large 
accumulations  of  means  of,  205- 
210;  on  bonanza  farms,  219;  cost 
of  wheat  production,  219;  of 
bread,  220;  of  iron,  220;  by 
small  capital,  222;  annual,  in 
United  States,  224,  229;  capacity 
of  the  Farth  for,  230;  rate  of  pro- 
duction of  man  and  his  food, 
231 ;  pJoductivity  of  capitals  ap- 
plied i ';  wholly  distinct  fact  from 
fertility  of  soils,  238;  production 
implies  subordination,  and  is  a 
government  of  interest,  807-309; 
but  is  a  partnership  affair  in  the 
division  of  the  product,  309-315; 
on  a  small  scale  can  seldom  be- 
gin in  free  competition  with  pro- 
duction on  a  large  scale,  319;  b}' 
women,  325-328;  rate  of  produc- 
tion may  increase  during  war, 
380;  but  diminishes  with  falling 
prices,  390-393;  steered  into  new 
channels  by  crises,  395;  which 
minimize  the  pain  of  failure  by 
making  it  general,  396;  mental 
qualities  which  promote  success 
in,  400;  are  war  and  army  ex- 
penditure productive?  438-440  ; 
share  of  product  taken  by  taxes 
in  ancient  Rome,  Gaul,  China, 
454,  455;  production  of  commod- 
ities and  values  are  inverse,  465; 
of  beet  sugar  in  France  in  1875, 
505;  large  production  of  iron  and 
steel  in  America  the  shortest 
road  to  low  prices,  509;  cost  of 
production  includes  import  du- 
ties, if  no  other  than  the  dutied 
market  exists,  532;  production 
doubled  by  protection  as  com- 
pared wdth  importation,  560  ; 
production  should  not  be  sacri- 
ficed to  revenue,  563;  produc- 
tiveness of  protective  tariffs  as  re- 
spects revenue,  469-472;  produc- 


tion at  lower  labor  cost  may  be 
at  higher  money  cost,  574;  of 
glass  in  United  States  from  1790 
to  date,  642-644;  p)er  capita  of 
woolen  goods  in  United  States, 
683;  of  iron,  steel,  railways,  etc., 
in  United  States,  651;  of  pig 
iron,  steel,  and  coal  in  world, 
650;  of  ships  and  steamers  as 
affected  by  subsidies,  and  by 
protection  to  iron  and  steel,  651- 
664;  of  cotton  and  woolen  goods 
in  Canada,  668;  of  sheep,  wool, 
and  woolens  in  all  countries,  668- 
683;  tariffs  do  but  little  to  regu- 
late the  quantity  produced,  but 
nuich  to  determine  the  place  of 
production  (quinine),  692;  pro- 
duction of  shoes  in  facto- 
ries in  United  States,  697  ;  do- 
mestic production, how  aided  by 
tariff,  609-629;  of  silk  and  silk 
goods,  history  of,  631-637;  of 
glass,  636-644;  of  iron  and  steel, 
644-652;  tables  and  chart  of  iron 
and  steel  production  in  United 
States  and  Great  Britain  from 
1860  to  1883,  652-653;  protection 
the  prevailing  policy  of  Europe 
since  Napoleon  and  Frederick, 
675 
Profit,  sometimes  greatest  on  small 
crop,  116-119;  in  railways,  155; 
the  inducement  to  employ  labor 
is,  168-194;  risk  earns  it,  186; 
rate  depends  on  time  as  well  as 
price,  191-194;  charity  is  a 
subtle  form  of,  204;  of  peace, 
211;  small  capitals  earn  large 
rates  of,  222;  causes  of  higli, 
229;  do  not  decline  in  the  new 
fields,  229-230;  defined,  238;  is 
there  an  ordinary  rate  of,  238; 
profit-sharing  in  farming,  268- 
272;  profits  the  mother  of 
wages,  293-316;  rate  of,  the 
measure  of  success  of  industry, 
293;  the  source  of  wages,  rent 
and  interest,  294;  steer  industry 
and  energize  labor,  294;  views 
of  Smith,  Walker,  Cairnes, 
Atkinson;  what  qualities  favor 
profit-making  and  aid  the  work- 
er to  become  an  employer,  307; 
how  all  industry  is  profit-shar- 


GENERAL  INDEX. 


roi 


iug,  311--31o;  is  intended  profit- 
sharing  better  than  the  invohni- 
tary  ?  314;  prolit  of  sustaining 
bi-metallism,  865;  if  successful, 
365;  great  public  improvements 
that  yield  no  profit  may  produce 
financial  crises.  379;  declining 
profits  stagnate  labor  and  pro- 
duce suffering,  390;  rate  of 
profit  measures  the  social  neces- 
sity of  industries,  397;  in  the 
economic  sense,  397;  desire  of 
profit  controls  all  social  organ- 
ization and  reciprocal  useful- 
ness among  men,  400;  relative 
prospect  of,  in  loans  to  govern- 
ment and  investments  in  pro- 
duction, 449;  making  a  profit 
out  of  being  taxed,  463;  profits 
of  trade  may  be  a  form  of  taxa- 
tion, 483-491 ;  salaries  and  bribes 
as  profits  of  conc^uest,  480;  mer- 
cantile profits  of  Indian  trade, 
486;  Englishmen's  profits  the 
basis  of  the  act  of  union,  493; 
profits  small  in  Germany,  516; 
sometimes  lessened  by  necessity 
of  paying  duties  on  the  product, 
532;  profit  of  working  under 
protection  is  offset  by  losses  of 
initiating  a  new  industry,  so  as 
to  equalize  the  chance  of  profit 
in  protected  industrj-  with 
that  in  business  of  other  kinds, 
565;  Sidgwick  on,  565;  the  profit 
argument  for  free  trade  applied 
to  protection,  576;  American  in- 
dustry always  less  profitable 
than  it  might  be,  so  long  as  it  ex- 
ports raw  C(jtton,  breadstuffs 
and  provisions,  instead  of  first 
working  them  up  into  finished 
cotton  goods  (Jefferson),  598; 
profits  (luring  moris  multicaulis 
mania  in  L'nited  States,  632; 
profit  of  growing  cotton  dates 
from  cot1(ni  gin,  686;  alfects  the 
profit  of  growing  skives,  687; 
profits  of  cotton  manufacture, 
rule  English  ])oli1ics,  profits  of 
growing  cotton  did  for  40  years 
ruh;  American,  68H;  wages  are 
paid  no  longer  than  profits  exist, 
690 
Prohibition,  of  imports  of  calicoes, 


chintzes  and  muslins  bv  Entrland 
in  1700,  489;  between  Hcilland 
and  France  in  1671,  501;  of  new 
vineyards  in  France,  502;  of  im- 
ports of  iron  and  steel  wares 
into  United  States  from  1790 
would  have  brought  cheap- 
ness and  abundance,  650;  great 
political  and  social  econo- 
my of,  650;  applied  to  for- 
eign vessels  from  taking 
part  in  coasting  trade, 
652 

Proletariat,  small  in  France  rela- 
tive to  employers,  496 

Property,  eff'ecf  of  land  becoming, 
138;  according  to  Adam  Smith, 
288;  social  uses  of  private,  304; 
as  a  qualification  for  voting  and 
holding  oflice  in  England,  479; 
and  income  tax,  amountjof  in 
England,  479;  in  laud  in  India, 
488;  in  New  Jersey  and  New 
York,  488 

Protection  to  industry,  17, 121-124; 
distinction  between  importing 
competing  products  and  com- 
peting producers,  314;  the 
former  displace  labor  without 
increasing  demand,  314;  the 
latter  adds  to  the  demand  as  fast 
as  to  the  supply, 315;  protection 
to  industrj-  in  United  States  in- 
volves an  obstruction  to  equal- 
izing American  labor  market 
with  foreign,  315;  military 
protection  to  foreign  trade,  316; 
natural  protection,  319;  exists  as 
to  all  non-importable  products 
and  services,  319  ;  protected 
classes,  320;  it  protects  prices 
of  raw  materials  to  export  only 
finislied  i)roducts,  322;  tariff'  of 
1824-8,  382;  natural  and  artificial 
facilities,  382;  rate  of  duties 
under,  383;  overwhelmed  by  ex- 
cessive imi)ortations,  384;  failure 
of  a  goverinnent  to  be  loyal  to 
its  own  people  in  industii;d 
matters  may  cause  crises,  307; 
power  to  levy  tariffs  essential  to 
national  unity,  416;  protective- 
ness  (if  a  nation's  policy  involves 
.study  of  local  as  well  as  general, 
and  army  and  colonial  as  well 


iGx 


GE^^EliAL  IMJL'X. 


as  tariff  action,  431;  may  be 
mililaiy,  431;  early  traces  of  it 
amoug  Hindoos,  453;  protection 
or  the  prohibition  of  an  indus- 
try the  only  alternatives  if  the 
country  can  produce  the  article, 
401,462;  those  who  do  not  live  by 
industry  are  not  so  directly 
interested  in,  463;  protective 
tariffs  excel  free  trade  tariffs  in 
producing  revenue,  469--472;  and 
also  prosperity,  473;  protection 
to  tobacco  manufacturers  in 
Great  Britain,  480-481;  to  extent 
of  prohibiting  imports  into  Eng- 
land of  calicoes,  chintzes,  and 
muslins,  489;  advance  of  Ireland 
under,  from  1783  to  1800,  493; 
not  responsible  for  retaliatory 
tariffs,  500;  aims  to  produce  in 
harmony  with  natural  facilities 
and  at  less  labor  cost,  511 ;  List's, 
labors  in  behalf  of,  in  Germany, 
514;  division  between  German 
states  in  1818,  514;  effect  of,  on 
relative  military  strength  of 
France  and  Germany,  515;  limit 
and  extent  of  German  oppor- 
tunity in  Zollverein,  517;  applies 
to  raw  materials  as  much  as 
to  finished  products,  517 ;  in 
Russia,  535-530;  in  Australia, 
Austro-Hungary,  Italy,  Servia, 
Roumania,  Spain,  Mexico,  and 
South  American  States,  530; 
Canada,  531-533;  protection  in 
India  vetoed,  533;  absolutely 
crushed  out  in  Chinese  tariffs, 
538;  and  Japanese,  553;  vast 
number,  variety,  and  vigor  of 
protective  statutes  in  England, 
555;  principle  of  protection  in- 
dorsed in  part  by  Smith,  Mill, 
Sidgwick,  Devas,  etc.,  555-558; 
doctrine  on  policy  of,  ascribed 
by  Rogers  to  Tories,  557;  by 
Price  to  practical  men  in  Ger- 
many, France,  United  States, 
and  Canada,  557,  664;  Perry 
regards  profanity  as  essential  to 
a  scientific  elucidation  of  pro- 
tection, 550;  Jevons  docs  not 
meet  the  protectionist  argument 
that  domestic  production  em- 
ploys two    liome   capitals,    im- 


portation one,  560;  protection 
cannot  require  more  wisdom 
than  destruction,  561;  duty  can 
only  be  protective  while  it  is 
adding  another  industry,  563; 
same  duty  may  give  revenue  on 
part  and  protect  against  part, 
565;  attracts  popvUation  and  in- 
creases national  strength  (Sidg- 
wick), 566;  is  natural,  567;  Mof- 
fat on,  566-568;  Devas's  argu- 
ments for,  569-571;  justified  by 
Roscher,  569;  tends  to  avert 
famines,  570 ;  protection  doc- 
trine requires  low  or  no  duties 
on  all  products  which  we  lack 
natural  facilities  to  produce, 
573;  it  puts  all  duties  on  prod- 
ucts that  compete  with  what  we 
produce,  573 ;  Hewitt  on  our 
natural  facilities  for  making 
iron,  573;  free  trade  not  desir- 
able between  Canada  and  Ver- 
mont, 573-575;  Perry's  point, 
"trade  profits,  or  men  would 
not  trade,"  576;  trade  in  the  long 
run  and  the  short  run,  578;  rates 
of  wages  in  America  and  Etu'ope, 
579-582  ;  Wendell  Phillips  on 
the  dollar,  583;  taxes  that  enrich 
the  consumer  because  paid  by 
the  producer,  585-589;  Perry's 
vast  superstructure  of  tax  wab- 
bles on  an  "if,"  and  falls,  589, 
590;  steel  rails  not  "  taxed"  by 
the  tariff,  but  reduced  in  price 
four-fifths.  589,  651  ;  woolen 
blankets  not  "taxed,"  590-679 
(chart  of  wool  prices);  iron  and 
steel  wares  not  "taxed."  590, 
647,  650;  protection  to  the  profits 
of  its  own  producers  is  that 
which  each  nation  means  even 
when  it,  by  sacrificing  its  farm- 
ers to  its  manufacturers,  calls  it 
free  trade,  606-608;  the  five 
points  of  protection,  609;  protec- 
tion promotes  unity  and  peace, 
628-630;  relation  of,  to  silk  man- 
ufacture in  United  States,  631- 
634;  decline  of  silk  manufac- 
ture in  England  since  protection 
was  withd'rawn,  634-638;  intro- 
duction of  glass,  china,  carpets 
and  tapestry  manufacture  into 


GENERAL  IXDEX. 


763 


Frauce  by  Colbert,  639  :  early 
protection  to  glass  manufacture 
in  the  United  States,  64U ;  in- 
duced by  Hamilton's  report  on, 
639;  partly  protected  by  friabil- 
ity, 643;  greater  tariff  protection 
to  British  than  to  American  iron 
and  steel  manufacture  from  1790 
to  1845,  648;  disastrous  effect  of 
failure  to  protect  iron  and  steel 
manufacture  felt  for  ensuing 
fifty  years  on  American  ship- 
building, 649;  American  naviga- 
tion hiAvs  exclude  foreign  vessels 
from  coasting  trade,  but  after 
1816  fail  to  protect  American 
ocean-going  vessels  in  any  way; 
653;  protection  by  discriminating 
duties  and  tonnage  acts  from 
1789  to  1816,  653;  growth  of 
American  shipping  under,  653- 
654-.  repealed  by  treaty,  654; 
and  acts  of  Congress,  654;  since 
1862,  654;  positive  effects  of  pro- 
tective policy  on  growth  of 
American  merchant  marine,  656; 
results  of,  in  Canada,  664-668; 
history  of  protective  legislation 
in  England  as  to  wool,  669-671; 
Lord  Bacon  a  prophet  of  protec- 
tion, 670,671;  multiplicity  of  the 
m.odes  of  protection  to  industry, 
675;  Thos.  H.  Benton  favored  a 
progressive  duty  on  wool,  676 
Protected  classes,  320,  328 
Protected  industries,strikes  among, 

328 
Provisions,  export  of,  and  rate  of 
dutv  on  import,  610  ;    revenue, 
614' 
Prussia,   rates   of  wages   in   1867, 
511,  581;  proposer  of  protection 
in    Germany,    514,     515,     517  ; 
miles  of  railway  in,  520;  advance 
of  wages    in   under    protection 
since  1879,  523;  rates  of  wages  in 
18«9,  581 
Public  purposes,  defined,  702,  703 
Publishing,    wages,  England  and 

America,  582 
Puddlers,   iron,  wages  in  United 
States,    Great  Britain,    Prussia, 
etc.,  511 
Pumps,  export  of  American,  596 
Punishment,     involves    economic 


loss,  441;  modes  of,  444;  severity 
lessened,  444;  colonization,  445 
Pyramids,  and  iron,  645 

Q. 

Qualities,  in  implements  the  best  is 
cheapest  whatever  it  may  cost, 
596;  of  wool,  672 

Quantity,  as  quantity  of  certain  ex- 
ports increases  value  declines, 
673 

Quebec,  manufactures,  667 

Quicksilver,  exports  of  and  duty 
on  imports,  611 

Quinine,  destruction  of  manufac- 
ture in  United  States,  by  free 
trade,  690-695 


B. 


Race,  of  immigrants  to  United 
States,  145;  first  to  use  iron,  645 

Rails,  iron  and  steel,  production 
and  fall  of  prices,  651 

Railway,  travel,  safety  of,  in 
United  States,  France,  etc.,  29; 
railways  and  monopoly,  135  ; 
American,  growth  of,  150-161; 
Harlem,  151;  in  England,  151; 
Baltimore  and  Ohio,  151;  Mo- 
hawk &  Hudson  River,  153; 
Boston  &  Albany,  etc.,  153;  era 
of  consolidation,  155;  land  grants 
to,  157;  areas  of,  158;  distribu- 
sion  of  earnings  between  capital 
and  labor,  172-174;  shrinkage  of 
values,  in  1883-5,  190  ;  cast  of 
mo\ing  grain  and  Hour  in  Amer- 
ica, 220;  how  controlled  by  Van- 
derbilt,  220;  reducing  freights, 
220;  rates  of  in  United  States, 
from  1868  to  1884,  221;  shrink- 
age in  values  borne  entirel}'  by 
capital,  222;  profit-sharing  in 
railways,  31';  strikes  on,  328; 
insolvency  of  American  railwa3s 
in  1857  produces  crisis  in  Eng- 
land, 377;  excessive  building  of 
railways,  379;  expectations  of. 
in  1837,  385;  relations  of  to  iron 
and  steel  iiiduslry,  391 ;  debts  of, 
in  United  States,  448;  ell'ect  of  on 
imports,  470;  loans  in  India, 
486;  mileage  of,  in  Prussia,  520; 


704 


GENERAL  INDEX. 


aid  to  railways  in  Canada,  531 ; 
effect  of  premature  introduction 
of  railways  by  foreigners  in 
China,  547,  551;  freights  on 
American  railways,  584;  miles  of 
railroad  built,  tons  of  iron  and 
steel  rails  made  in  United  States, 
and  prices  of  rails  from  1860  to 
1883,  652,  653 

Rank,  organization  of  labor  by 
rank,  225;  effect  of  rank  and 
grade  of  life  on  crime  in  men 
and  women,  442;  taxed  in  China, 
455;  depends  indirectly  on  iron 
and  steel  manufacture,  646 

Rates,  incidence  of,  459,  467;  kinds 
of,  477 

Raw  materials,  prices  of,  121;  in 
estimating  wages,  172-176 ; 
values  given  to,  by  diversifying 
industries,  322;  distinction  be- 
tween raw  materials  and  finished 
product,  applies  to  each  product 
singly,  but  disappears  in  national 
aggregates,  671 ;  France  protects, 
498;  valueless  in  India  where 
manufactures  were  destroyed, 
488;  Germany  remained  poor  and 
weak,  while  the  "granarj^  of 
Europe,"  515;  production  of, 
first  protected  under  ZoUverein, 
517;  raw  materials  may  be  dearer 
and  yet  the  finislied  product 
cheaper,  596;  so  of  American  irou 
and  steel  wares,  596;  demand  for 
raw  silk  in  England  falls  by 
three-fourths  under  free  trade  in 
silks,  636;  small  raw  materials 
required  for  iron  and  steel  manu- 
facture in  England  in  1790,  646; 
wool  a  finished  product,  671 

Reciprocity,  treaty  of  United  States 
with  England  in  1816  described 
by  Mr.  Huskisson  as  a  dexter- 
ous swap  for  England,  655 

Record,  debts  of,  in  the  United 
States,  448 

Refiners  of  sugar,  duties,  618 

Rent,  Ricardo's  theory  opposed  hj 
Carey,  16  ;  causes  of,  125-150  ; 
share  of  produce  of  land  that 
goes  to  rent,  177;  according  to 
Smith,  Young,  rates  of  on  pro- 
ductive real  estate,  179 ;  how 
compares  with  profit  on  capital. 


193;  relation  of  rent  to  value  of 
land,  237,  238  ;  Smith's  and  Ri- 
cardo's  views  criticised,  239 ; 
depends  wholly  on  location,  239, 
240  ;  views  of  Carey,  Roscher, 
Bastiat,  Locke,  Mill,  Fontenay, 
and  MacLeod  on,  242;  defined  as 
cost  of  occupying  working  space, 
238 ;  depends  on  w^hat  facts  ? 
238 ;  rent  balances  transporta- 
tion, 247-251  ;  economizes  pro- 
ductive space  to  the  advantage 
of  society,  248-253 ;  revenues 
rented  in  Asia  and  Africa,  453  ; 
taxes  are  rent  where  government 
is  socialistic,  453 ;  or  simple 
bondage,  453 ;  the  first  rent 
would  be  of  mines  (iron)  for 
manufacture  of  weapons,  645 

Repeal,  of  a  protective  duty  can 
never  be  needed,  564,  596 ;  of 
duties  on  coffee  in  United  States 
raised  prices  in  Brazil,  600 

Reproductive,  capital  distinguished 
from  enjoyable,  163,  205,  207  ; 
reproductive  wealth  defined,  216; 
rate  of  reproduction  in  man  and 
his  food,  231  ;  investments  in  re- 
productive wealth,  if  premature, 
produce  crises,  378 

Republic,  131  ;  diversity  of  form 
in,  415 ;  departments  of  in 
United  States,  427  ;  freedom  to 
vote  for  its  officers  does  not 
lessen  their  absolute  powers,  416 

Residences,  regulation  of  by  gov- 
ernment, 435 

Responsible  government,  defined, 
406  ;  history  of,  406-412;  dates 
in  England  from  failure  of 
George  III.  to  subdue  America, 
409 ;  developed  largely  in  Vic- 
toria's reign,  410  ;  crown  repre- 
sents the  dignity,  cabinet  the 
policy,  454 

Resumption,  in  England  in  1820, 
effects  of,  370,  371  ;  in  Russia, 
528;  and  United  States,  390, 
392,  528 

Revenue,  farming  the,  453 ;  as  an 
exclusive  object  in  laying  taxes 
belongs  to  the  military  period, 
456  ;  sources  of,  in  the  United 
States,  468 ;  most  revenue  al- 
ways   produced    by    protective 


GEXERAL  INDEX. 


'05 


tariffs,  469-473 ;  from  luiblic 
lands,  interual  revenue,  and  cus- 
toms in  the  United  iStates,  475 ; 
in  England,  from  all  sources, 
479,  476  ;  cost  of  collecting  in 
England  and  United  States,  482  ; 
drawn  in  salaries  in  India,  485  ; 
from  land  in  India,  488 ;  of 
Turkey  mortgaged,  490  ;  of 
France,  495-498 ;  of  Germany 
and  Prussia,  532 ;  of  Russia, 
527 ;  collected  in  the  United 
States  on  Canadian  products  not 
a  tax  on  consumers,  583 ;  of 
China,  537 ;  tariff  for  revenue 
only  is  an  impossible  chimera, 
561-563  ;  duties  on  imports  will 
protect  unless  domestic  produc- 
duction  is  forbidden,  562;  Amer- 
can  government  having  no  power 
to  prohibit  domestic  production, 
562 ;  can  not  le\y  a  duty  for 
revenue  only,  562,  563 ;  a  tariff 
for  revenue  only  calls  for  high 
duties  on  products  we  have  no 
natural  facilities  to  produce,  573; 
revenue  derived  from  importa- 
tion of  articles  of  which  we  pro- 
duce our  whole  supply,  586 ; 
duties  so  far  as  they  produce 
revenue  are  revenue  duties  (Mill) 
587 ;  even  repeal  of  revenue 
duties  may  not  always  cause  re- 
duction in  prices  by  amount  of 
duty  (coffee),  600 ;  portion  of 
revenue  collected  from  foreign- 
ers, 623;  revenue  from  silks,  634 

Revohition,  agitation  for  a  social, 
304-307  ;  tendencies  to  paternal 
despotism  where  spirit  of  revo- 
lution is  deficient,  402  ;  effected 
in  English  government  by  Amer- 
ican independence,  409  ;  what  is 
deemed  njvolutionary  in  Eng- 
land, 426  ;  loss  of  life  in  French 
revolution  compared,  447  ;  kind 
of  industrial  revolution  needed 
in  Cluna,  551-554 

Revolvers,  American  superiority 
in  foreign  trade,  596 

Rhode  Island,  141,  252;  popula- 
tion of,  to  cultivated  land,  546 

Rial,  340 

Ribbons,  I^ngland  j)rotects  her  own 
against   Irish,   493 ;    decline  of, 


wlien  protection  against  French 
and  German  gone,  634-637 

Rice,  excise  on,  481  ;  revenue  on, 
in  United  States,  paid  by  foreign- 
ers, 586;  exports  of,  611 

Rice-hullers,  American  export  of, 
596 

Roads,  taxed,  454 

Romans,  economic  conditions  of, 
determined  their  political  institu- 
tions, 402  ;  power  lirst  in  sold- 
iers and  priesthood,  then  in  sold- 
iers and  lawyers,  then  in  political 
manipulators  of  elections,  etc., 
402  ;  register  of  revenues  and 
expenses,  454  ;  tribute  derived 
by,  454  ;  wool  culture  and  sheep 
among  ancient,  668 

Rome,  pope  of,  404 ;  elective,  405; 
mode  of  choosing,  418 

Rome,  ownership  in,  23;  family 
relation  under  Roman  law,  60; 
classes  which  ruled  in,  402,  405; 
extraordinary  prices  of  line 
woolens,  669 

Rose  noble,  340 

Rotation  of  crops,  255,. 520;  and  of 
manures,  520 

Rouble,  338 

Roumania,  tariff,  530 

Rubber  (see  India  rubber) 

Rupee,  338 

Ryots,  485,  486 

Russia,  markets  of,  100;  bureau- 
cratic government,  406;  value 
of  agricultural  products  of,  230; 
relative  wages  in,  315;  orna- 
ments worn  in,  331;  monetary 
unit  of,  338;  political  parties  in, 
404;  local  government,  430;  the 
mir,  430;  expenditure  on  army 
in,  438;  alleged  low  credit  of, 
448;  area  of,  526;  communal 
and  land  system  of,  525-527; 
emancipation,  526,  527 ;  home 
industry  in,  527;  child  labor  and 
total  number  of  hands  emploj'ed 
in  factories  of,  527;  Russians 
escape  three  important  forms  of 
western  taxation,  through  their 
more  [)ra(^tical  socialism  as  an 
aspect  of  tlu'ir  intenser  despot- 
ism, 529;  the  taxes  of  emancipa- 
tion (including  rebellion),  re- 
sumption, and    jiauperage,  529; 


766 


GENERAL  INDEX. 


Americ.an  balance  of  trade 
against,  599-001  ;  product  of 
iron,  steel,  and  coal  in,  GoO 


S. 


Salaries,  as  a  mode  of  taxation,  485 
Salt,  earnings  of  salt  manufacture 
in  United  States  and  division 
between  capital  and  wages,  313; 
value  given  by  meat  packing, 
322  ;  tax  on,  converts  the  Hin- 
doos into  earthworms,  487  ;  Ro- 
man taxes  on,  4o4;  Chinese,  455  ; 
heaviest  known  tax  laid  on  in 
India,  455,  486  ;  United  States 
revenue  from,  not  paid  by  con- 
sumer, 586  ;  fuller  demonstra- 
tion of  this  point,  693-697  ;  ex- 
ports of,  611  ;  imports  and  rev- 
enue from,  614 ;  a  surplus  of 
revenue  not  a  good  reason  for 
withdrawing  protection  from, 
640  ;  salt  production  in  United 
States  as  related  to  tariff,  693- 
697;  foreign  production  as  com- 
pared with  domestic  in  use,  693; 
693  ;  prices,  duties,  and  manu- 
facture South  and  North,  694, 
695;  from  1868  to  1872  duty 
was  added  to  price,  from  1872 
to  1876  it  was  divided,  since 
1876  it  has  been  paid  entirely  by 
importers  (diagram),  696. 
Sausage  machines,  American  ex- 
port of,  596 
Savages,  absence  of  money  among, 
831;  schemes  of  converting  by 
raising  silkworms,  631 
Savings  banks    in   United  States, 

190 
Savings,  taxes  on,  464 
"  Saw  gin,"  AVhitney's,  686 
Saws,    wages  in  manufacture   of, 
581;       English    and    American 
prices  of,  590 
Saxe- Weimar,  515 
Saxony,  wages  in  1867,  511,   515; 

wools  of,  672 
Scales  and  balances,  exports,  611 
Scarcity,  effect  of  on  prices,  115- 
119;  of  savage  life,  162-166;  of 
crime  during  great  wars,  443; 
the  scarcity  and  abvmdance  so- 
phism of  Bastiat,  508 


Schools  of  political  economy,  9-36; 
of  Carey,  16;  schools  sustained 
by  taxes  under  universal  suf- 
frage, 474;  in  Prussia,  523 

Science,  is  political  economy  a,  1-9; 
classitication  of,  by  A.Comte, 
6;  the  scientific  method  in  polit- 
ical econom}^  23;  how  economy 
made  exact  (Jevons),  34;  Perry 
says  the  facts  are  too  numerous, 
whirling  and  entangled,  571 

Scissors,  American  export  of  su- 
perior, 596 

Scotland,  union  of  with  England, 
340,  461;  taxes  in,  476;  prohi- 
bition of  culture  of  tobacco  in, 
480;  lessened  product  of  bread- 
stuffs  under  free  trade  in  corn, 
559;  production  of  tobacco  pro- 
hibited in  order  that  import  duty 
may  not  protect,  562;  our  bal- 
ance of  trade  with,  599-601 ;  ear- 
ly protection  to  glass,  639 

Seasons,  effect  of  bad  seasons  to 
destroy  agriculture  counteracted 
by  protection  to  corn  in  Eng- 
land, 113-118 

Secession,  war  for  in  United  States, 
could  it  have  been  averted? 
438 

Seed,  tax,  466;  export  of  (hay  and 
cotton)  seeds,  611;  import  of 
tiax,  hemp,  etc.,  614 

Senate  of  United  States,  414,  426 

Servia,  government  parliamentary 
and  responsible,  407 

Sewing  machines,  American  ex- 
port of,  596,  611 

Sex,  in  crime  in  Great  Britain,  83; 
imposes  no  material  obstacle  to 
directon  of  industry  if  the  value 
sense  exists,  307-308;  women  as 
wages- workers,  325-328;  does 
their  best  welfare  lie  in  giving 
them  a  broader  claim  to  support 
at  the  hands  of  male  relatives,  or 
a  freer  admission  to  compete  for 
wages?  325;  limitations  on  wo- 
man as  a  worker,  826;  degree  in 
which  they  are  self-supporting 
in  United  States,  adherence  to 
the  family  order,  327;  the  work- 
ers find  their  real  underbidders 
in  the  "ladies,"  who  work  or 
not      as      they     choose,       and 


GENERAL  INDEX. 


lb  I 


hence  help  to  fix  woinan's  work 
nearer  the  gratuitous  standard, 
328;  sex  and  crime,  441,  442; 
in  work  in  France,  497;  in  Ger- 
many, 524;  in  strikes,  328 

Shearing  frames,  681,  685 

Shears,  cast  steel,  English  and 
American  prices  of,  590 

Sheep,  taxed  in  Turkey,  but  im- 
ports and  aliens  free,  488;  in 
France,  498;  antiquity  of  sheep 
culture  and  historj-  of,  668-683; 
development  of,  671;  may  be 
bred  to  any  pattern,  671;  high 
prices  on  merinos  in  America, 
676;  growth  of  sheep  and  yield 
of  wool  in  United  States, 
677 

Sheetings,  383,  666 

Shillings,  339,  341 

Ships,  building  and  repairing  of  in 
United  States,  low  returns  to 
capital  and  large  to  labor  in,  313; 
English  ships  needed  protection 
until  they  could  carry  cheaper 
than  all  others  (Mill),  557;  wages 
in,  in  America  and  Europe,  581 ; 
American  ships  came  under  free 
competition  in  1816,  642;  ship- 
building dependent  on  iron  and 
steel  manufacture  since  1845, 
648;  British  ships  protected  by 
discriminating  duties  on  iron 
carried  in  them,  648;  canvas 
and  cordage  for,  652;  rapid 
growth  of  shipping  while  under 
protection  in  United  States,  653, 
654,  650;  national  quality  of 
ships  and  right  to  protection, 
654;  free  ships  would  i)ut  an  end 
to  ship-lniilding,  655;  decline  of 
American  ocean-going  marine 
because  unprotected  itself  and 
dependent  (jn  iron  and  steel 
manufactures,  also  unprotected, 
656;  while  Ii^nglish  iron  and  steel 
industries  were  got  ready  for 
ship-l)uilding  by  persistent  ])ro- 
tection,  640;  subsidies  to  English 
ocean-going  vessels,  659,  662, 
663;  denial  of  subsidies  to  Amer- 
ican ocean-going  vessels,  657, 
658;  American  penny-wise  UK^an- 
ness  toward  ships  enables  Eng- 
land  to   score  a   handsome  net 


profit  on  her  piracy  over  all  costs 
of  indemnity,  663 

Shoddy  and  rags,  in  Yorkshire, 
122;  in  English  blankets,  590, 
672 

Shoemakers'  tools,  American  ex- 
port of,  596  ;  productions  of  in 
United  States,  697 

Shoes,  export  of  from  New  Eng- 
land, 35  ;  law  governing  price  of 
in  exchange  with  corn,  97;  strikes 
in,  328;  protected  in  1824,  383; 
women's  shoes  exported  from 
United  States,  for  one  hundred 
years  past ;  magnitude,  value, 
and  cheapness  of  New  England 
shoe  trade,  697,  698 

Shovels,  English  and  American 
prices  of,  590 

Siberia,  tribal  ownership  in,  23 

Sidon,  453 

Silesia,  wools  of,  672 

Silk,  early  culture  of,  in  America, 
631  ;  visionary  economic  views 
concerning,  631  ;  colonial  export 
of  raw,  631  ;  revival  of  in  1826, 
and  silkworm  mania,  632,  633; 
manufacture  of,  in  United  States, 
sharing  of  product  in,  313;  Eng- 
lish silks  protected  against  Irish 
by  Act  of  Union,  493;  taxes  on 
manufacture  of,  in  China,  455; 
decline  of  silk  manufacture  in 
Turkey,  491 

Silks,  French  imports  and  exports 
of,  26  ;  Belgium,  26  ;  manufac- 
turers of  Bengal  petition  for 
same  protection  against  English 
silks  as  England  exacts  against 
theirs,  487 ;  former  repute  of 
Turkish  silks  and  velvets,  490; 
in  France,  500-503  ;  statutes  in 
aid  of  silk  manufacture  in  Eng- 
land, 555  ;  wages  in  silk  hats  in 
America  and  Europe,  581  ;  Eng- 
lish silks  protected  against  Irish 
by  Act  of  Union,  493;  decline  of 
the  tarilT  tax  on  silk  though  the 
duty  remains  the  same,  620,  621; 
munufaeture  of  in  America, 
growth  of  value  of  product,  633; 
a  consequence  of  protective 
duties,  633  ;  decline  of  manufac- 
ture in  England  under  free  trade, 
632;  proportion  of  silk  mamifac- 


ro8 


OENERAL  INDEX. 


ture  to  Great  Britain's  entire 
manufacture  (McCullocIi),  687  ; 
McCulloch's  attempt  to  "  explain 
away"  the  destruction  of  tlie 
Englisli  silk  manufacture  l)y 
free  trade,  687,  688  ;  imports  of 
into  United  States  from  France 
and  Germany, 687;  former  rivalry 
between  England  and  France  in, 
637 ;  scarf  of  silk  in  Cceur  de 
Leon's  contest  with  Saladin,  646  ; 
fibre  of  compared  with  wool, 
673 

Silver,  in  India,  831 ;  the  money  of 
the  poor,  the  retailer,  the  laborer, 
and  of  vital  consumption,  339  ; 
in  England,  399;  relative  quantity 
used,  344  ;  has  free  coinage,  and 
is  standard  in  India,  862;  in  Ger- 
many, 363;  eifect  of  cessation  of 
drain  to  India  accurately  foretold 
by  Meggins  prior  to  1770,  and 
verified  in  1873,  373  ;  export  of, 
where  it  subtracts  from  circula- 
ting medium,  388,  384  ;  Ameri- 
can interest  in  Chinese  trade, 
586 

Simplicity,  as  a  cover  for  indolence, 
571 

Skill,  influence  of  on  wages,  313 

Slaughtering  and  meat  packing  in 
United  States,  relative  wages 
and  profits,  313 

Slavery,  associated  with  tribal 
ownership,  38  ;  and  pauperism, 
30  ;  relative  prosperity  of  free 
and  slave  states  partly  due  to 
race  capacity,  33 ;  in  United 
States  by  census,  146  ;  slavery 
abolished  by  substitution  of 
wages  for  force,  164  ;  servants, 
provision  for,  166 ;  change  of 
opinion  concerning  slavery  with 
growth  of  freedom,  338;  relation 
of  to  free  trade  and  the  secession 
movement  of  1833-33,678-679;  rise 
in  price  of  slaves  due  to  success  of 
cotton,  384;  in  civilization  is  suc- 
ceeded by  penitentiaries,  444; 
slave  labor  and  free  trade  parts  of 
the  same  scheme  of  propagand- 
ism  in  United  States,  553,  687  ; 
profits  of  cotton-growing  and 
slave-growing  combine  to  make 
slavery  a  power,  687;  the  slavery 


struggle  in  Am.erica  an  economic 
war,  688 

Smiths,  388,  511,  646 

Snuiggling,  between  England  and 
France  exceeded  legitimate  trade 
in  1774,  500;  right  to  smuggle  in 
China  and  Japan  backed  by 
British  forces,  554;  in  New  York 
it  is  effected  by  agents  of  foreign 
houses  (Wells  and  committee  of 
Congress),  605 

Soap,  England  protected  lier  soap- 
makers,  but  gave  the  Irish  free 
soap  by  Act  of  Union,  498  ;  ex- 
port of,  611  ;  import  of  and  reve- 
nue from,  614 

Socialism,  theory  of  tribal  or  com- 
munal ownei'ship  should  be 
studied,  how,  28  ;  state  socialism 
and  wherein  all  state  life  is  social, 
57,  60;  what  is  social  wealth,  68- 
65  ;  social  view  of  title,  135-150; 
Henry  George's  scheme  of  land, 
125,  130  ;  disappears  as  to  title 
with  advances  of  society,  but  in- 
creases as  to  use,  180-151;  culmi- 
nates in  slavery,  188  ;  socialistic 
tendencies  of  taxation, 145  ;  aid  to 
railways  and  reaction  against, 
145-161  ;  railway  theories  of 
socialism,  160;  argument  of,  as  to 
capital,  labor,  and  wages,  ex- 
ploitation and  robbery, stated  and 
answered,  167-185;  Mill's  cjuasi- 
socialism,  185  ;  the  socialist  ob- 
jection to  accumulation  ans- 
wered, 198-210;  Karl  Marx,  209; 
social  saving  by  private  enter- 
prise, 218  ;  poor  survive  best  in 
cities,  319  ;  social  gain  by  large 
capitals,  230  ;  social  use  of  re- 
productive wealth,  834  ;  Bastiat 
on  socialism,  384  ;  objections  of 
socialists  to  large  landholding, 
873  ;  socialist  views  of  labor  dis- 
cussed, 304-330  ;  destruction  of 
values  by  strikes,  310,  338  ;  doc- 
trine that  returns  to  capital  are 
a  robbery  of  labor  is  subversive 
of  all  social  order,  and  tends  only 
to  destroy  industry,  807  ;  wages 
of  social"  labor,  333;  tendencies 
of  local  government  to  socialist 
undertakings,  477-479;  socialism 
of  the  Russian  mir   and  artel. 


GENERAL  INDEX. 


769 


526 ;  in  Russian  finance,  528; 
Russian  socialism  in  two  aspects 
exceeds  that  of  western  nations, 
529 

Sociology,  relation  of  to  political 
economy,  T 

Soil,  exhaustion  of,  2r)3-2o6;  re- 
lation of  protective  policy  to, 
570,  571;  would  first  be  used  for 
making  iron,  645 

Sol,  monetary  unit  of  Peru,  338 

Soldiers,  erroneous  statistics  of  in 
France  under  Napoleon  III.,  30  ; 
health  of  British  soldiers  serving 
abroad,  31;  of  recruits  in  France, 
32;  bounty  laws  in  America,  145; 
wages  of  ,290;  hold  the  power  at 
first,  402  ;  cost  and  functions  of, 
437—440;  relation  of  to  industry, 
440;  .soldiers  for  sale  in  German}^ 
while  export  raw  materials,  515; 
expenditure  on  soldiers  inFrance, 
497 

Sophisms,  of  i\Iill  as  to  protective 
duties  producing  no  revenue, 
469-472  ;  may  apply  to  a  theory, 
but  not  to  a  practice,  hence  to 
free  trade  but  not  to  protection, 
507;  of  Bastiat  criticised,  506- 
513  ;  of  Perry  as  to  paying  for 
foreign  products  with  domestic 
and  trading  for  profit,  571-577, 
578 

Southern  States,  effect  of  war  of 
1861-5,  415,  687,  688 ;  in  salt 
making,  694 

South  Carolina,  in  1828  to  1837, 
384,629,  630;  silk  raising,  631 

Soulhilown  wools,  672 

Sovereitrns,  340-342;  pound  ster- 
ling, 340 

Sovereignty  of  United  States  with- 
in its  powers,  415  ;  sovereignties 
merged  in  Germany,  522 ;  of 
Cliiiia  and  Japan  imdermined  as 
to  tariff,  533,  534 

Spain,  214 ;  monetary  uiiil  of, 
338  ;  government  responsil)le, 
407  ;  debt  of,  448;  order  des- 
troying vines  ami  olive  trees  in 
Mexico,  480;  tarill"  of,  530;  Am- 
erican balance  of  trade  against, 
600  ;  product  of  iron,  .steel,  and 
coal,  650;  wool  and  woolens,  668, 
669;  wools  of,  672 


Sparta,  causes  of  its  peculiar  state 
life  were  economic,  402;  aristo- 
cratic, 405 

Specie,  import  and  export  of, 
383;  turned,  384,  386;  resump- 
tion of,  529 

Specific  duty  on  tobacco,  con- 
verted into  ad  valorem.  481  ; 
nearly  all  duties  specific  under 
Zollverein,  517  ;  on  glass  in 
United  States,  644 

Spinning  jenny,  681,  684;  spin- 
ning frame  or  throstle,  684 

Spirits,  480,  481,  482;  export  of, 
611;  import  and  revenue,  614 

Spirituous  liquors,  annual  value 
of,  con.sumed  in  United  States, 
25;  taxes  on,  463,  464;  effects  of, 
475  ;  how  methylated  for  use  in 
arts,  470;  English  revenue  from, 
480,  481,  482 

Spiritual  government,  428 

St.  Petersburg,  351,  405 

Stamps,  revenue  from,  479,  482; 
in  India,  486 

Standard,  silver,  and  later  gold 
in  England,  334;  coin,  335,  336; 
in  United  States,  336  ;  nine 
meanings,  342  ;  single  and 
double,  on,  361;  Beaconsfield  on, 
362 

Starch,  Act  of  Union  gave  Ireland 
free  starch,  England  protected 
starch,  493 ;  export  of  from 
United  States,  611  ;  import  and 
revenue,  614 

State,  control  of  railways  by,  29; 
origin  and  functions,  131-151  ; 
aid  to  railways  in  United  States, 
150-161;  dechne  of  cost  (value) 
and  increase  of  utility  of  the 
state  as  society  advances  (lilder), 
324;  state,  like  the  family  or  the 
basic  qualities  of  human  nature, 
is  a  necessity,  and  natural,  ;'.92, 
393;  the  government  of  intei-est 
known  as  industry  or  business 
is  more  searching,  minute,  and 
controlling  than  the  political 
state,  399;  it  is  an  uncon.scious 
government,  400;  f(irm  of  the 
state  determined  by  the  material 
conditions  of  the  people,  402- 
404  ;  state  as  a  mechanism 
much   alike  in  its  essence   and 


770 


GENERAL  INDEX. 


form,  whatever  its  mode  of  selec- 
tion, 404-415  ;  parliamentary 
and  representative  states,  406; 
responsible  ministry  and  dis- 
soluble legislature,  407-412  ; 
Roman  state,  412  ;  what  forces 
state  must  represent,  418;  "  con- 
curring majorities  "  according 
to  Calhoun,  414;  relation  of  in- 
dustrial to  political,  431  ;  the 
state  as  wise  as  its  average  con- 
stituency only,  441;  objects  in 
punishment,  440;  state  debts  in 
United  States,  448  ;  loans  to, 
448;  effect  on  tax  policies  of 
state  becoming  a  producer,  456  ; 
subjects  of  a  state  do  not  pay  all 
its  taxes,  457  ;  state  taxation  in 
United  States,  468;  functions  of 
in  England  shown  by  diversity 
of  local  rates,  477-479;  state  aid 
to  railways  in  Canada,  531  ; 
state  aid  to  silk. culture  in  United 
States,  631-633  ;  state  aid  to 
glass-making  in  Massachusetts, 
639;  state  is  the  sum  of  all  in- 
trinsically profitless  but  socially 
necessary  industries,  700,  701  ; 
and  hence  mei'ges  into  identity 
with  protection,  700,  701 
Statesmanship,  its  relation  to  polit- 
ical economy,  8,  17;  American 
examples  of,  38;  state  defined, 
131 ;  statesmen  assume  the  basic 
qualities  of  human  nature  as 
constant  factors,  398 ;  forms 
through  which  it  works  in  Eng- 
land, America, .  France,  etc., 
406-429;  class  who  supply  work 
for  statesmen,  447 ;  statesmen 
should  know  whether  a  tax  pro- 
duces revenue  and  prosperity, 
465-469,469-473;  as  this  is 'a 
practical  matter,  but  need  not 
know  its  final  incidence,  which 
is  a  metaphysical  subtlety,  459- 
460  ;  statesmanship  of  Russia  in 
emancipation,  527;  of  German}', 
514-523;  of  colonial  and  Cana- 
dian independence,  531 ;  Chinese 
statesmanship  as  to  subversion 
of  native  industry  by  foreign  pro- 
cesses prematurely  introduced, 
548;  American  statesmen  over- 
reached and  out  maneuvered  by 


English  from  1815  to  1860inmat- 
ters  relating  to  carrying  trade 
and  ocean  ships,  640-664;  de- 
struction of  American  merchant 
marine  an  intended  stepping- 
stone  to  disunion,  657,  658;  of 
Sir  John  A.  Macdonald,  664;  of 
Colbert  in  France,  678,  674; 
artisans,  how  attracted,  674; 
blunder  of  French  statesman- 
ship in  1786,  674;  triumph  of 
Napoleon's  protective  policy  in 
Europe,  674,675;  statesmanship 
of  America  holds  protection  to 
be  the  surest  road  to  cheapness, 
683;  of  Great  Britain  sacrifices 
domestic  production  to  foreign 
trade,  689 
Statistics,  definition  of,  24;  phil- 
osophy of,  24-40  ;  Cossa's  fal- 
lacy as  to,  24;  what  they  show, 
24;  fallacious  handling  of,  24- 
26;  conflicts  of,  as  between  dif- 
ferent nations,  26-28;  may  be  due 
not  to  error  but  to  different 
classification,  27  ;  as  to  silks, 
coal,  wool,  hops,  glass,  28;  of 
china  discredited,  29  ;  military 
under  Napoleon  III.,  30  ;  of 
the  poor  prove  relief  only  and 
not  poverty,  30 ;  of  eccentric 
marriage,  30;  of  health  and  cli- 
mate, 31  ;  crime,  32,  443,  444; 
taken  with  a  bias,  33;  accurate 
predictions  of  population,  145  ; 
of  grain  production,  shortage  and 
effect  of  in  United  States,  1879- 
1883, 106, 1 1 7  ;Mongredien's  errors 
concerning  causes  of  dear  bread- 
stuffs  in  England,  112;  during 
Napoleon  wars,  112-113  ;  chart 
showing  that  fluctuations  in 
America  and  France  were  iden- 
tical with  those  in  England,  124; 
of  repeal  of  corn  laws,  119;  of 
immigration  into  America,  141- 
150;  chart  of,  147;  of  forests  in 
United  States,  148;  of  beginning 
of  railways,  152-157;  lancfgrants, 
157,  158;  of  division  of  product 
between  capital  and  labor,  and 
of  division  of  capital  fund  be- 
tween rent,  interest,  profits,  173- 
182;  of  economy  of  large  capitals, 
219-380  ;    of    relative    capacity 


GENERAL  INi)t:X. 


Ill 


of  reproduction  as  between  man 
and  his  food,  230-234;  of  ratio 
of  rent  to  value,  244 ;  of  rent 
and  transportation  as  balancing, 
250-252;  of  diminution  in  value 
of  products  by  distance  from 
markets,  tax  of  transportation, 
252  ;  exhaustion  of  soils  and 
contra,  254;  of  ratio  of  farm  in- 
comes, farm  values,  and  farm 
wages  to  nearness  of  consumers 
(Dodge),  256-262;  of  agriculture 
by  machinery,  263-267;  of  large 
landholders  in  America  and 
England,  268-274;  of  depopula- 
tion and  waste  of  Ireland,  274- 
275 ;  of  emergence  of  food  plants 
into  general  use,  275-280  ;  of 
cost  and  economy  of  strikes  and 
lockouts,  310,  328;  of  division 
between  capital  fund  and  wage 
fund  in  America,  311-314;  of 
women  who  labor,  325-328;  of 
value  of  standard  coins,  338;  of 
fineness  of  British  coins,  340- 
342;  of  all  coins  and  paper  in 
use,  344;  of  export  of  bonds, 
340;  of  turning  from  silver  to 
gold  in  Germany,  362;  of  rate 
of  production  of  gold  and  silver, 
363-367  ;  causes  of  disparity 
between  silver  and  gold,  368; 
of  crises,  1825-6  in  England, 
371;  1847  in  England,  374;  1857 
in  England,  377;  of  1816-19  in 
United  States,  381;  of  1837  in 
United  States, 383-385;  of  1857  in 
United  States.  385-388;  of  1866  in 
England,  389;  of  1873  in  United 
States,  390-392;  of  balance  of 
trade  doctrine,  393,  394;  of  bal- 
ance of  trade,  how  marred,  395; 
of  cost  of  armies,  437  ;  of  crime, 
440  ;  of  income  and  expendi- 
ture of  United  States  in  1883,  45; 
of  average  imports  and  ratio  of 
revenue  to  imports  under  pro- 
tection and  low  duties  from  1821 
to  1861,  469-470  ;  of  taxation  in 
Great  Britain,  476,  479  ;  of  pau- 
pers in  England,  478  ;  of  cost  of 
collecting  revenue,  482  ;  of  spo- 
liation of  India,  484-488  ;  of 
Turkey,  488-491  ;  spoliation  and 
decline  of  Ireland,  491-495  ;  of 


occupations  of  French,  496 ;  of 
women  in  France,  497  ;  of  reve- 
nues, 498 ;  of  Frencli  taxes, 
499  ;  of  population  of  the  Zoll- 
verein,  516  ;  of  German  reve- 
nues and  prosperity,  492-524  ; 
of  sources  of  revenue,  523  ;  of 
iron  and  steel  production,  522  ; 
of  emancipation  in  Russia,  527  ; 
of  resumption  of  specie  pay- 
ments in  Russia,  528  ;  concern- 
ing China  always  begin  in  a 
guess,  537  ;  of  Chinese  popula- 
tion as  estimated  by  most  com- 
petent geographers,  538-550  ;  of 
Chinese  immigration  to  America, 
548 ;  of  rates  of  duty  and  of 
duties  paid  bj^  foreign  prodiicers 
uuder  American  tariff,  607-620  ; 
of  steel  rails,  cutlery,  plumbing 
ware,  paper.aud  crockery  trades, 
620-626  ;  of  experiments  in  silk 
culture  in  America,  631  ;  Ameri- 
can manufacture  of  silk,  633  ; 
of  silk  manufacture  in  England, 
634-637  ;  of  progress  of  iron  in- 
dustry in  Great  Britain,  646  ;  of 
the  world's  iron,  steel,  and  coal 
production  in  1881-1883,  650; 
of  American  iron  and  steel  pro- 
ducts, steel  rails,  railroad  build- 
ing, and  immigration  from  1860 
to  1883,  651  ;  of  English  and 
American  shipping  and  their 
rivalry  in  ocean  carrying  trade, 
652-664 ;  of  manufactures  in 
Canada,  664,  668  ;  of  sheep  and 
wool  and  prices,  666-684 ;  of 
cotton  and  cotton  goods  manufac- 
ture in  United  States  and  Eng- 
land, 684-691  ;  of  quinine,  692  ; 
of  American  and  foreign  salt, 
693-697 

Statutes,  of  England  protective  and 
prohibitory,  555 ;  protective  of 
iron,  steel,  and  shipping,  648 ; 
American  less  so,  648 ;  English 
protection  of  wool,  669 

Steel  (see  Iron),  acts  to  protect 
manufacture  of,  in  England,  555; 
wages  earned  in  iron  and  steel 
in  United  States,  312;  German, 
523;  wages  in  steel  works  United 
States  and  Europe,  581 ;  were  the 
duties  on  steel  rails  a  tax  on  con- 


ii2 


GENEBAL  INDEX. 


sumers  or  a  relief  to  railways? 
589,  651  ;  Euglish  and  American 
prices  of  iron  and  steel  wares  in 
1882,  590;  antiquity  of,  645; 
world's  product  of  steel  in  1888, 
650 

Steel  rails,  effect  of  American  pro- 
duction on  prices,  590 ;  other 
causes  than  tariff  operated  to 
delay  fall  in  prices,  618,  619 ; 
production  and  prices  in  United 
States  from  1860  to  1883,  651 

Stock,  exchanges,  a  more  perfect 
form  of  market,  101  ;  shrinkage 
of  railway  stocks,  222;  live  stock, 
absence  of  in  Chinese  empire 
and  its  economic  effects,  540-547 

Stone,  wages  of  working  in,  in  Eng- 
land and  Massachusetts,  582  ; 
age  of  stone,  645 

Stoneware,  exports  of,  610  ;  im- 
ports of  and  revenue  from,  613 

Strikes,  relation  of  to  commercial 
crises,  190  ;  waste  of,  310,  328  ; 
not  wholly  cured  by  profit  shar- 
ing, 314  ;  number  of,  from  1881 
to  1886,  men  and  establishments 
engaged,  and  gain  and  loss  by, 
328  ;  English  strikes  and  riots  of 
the  machine  breakers,  684 

Subsidy,  protection  by,  efficiently 
applied  to  English  vessels,  656- 
660  ;  while  denied  to  American, 
656-659  ;  liberality  of  British 
government,  662  ;  mode  of  pay- 
ing, 662  ;  economy  of  subsidies, 
663,  675 

Suez  canal,  favors  absenteeism  in 
India,  487 

Suffrage,  influence  of  extended, 
402 ;  expanding  the  right  of, 
418;  effect  of  extension  of,  on  the 
spirit  and  intent  of  legislation, 
424  ;  why  only  males  vote,  435  ; 
effect  of  universal,  on  modes  of 
taxation,  474 

Sugar,  revenue  from  (1861)  in  Eng- 
land, 480  ;  repeal  of  import  duty, 
480;  excise,  481;  revenue  from, 
in  France,  498,  503  ;  History 
of  development  of  beet  sugar 
in  Europe,  503-506 ;  efforts  to 
prove  a  country  richer  for  not 
producing  it,  though  it  can  pro- 
duce it  cheaper  than  any  others 


but  not  at  first,  504  ;  France  ob- 
tained abundant  and  cheap  beet 
sugar  in  1840,  505  ;  German  ex- 
port of,  520  ;  cultivation  of, 
partly  extinguished  by  forced 
importations  in  Japan,  554  ; 
wages  in  refineries  in  United 
States  and  Europe,  581  ;  cane 
growers  in  Jamaica  seek  to  get 
into  a  protected  market,  505 ; 
since  1860  France  taxes  beet 
sugar  heavier  than  colonial,  505; 
export  of,  611  ;  import  and  reve- 
nue, 614 ;  state  of  American 
market  and  prices  relatively  to 
European,  618  ;  necessity  of 
making  all  the  sugar  a  nation 
consumes,  629 

Supply  and  demand,  economics  a 
study  of,  4  ;  law  of  applied  to 
prices  as  affected  by  duty,  591- 
594  ;  law  of  ratio  of  whole  sup- 
ply to  whole  demand  applied  to 
determine  effect  of  import  duties 
on  prices  where  there  is  a  com- 
peting domestic  production,  618; 
when  supply  is  short  prices  rise 
in  disproportion  to  scarcity,  690  ; 
of  cotton  in  cotton  famine,  690  ; 
prices  diminish  chiefly  with  the 
magnitude  of  supply  (shoes), 
697,  698 

Surplus,  of  revenue  in  United 
States  under  protection,  384 ; 
division  of,  among  the  States, 
384 ;  how  it  arises  (1883),  468  ; 
existence  of,  not  a  good  reason 
for  withdrawing  protection  from 
salt  (Jefferson),  640  ;  the  greater 
the  national  surplus  relatively  to 
a  uniform  demand  the  less  its 
aggregate  value  (woolens),  673 ; 
compare  Tooke,  Carey  and 
Baird,  113,  117  ;  (illustrated  in 
case  of  raw  cotton),  687 

Sweden,  monetary  unit  of,  338 ; 
wages  of  blacksmiths  and  iron 
puddlers  in,  511  ;  American  bal- 
ance of  trade  against,  600  ;  pro- 
duct of  iron,  steel,  and  coal  in, 
650 

Switzerland,  monetary  unit  of, 
338 ;  economic  conditions  favor 
democracy,  402 ;  wages  in,  in 
1867,  511 


GEXEIiAL  INDEX. 


/  t  -3 


Table-ware,  American  export  of, 
596 

Tallow,  United  States  revenue  on, 
not  paid  by  consumer,  586  ;  ex- 
port of,  611  ;  import  and  reve- 
nue, 614 

Tanning  bark,  protection  on,  and 
export  of,  610 

Tapestrj',  introduced  in  France, 
639 

Tar.  520 

Tariff,  when  it  becomes  necessary 
as  a  protective  agent,  319 ;  of 
1824-28  in  United  States,  382  ; 
compromise  tariff  of  1833,  384  ; 
how  it  brought  on  the  inflation 
of  1834-36  and  crisis  of  1837, 
385 ;  tariiTs  in  United  States 
from  1820  to  1881  compared  as 
to  productiveness  of  revenue, 
imports,  and  immigration,  468- 
472 ;  importance  of  making, 
488;  Turkish  tariff  on  English 
steel  3  per  cent.,  English  tariff 
on  Turki-sh  steel  $150  per  ton  ; 
how  English  and  Irish  tariffs 
contrast  under  Act  of  Union,  493; 
England  takes  protection  and 
dear  goods  and  gives  Ireland 
free  trade  and  cheap  goods,  493  ; 
sample  of  specific  duties  in  Zoll- 
verein,  517  ;  tariff  of  Russia  de- 
signed for  protection  chietly,  527; 
essential  uniformity  in  all  tariffs, 
530  ;  except  where  sovereignties 
are  coerced,  533,  534 ;  Chinese 
and  Japanese  tariffs,  obtained  by 
American  and  English  coercion, 
534,  553  ;  tariff  of  France,  pro- 
tective duties  in,  408  ;  di.scussed 
by  Smitli,  500;  retaliatory  tariffs, 
500  ;  tariff  for  revenue  only  an 
impossible  thing  in  the  United 
States,  561-563 ;  Sidgwick  on, 
561-566  ;  need  of  prf)tection  in- 
creases with  means  of  transpor- 
tation, 569 ;  rate  of  tariff  re- 
quired to  sustain  production  in 
lines  wliere  etjuivalent  effort  i)ro- 
duees,  585  ;  tariff  not  a  tax  when 
the  production  it  causes  lowers 
prices  more  than  the  duty  raised 


tliem  (steel  rails),  589,  651  ; 
tariff  not  a  tax  on  consumers 
when  paid  by  importing  produ- 
cers, 612-615 ;  when  price  is 
raised  but  there  is  a  competing 
domestic  production,  618-620; 
change  of  revenue  tariff'  on  silks 
to  protective,  633 ;  effects  of, 
633  ;  tariff  as  to  silk  from  1790 
to  date,  634  ;  Jefferson  regarded 
tariff  and  patriotism  as  identical 
even  where  the  revenue  was  in  ex- 
cess of  needs,  640  ;  of  1824  on 
glass,  and  effect  of,  643  ;  British 
tariff  on  iron  and  steel  from  1790 
to  1849  created  the  British  mer- 
cantile marine  of  1850  tol888,  648 
-650  ;  American  free  trade  tariffs 
on  iron  and  steel  for  same  period 
destroyed  our  ocean  carrying 
trade,  648-650 ;  di.scriminaling 
duties  according  to  bottoms  in 
aid  of  ships,  653  ;  effect  of  pro- 
tective tariff  in  other  countries 
on  England,  664  ;  principles  on 
which  wool  and  woolen  duties 
were  based  in  United  States, 
677 ;  caused  a  great  increase  in 
production  of  woolens  and  wools 
and  a  gradual  lowering  in  price 
through  abimdant  supply,  674, 
678;  Bigelow  and  Hayes  on,  678; 
on  quinine,  691,692 

Tartary,  econoiuic  conditions  fa- 
vor nomadic  life,  402 

Tasmania,  445 

Tax-payers,  relieved  to  the  extent 
of  revenue  collected  from  for- 
eigners, 585  ;  amount  of  relief, 
586,  612,  616,  617 

Taxation,  the  state  the  proper 
judge  of  the  pin-poses  to  which 
it  is  adequate,  431  ;  earliest  tax- 
ation was  tribute,  453  ;  rapine 
by,  453  ;  is  rent  wliere  govern- 
ment runs  industry,  453  ;  taxes 
in  services,  453  ;  and  representa- 
tion, 453  ;  objects  of,  455  ;  theo- 
ries of  e(iuality  in,  456  ;  on  pro- 
perty, 456  ;  on  expenditure,  456; 
on  .superfluities,  456  ;  despotism 
of  single-taxism,  457  ;  vagueness 
and  self-contradiction  in  Dr. 
Smitli's  theories  of,  457-460  ; 
elusiveness    of    taxes    and    dif- 


GENERiYL  INDEX. 


fusion  of  tlieir  effects,  462-^68  ; 
self-imposed  taxation,  466  ;  tax- 
ation by  prolits  of  trade  with 
conquered  barbarians,  483,  490  ; 
in  France,  496-504  ;  in  Germany 
and  Prussia,  532  ;  tax  on  human 
energy  in  creating  the  means  of 
reproducing  wealth  in  western 
nations,  549 ;  degree  in  which 
burden  of  domestic  taxation  is 
borne  by  domestic  producers, 
556  ;  taxation  for  revenue  (with- 
out either  protecting  or  destroy- 
ing industry)  an  impossible  chi- 
mera, 561,  562,  563  ;  all  produc- 
tion caused  by  some  form  of  tax- 
ation, 584  ;  Perry's  error,  584  ; 
tariff  duties  in  part  relieve  dom- 
estic tax-payers  wholly  from 
taxation,  585  ;  by  collecting  rev- 
enues from  foreign  producers, 
586  ;  duty  on  import  does  not  ef- 
fect a  tax  on  consumer  unless  it 
raises  price,  589,  612-614;  nor  if 
deductions  in  price  exceed  rise, 
590  ;  the  ' '  tax  "  of  pi'otection  an 
exploded  myth,  683 
Taxes,  effect  of,  on  statistics,  29  ; 
as  a  means  of  confiscating  land 
by  numbers,  125-130;  none  on 
land  in  Great  Britain,  144  ;  in 
America,  144  ;  socialistic,  145  ; 
transportation  as  a  tax  on  pro- 
duction, 250-253  ;  the  chief  tax 
on  producers  of  farm  products, 
320;  Elder  on  greater  freedom 
in  taxation  as  society  advances, 
324;  of  United  States  in  1861-5, 
353;  paid  freely  where  money  is 
made  plenty,  353;  modes  of  vot- 
ing in  early  England,  408,  409; 
tribute  the  earliest  form  of,  452; 
mention  of,  on  Egyptian  monu- 
ments, 453  ;  in  Roman  Empire, 
Asia,  Carthage,  Gaul,  454;  mode 
of  distributing  \inder  Constan- 
tine,  455 ;  in  Eastern  Empire 
and  China,  455  ;  enormous  rate 
of,  on  salt  in  India,  455  ;  the 
seed  tax  is  the  source  of  all  pro- 
duction, 466 ;  what  taxes  are 
most  lightly  felt,  467,  468  ;  state 
and  local  taxes  in,  468;  on  liquors 
and  tobacco  an  imperceptible 
check    on    consumption,    475 ; 


amount  of  local  and  national 
taxes  in  Great  Britain,  476  ; 
taxes  in  profits  of  foreign  trade, 
484;  ratio  of  taxes  to  income  in 
India,  486  ;  taxes  become  a 
groimd  rent,  486;  foreigners  and 
resident  aliens  exempt  from 
in  Turkey,  488;  on  beet  sugar  in 
France,  505 ;  in  Germany,  522, 
523  ;  on  liquors  brings  govern- 
ment into  partnership  with  the 
traffic  in  Russia,  527 ;  distribu- 
tion of,  in  Russia,  529  ;  exemp- 
tion of  Russia  from  certain 
heavy  foi-ms  of  taxation,  529  ; 
effect  of  proposal  tax  according 
to  population,  or  to  give  alms, 
on  census,  539  ;  taxes  in  Japan, 
554;  the  tax  effected  by  a  pro- 
tective duty  (if  it  effects  one) 
repeals  itself,  564  ;  taxes  may  be 
thrown  on  foreign  producers, 
(Sidgwick),  560;  tariff  not  a  tax 
when  the  production  it  causes 
reduces  prices  by  five  times  the 
entire  duty  (steel  rails),  589  ;  all 
internal  taxes  reduce  tlie  protec- 
tive effect  of  tariff,  694 

Tea,  on  free  list  in  United  States, 
573,  600 ;  early  discriminating 
duties  on,  to  favor  American 
ships,  653 

Terms,  elusiveness  of  economic 
terms,  14 

Texas,  area  compared  with  Ger- 
many, 315;  salt  beds  and  tem- 
porary protection  under  a  free 
trade  confederacy  in  salt  mak- 
ing, 694 

Textile  fabrics,  aggregate  returns 
to  labor  and  capital  in,  312  ;  are 
refused  protection  in  India  while 
protected  in  England,  487  ; 
Liverpool  Cotton  Circular  on 
American  tariff,  664  ;  causes  of 
prices,  691 

Thistle  crowns,  340 

"  Throstle,"  invention   of,  681-685 

Tillage,  perfection  of  in  Germany, 
520 ;  more  women  than  men 
employed  in,  in  Wurtemburg, 
525 

Timber,  exports  of,  611  ;  imports 
and  revenue,  614 

Time  required  by  free  trade  to  pro- 


GENEEAL  INDEX. 


115 


duce  financial  crises — four  years 
in  United  States,  383  ;  one  j^ear 
in  England,  374,  376;  seven 
years  in  United  States  when  de- 
layed by  unprecedented  influx 
of  gold, '385  ;  four  to  eiglit  years 
in  1816  to  1824  to  extend  to  all 
branches,  642  ;  thirty-six  years 
of  free  carrying  trade  sustained 
by  United  States  before  tlie  free 
trade  principle  proved  fatal, 
656 
Time  required  by  protection  to 
produce  cheapness — beet  sugar 
in  France,  twenty  years,  515-521; 
cutlery  in  United  States,  eight 
years,  596 ;  general  manufac- 
tures in  Germany,  twenty-five 
years, 51 4-51 7;  to  build  up  Amer- 
ican manufactures  to  prosper- 
ity, fifteen  years,  641  ;  British 
woolens,  twenty-five  years,  609  ; 
export  of  wool  prohibited  165 
years,  670;  to  convert  wool  into 
a  coat,  one  day,  671;  under  reduc- 
tion of  duty  (2  cents  per  pound 
of  wool)  to  reduce  whole  num- 
ber of  American  sheep  one- 
seventh,  two  years,  679  ;  to  re- 
duce American  quinine  manu- 
facture one-half,  five  years,  672 
Tin  wares,  export  of,  611  ;  import 

and  revenue  from,  614 
Tithes,  Hebrew,  453  ;  India,  453  ; 
paid  by  natives  in  Turkey,  aliens 
.  pay  nothing,  488 
Title,  private,  as  related  to  labor 
and  production,  125,  130,  134; 
regulation  of,  by  government, 
430 
Tobacco,  duty  on,  in  England, 
how  prevented  from  protecting 
the  cultivation  of,  461,  462 ; 
Shadwell  and  McCulloch  on, 
480-481  ;  revenue  from,  480 ; 
comes  from  United  States,  480  ; 
invoice  price  in  United  States  of 
tobacco  shipped  to  England,  481 ; 
revenue  from  monopoly  of,  in 
France,  498  ;  statutes  to  i)rotect 
manufacture  of,  in  England, 
555  ;  English  duty  on  American 
tobacco  according  to  Adam 
Smith  justifies  American  duly 
on  any    English    product,  556 ; 


export    of,    611  ;    imports    and 
revenue  from,  614 

Tolls,  454,  476 

Tonnage  acts,  for  American  ves- 
sels, 653 ;  repealed  by  treaties, 
654  ;  dues,  different  on  English 
and  American  vessels  in  Ameri- 
can ports,  655  ;  tonnage  in  for- 
eign and  American  vessels,  656 

Tons,  gross  and  net,  650 

Tooke,  on  prices,  113-117 

Trade,  its  relation  to  commerce,  6; 
essay  on  balance  of,  by  G.  King, 
95 ;  boards  of,  for  grain  and 
provisions,  economy  of ,  102-120; 
engaged  in,  in  United  States,  320; 
Great  Britain  derives  no  revenue 
but  profits  of  trade  from  out- 
lying dominions,  484  ;  domestic 
trade  increased  by  protection  in 
a  degree  greater  than  foreign 
trade  is  checked,  512;  trade  arises 
not  from  production  of  unequal 
values  of  the  same  product,  but 
of  like  values  of  unlike  products, 
513 ,  hence  England's  superi- 
ority in  the  same  line  paralyzes, 
513  ;  freedom  of  internal  trade 
as  essential  as  protection  from 
exterior  competition,  to  the 
American  policy,  514 ;  a  large 
trade  makes  a  low  price,  623  ; 
internal  trade  between  North 
and  South  the  most  permanent 
and  cordial  basis  of  political 
union,  649,  650  ;  three-cornered 
commerce,  664;  in  slaves  between 
the  slave-growing  and  cotton-, 
growing  Slates  in  1815-1830, 
677-679 

Traders,  home  traders  protected 
when,  without  raising  prices, 
foreign  competing  article  is  ex- 
cluded, 609 

Trades  unions,  166,  309-315  ;  ]iro- 
portion  of  strikes  ordered  by, 328 

Transit  duties,  455 

Transporters,  protected  when,  609 

Transportation,  and  rent,  249 ; 
Mill's  theory  of  annihilation  of 
rent  l)y  perfect  transportation, 
247-253  ;  as  a  tax  on  farmers, 
320;  strikes  in,  328;  relation  of 
State  to,  455;  taxes  on,  in  China, 
455  ;  number  of  persons  in,  in 


776 


GENERAL  INDEX. 


France,  496;  greater  the  develop- 
meut  of  transportation  the 
greater  the  need  of  protective 
tariffs,  569;  reduction  in  cost  of, 
a  mode  of  protection,  675 

Traps,  American  export  of  rat, 
beaver,  and  fox,  596 

Travel,  520 

Treason,  industrial,  a  general 
strike  would  be  (Jevons),  803 

Treaty,  tariffs  by,  of  England  with 
Turkey,  488  ;  Portugal,  500,  670; 
Ireland,  494  ;  of  1816  between 
Groat  Britain  and  United  States, 
514  ;  of  England  with  Japan, 
China,  etc.,  516,  533;  held  irre- 
vocable by  England,  554  ;  with 
United  States,  642  ;  concerning 
shipping,  642  ;  extended  to  other 
countries,  653  ;  of  1815,  655  ; 
Huskisson  on  the  profits  of  the 
reciprocity  swap,  655  ;  of  Eng- 
land with  France  in  1786  in 
woolens,  674 

Tribe,  and  tribal  ownership  by, 
effects  of,  33,  49-54,  130 

Tribute,  of*India,  486 

Tripoli,  338 

Troy,  ancient,  Schliemann  on  iron 
in,  645 

Trunks,  export  of,  611 

Tunis,  French  bondholders  in,  450 

Turkey  (Ottoman  Empire),  reve- 
nue policy  of,  330 ;  ornaments 
worn  in,  331  ;  monetary  unit  of, 
338 ;  gave  England  free  trade, 
170  years  in  advance  of  Eng- 
land's repeal  of  the  corn  laws, 

488  ;  protective  England  sapping 
the  wealth  of  free-trade  Turkey, 
from  1675  to  1842,  488-491  ;  for- 
mer wealth  of,  in  manufactures, 

489  ;  present  desolation,  490,  516; 
the  only  thoroughly  free  trade 
country  in  Europe,  490  ;  Eng- 
land's trade  in  cotton  goods  with 
Turkey,  689 

Tyre,  450;  Tyrian  dyes,  669 

U. 

Umbrellas,  exports  of,  611 
Union,  economic  effects  of   Act  of 
Union  in  Ireland,  493,  493  ;  how 
it  was  bought  and  i)aid  for,  493; 


free  trade  to  Ireland  and  pro- 
tection to  England  were  the; 
basis  of  the  Act  of  Union,  492, 
493,  494;  union  of  the  states 
hinges  upon  maintaining  pro- 
tective policy,  638-630;  the  pro- 
slavery  struggle,  of  1830  to  1865, 
687,  688 
Unite,  coin  of  James  I.  340 
United  States  of  America,  drink 
bill  of,  35  ;  travel  in,  28  ;  free 
and  slave  States  in,  33  ;  homi- 
cides in;  34  ;  secondary  impor- 
tance of  foreign  trade  in  continen 
tal  as  compared  with  insular 
states,  35  ;  >  field  for  study  of 
economics  the  best,  36 ;  income 
of,  36 ;  export  of  shoes  from 
New  England,  35  ;  tlie  best 
economic  teacher,  38  ;  value  of 
its  census,  39;  growth  of  pop- 
ulation, 140  ;  area  of,  141  ;  sys- 
tem of  land  registration,  143  ; 
population,  145,  146 ;  future 
population,  145  ;  displacement 
of  labor  in  by  machinery,  209  ; 
annual  product  of  industry  in, 
234  ;  wages  in  colonial  period 
low,  337  ;  value  of  agricultural 
product,  234 ;  its  standard  of 
wages,  315  ;  its  debt-paying  poli- 
cy ,353-355  ;  crises  in,  381-385  ; 
coinage  in  from  1851  to  1856, 
386 ;  responsible  government 
not  developed  as  a  system 
for  discussion  or  adoption  when 
constitution  of  United  States  was 
modeled,  407,  409  ;  government 
of  United  States  defined,  415  ; 
as  respects  foreign  nations  each 
State  forms  a  municipal  subdivi- 
sion of  one  nationality,  415  ; 
cost  of  maintaining  its  govern- 
ment in  1861-1865,  _ 437-439  ; 
various  forms  of  debt  in  United 
States  and  amount,  448  ;  state 
systems  of  taxation  in,  456- 
468  ;  national,  468  ;  relative  rev- 
enues in  protective  and  free- 
trade  periods,  469-471  ;  how  af- 
fected by  English  duty  on  tobac- 
co, 480;  number  of  custom  officials 
and  cost  of  collecting  duties, 
482  ;  wages  of  iron  puddlers  and 
blacksmiths  in,  and  in  Europe, 


GENERAL  INDEX. 


511  ;  ori^iu  of  federal  union  in 
United  States  and  Germany, 
514  ;  effects  of  wars  of  1806  to 
1815  and  peace  of  1816,  514  ; 
United  States  leads  in  certain 
ways,  521  ;  resumption  of  specie 
payments  in  United  States  com- 
pared to  that  in  Russia,  529  ; 
subordinate  position  of  United 
States  in  trade  with  China,  536  ; 
silver  interests  of,  536  ;  has  no 
constitutional  power  to  pass  a 
tariff  for  revenue  only,  562 ; 
unity  of  the  country  involves 
loyalty  by  the  government  to 
those'  who  have  paid  the  cost 
of  maintaining  it,  575  ;  relative 
wages  in  United  States  and  Eu- 
rope, 581  ;  railway  freight,  584  ; 
no  longer  supplied  by  Birming- 
ham, 596  ;  motive  in  establisliing 
American  Union  was  cliietiy 
protection,  628-630  ;  first  cul- 
ture of  silk  in,  631  ;  Jefferson 
believed  protection  should  l)e 
continued,  nothwithstanding  it 
made  a  surplus,  640  ;  quantities 
and  values  of  glass  manufacture, 
643,  644  ;  population  compared 
with  Great  Britain,  646 ;  less 
vigorous  than  England  in  pro- 
tecting iron  and  steel  manufact- 
ure from  1790  to  1845,  647,  648; 
disastrous  effects  of  American 
free-trade  negligence  on  sliip 
building,  648-650 ;  product 
(1883)  of  iron,  steel,  and  coal, 650; 
percentage  of  world's  production, 
650  ;  United  States  built  up  a 
carrying  trade  and  merchant  ma- 
rine by  protection,  652-656  ; 
and  lost  it  by  bowing  the  knee 
to  the  free-trade  Baal  under 
name  of  "  reciprocity,"  655  ;  in- 
fluence tariffs  of  Britisli  com- 
merce from  identity  of  interests 
merely,  664  ;  production  and  im- 
portation of  wool,  672,  674  ; 
diagram  of,  679  ;  tlie  struggle 
over  slavery,  687,  688 ;  Eng- 
land's  trade  in  cotton  good  with, 
689  ;  imports  and  exports  of  cot- 
ton goods  Ijy,  696 
United  States  of  Colombia  (see 
Colombia) 


Unit}'  of  law,  between  econo- 
omics  and  physics,  4  ;  of  states, 
416  ;  and  of  essential  form  and 
operation  underlying  the  state 
mechanism,  however  differently 
selected,  416  ;  of  Germany,  514- 
524 ;  in  a  nation  resembles  that 
in  a  family,  575 

Universities,  480 

Uruguay,  America  buys  from, 
England  sells  to,  600 

Utility,  relation  of  to  value,  6,  96- 
100  ;  Jevons  on  fluctuations  in, 
according  to  change  in  wants,  95  ; 
how  affected  by  supply,  99;  of  ac- 
cumulations, 220;  increase  of  util- 
ities with  progress  of  man,  232  ; 
utility  of  private  ownership  as 
against  state  ownership,  304  ;  of 
the  qualities  which  promote  suc- 
cess and  profit  in  employing  la- 
bor, 308;  is  labor  paid  for  in 
proportion  to  the  degree  in  which 
its  utility  is  social?  323;  increas- 
ing utility  of  the  state  as  society 
advances,  324  ;  of  ornaments 
among  barbarians,  331  ;  of  mon- 
ey, 344 

V. 

Valises,  exports,  611 

Values,  Mill's  theory  of  interna- 
tional values,  10-14;  relation  of 
to  utility,  6;  when  depend  on 
cost  of  production  according  to 
Mill,  10;  vanishing  values,  69- 
71;  definition  of,  79;  by  Adam 
Smith,  Carey,  79;  by  Koscher, 
Marx,  Bastiat,  (Jairnes,  F.  A. 
Walker,  Cherbuliez,  Jevons, 
Perry,  La  Vasseur,  Locke,  Mc- 
Culloch,  Ricardo,  Carey,  Mac- 
Leod, Aristotle,  Condillac, 
Whately,  Say,  Beccaria,  79-84; 
fallacy  of  resting  value  on  labor, 
84;  how  all  labor  i)asses  into 
commodities,  85 ;  comcjs  from 
the  consumer,  86;  Karl  Marx's 
theory  of,  88-91;  begins  with 
Smith  and  Iticardo's  (jrror,  and 
carries  it  out  logically  to  tluig- 
gism,  91;  Jevons's  theory  of,  94; 
based  on  Gossen's  theory  of  pleas- 
ure and  pain,  94;  values  are  de- 
termined in  markets,  99;  causes^ 


/  o 


GENERAL  INDEX. 


of  values  of  land,  125,  130,  145; 
distribution  of  values  is  the 
counter  to  distribution  of  com- 
modities, 196;  law  of  declining 
and  advancing  values,  304  ; 
shrinking  of ,  213;  elusiveness  of 
the  supposed  "hard  pan  "  to  be 
reached  by  shrinkage  of,  212; 
sense  of,  determines  success  in 
business,  218;  values  which  de- 
cline as  society  grows,  221 ;  little 

\  waste  in  higher  values,  224-226; 
of  land  is  the  capitalization  of 
economic  rent,  287;  as  affected 
by  transportation,  241-353;  of 
farm  lands,  products,  and  labor, 
253-261  (Dodge);  sense  of  value 
must  be  keen  in  the  successful 
director  of  labor,  307;  the  sur- 
plus in  one  industry  constitutes 
by  exchange  the  values  in  an- 
other, 320;  values  given  to  raw 
materials  by  exporting  only  fin- 
ished products,  322;  relation  of 
to  money,  335;  of  commodities 
more  variable  usually  than  that 
of  money,  336;  of  the  standard 
monetary  unit  of  most  countries 
in  United  States  currency,  338; 
overvalued  metals  seek  coinage, 
341;  undervalued  metals  cannot 
circulate,  but  are  melted,  342; 
fall  in  producing  panic,  389;  of 
criminal,  444 ;  his  capacity  to 
jiroduce  has  the  same  economic 
value  to  society,  440;  aggregate 
value  of  land  in  India  hardly 
greater  than  in  New  Jersey,  488; 
of  wines  in  France,  497;  of  aver- 
age imports  and  exports  increase 
as  their  weight  lessens,  518-521 ; 
of  an  extra  dollar  on  Saturday 
night  to  the  workman,  584;  of 
British  manufactures,  637;  as 
quantities  of  woolens  exported 
increase  value  declines,  673  (com- 
pare Tooke,  Carey  and  Baird, 
113  to  117);  of  English  cotton 
goods  exported  and  consumed, 
685 

Varnish,  manufacture  of  taxed 
in  China,  455;  export  of 
611;  import  and  revenue, 
614 

Vegetarian  diet,   relation  to    eco- 


nomic condition  and  political  in- 
stitutions, 402 

Velvets,  672 

Venezuela,  monetary  unit  of,  338; 
balance  of  American  trade  with. 
600 

Venice,  in  glass  making,  639;  in 
woolens,  669 

Vermont,  why  may  not  import 
free  from  Canada,  574-576;  peo- 
ple whose  products  are  the  same 
can  not  trade,  574;  Canada  can 
not  reap  our  prices  because  she 
did  not  help  to  sow  their  cost, 
579;  wools  of,  672 

Versatility  of  aims,  when  an  obsta- 
cle to  economy,  303 

Vessels  and  steamers,  export  of, 
611;  American  vessels  reduced 
to  a  free  competition  with  for- 
eign in  carrying  ocean  freights 
to  and  from  American  ports  in 
1816,  642;  effect  of  laggard  pro- 
tection to  iron  and  steel  manu- 
facture from  1790  to  1845  com- 
pared with  English  protection,  to 
cripple  American  shipbuilding 
from  1855  to  date,  648-649;  ocean 
carrying  trade  of  England  built 
up,  656;  by  subsidies,  659,  662; 
treaties,  642,  655  ;  piracy,  663  ; 
and  righteousness,  608 

Veto,  its  disuse  in  England,  408- 
410;  power  of  in  United  States, 
417;  in  India,  533 

Vice,  taxes  on,  to  promote  utilities, 
463 

Victoria,  tariff  of,  530;  compared 
with  New  South  Wales,  530  ; 
protects  glass,  upholstery,  furni- 
ture, etc.,  530 

Vienna,  405 

Vinegar,  revenue  on  in  United 
States  paid  by  foreign  producer, 
586;  exports,  imports,  and  rev- 
enue, 611,  614 

Virginia,  early  precedence,  149 ; 
slavery  in,  384;  culture  of  silk 
in,  631;  glassmaking  in  colonial, 
639h-  colony  of,  protected  sheep, 
wool  and  wool  manufacture,  676; 
salt  product  of,  693 

Visionary,invention  of  power  loom, 
685 

Voting,  modes  of  in  Roman  Re- 


GENERAL  INDEX. 


779 


public,    412;    in   United   States, 
417-429;  plural  voting  on  taxes 
in  England,  479;  property  tjual- 
ifications,  479 
Vulcan  and  iron  and  steel,  645 

W. 

Wages,  rate  of,  Carey  on,  16  ; 
Brassey  on,  35 ;  not  propor- 
tionate to  ratio  of  capital  to 
population  (McCullocb),  168  ; 
wages  a  payment  for  service, 
85;  how  employment  for  arises, 
164;  the  lirst  are  presents,  165; 
may  be  high  where  capital  is 
scarce,  170 ;  are  the  effect  of 
protits,  170  ;  though  appearing 
to  be  the  leavings,  170;  based  on 
equivalence  of  exchange  between 
employer  and  employed,  171- 
172  ;  equality  of  division,  172- 
182;  received  by  wages  class  in 
Great  Britain,  176  ;  in  manu- 
factures lixed  in  part  by  those 
in  agriculture,  181 ;  are  paid  for 
obedience  only  and  not  for  mus- 
cular force  or  creative  power, 
183-184;  Karl  Marx's  theory  of, 
rests  on  a  false  basis,  184;  losses 
of  wages  workers  in  strikes,  190; 
how  wage  workers  may  obtain 
the  "profits"  also,  213;  when 
capital  is  risked  workers  earn 
protits,  222  ;  promoted  by  large 
capitals,  227  ;  low  rate  of  in 
India,  227 ;  law  of  increasing 
share  of  product  to  wages,  how 
offset  in  new  industries,  234 ; 
Bastiat    on    the    preference    of 

•  wages  to  protits  or  title  by  work- 
ing men,  234;  wages  are  capital 
in  smaller  quantity,  235;  are  cost 
of  labor  expended  in  production, 
238 ;  rates  of  on  farms,  253- 
261;   a  payment  for  labor  time, 

;    288;  differs  from  fee,  289;  com- 

/  mission,  290  ;  royalty  or  share, 
290 ;  cause  of  and  of  rate,  is  in 
protits,  293-316;  poi)ulation  not 
a  check  on  wages,  295  ;  wages 
lower  in  covuitries  of  slow  pro- 
duction, 297-298  ;  and  without 
machinery,  298;  lower  in  country 
than  city,   298 ;    rates  of,  fixed 


by  labor-saving  machines,  299  ; 
causes  which  compel  men  to 
work  for  wages,  307 ;  wages 
class  excel  in  fervor  and  gener- 
osity, but  fail  in  calculation  and 
prudence,  309 ;  trades  unions, 
310  ;  in  what  industries  wage- 
workers  get  the  highest  ratio  of 
product,  313  ;  effect  of  higher 
wages  than  the  competitive  rate 
to  check  extensions  of  works, 
313,  314 ;  are  wages  increased 
by  profit-sharing  ?  314  ;  relative 
in  different  countries,  315;  why 
higher  in  Great  Britain  than  in 
Germany,  France,  and  Russia, 
317 ;  not  increased  by  lessening 
population,  320,  321;  of  labor  in 
proportion  to  its  social  use,  323; 
of  women,  325-328;  economy  of 
working  for,  433;  small  number 
of  wage  workers  in  France  and 
large  number  of  small  em- 
ployers, 496;  rates  of  wages  for 
blacksmiths  and  iron-puddlers 
in  1867  in  United  States,  Great 
Britain,  Prussia,  Saxony,  and 
Switzerland,  511;  lower  in  Ger- 
many than  Great  Britain,  causes 
of,  516;  increase  of  in  Germany 
with  increase  of  protection,  523- 
524 ;  English  acts  to  regulate 
wages,  555;  higher  wages  (Sidg- 
wick)  by  protection,  566;  wages 
affected  by  excessive  supply  of 
workmen,  574 ;  Perry's  error 
(with  Ricardo)  in  supposing 
wages  must  be  lower  because 
capital  is  higher  in  America  than 
in  Great  Britain,  579-582  ;  com- 
parison of  rates  of  in  Massachu- 
setts and  England,  580-582;  Wen 
dell  Phillips  on  the  moral  advan- 
tages of  good  wages,  583;  why 
rates  of,  needed  tariJT  protection 
where  equivalent  efforts  here 
and  abroad  would  produce  same 
commodities,  585;  wages  pro- 
moted by  protection,  623-627; 
wages  paid  in  Canadian  manu- 
factures, 667-608;  wages  depend 
on  the  value  of  conmiodilies  and 
not  on  their  (luaiitity,  673 
Wages  fund  llieory,  Sidgwick, 
Mill,  and  Thornton  on,  15;  Carey 


'780 


GENERAL  INDEX. 


on  mte  of  wages,  16 ;  wages, 
rent,  and  interest  as  shares  de- 
pend on  who  distributes.  163 ; 
defined  by  Cairnes,  Mill,  Bras- 
sey,  Thornton,  290-293 ;  the 
aggregate  wage  fund  tends 
toward  equal  sharing  with  ag- 
gregate returns  of  capital,  311- 
314  ;  reason  why  wages  are  eight 
times  greater  in  United  States 
than  in  China  lies  in  animal  and 
macliine  power,  542;  why  wages 
are  low  in  China  and  India,  625 

"Want  and  wealth,  the  complements 
of  each  otlier,  401  ;  object  of 
American  labor  organizations  is 
not  to  prevent  want,  but  to  con- 
trol industry,  310,  328,  390,  597; 
man's  first  want,  645 

War,  effect  of  on  prices,  113  ;  of 
allied  powers  with  Napoleon, 
112;  effect  of  on  means  of  pay- 
ment, 114,  221;  on  industry,  211; 
on  prices,  221  ;  war  debts,  353  ; 
paying  expenses  of  as  incurred, 
353  ;  Adams  and  Laughlin  on, 
353 ;  exhaustion  of  war  post- 
poned, 354;  effect  of  as  to  crises, 
380;  absence  of  gold  at  outbreak 
of  war  of  1861,  221;  close  of  war 
in  United  States  produces  mone- 
tary crises  in  England,  389 ; 
business  revived  by,  385  ;  as  a 
productive  agency,  439;  crime  in 
social  war,  440  ;  expense  of  war 
debt  in  United  States,  468  ;  rise 
of  revenue  during  war  with 
"  Confederacy,"  470  ;  effects  of 
war  tariff,  469-472  ;  Russia's 
escape  from  in  part,  529 ;  to 
force  opium  on  China,  534 ; 
liabilities  to  war  increased  by 
importing  what  we  can  produce 
(Jefferson),  598;  growth  of  manu- 
factures in  United  States  during 
war  of  1806-1815,  641  ;  making 
implements  of  war  the  first 
manufacture,  644 ;  how  the 
United  States  would  have 
avoided  the  war  for  secession, 
650  ;  economic  effects  of  war  on 
northern  and  southern  states,  688 

Washington,  capture  of,  437 

Washing  machines,  American  ex- 
port of,  596 


Waste  of  forests,  148;  of  animals, 
149;  by  misdirection  of  industry, 
mainly  incurred  by  the  enter- 
prisers, 191  ;  small,  of  society, 
224  ;  servants,  226  ;  small  in  the 
higlier  values,  great  in  the  lower, 
226 ;  waste  involved  in  strikes, 
310,  314,  328  ;  of  being  without 
an  army  in  United  States,  437  ; 
of  life  in  social  struggles  and 
fanaticism,  446,  447  ;  relative 
waste  of  labor  in  C'hina  and  in 
western  nations  as  each  is  seen  by 
the  other,  545,  550  ;  in  tillage  in 
China,  551 

Watches,  American  machine-made, 
superiority  of  abroad,  596  ;  ex- 
ports, d\ities,  611;  imports, 
revenue,  614 

Ways,  430,  432 

Wax,  export  of  and  duties  on, 
611;  imports  and  revenue,  614 

Wealth,  conflicts  of  definition,  5  ; 
is  money  wealth  in  the  sense 
held  by  mercantile  school,  18  ; 
defined,  41  ;  its  economic  mean- 
ing distinguished  from  its  social, 
41  ;  relation  of,  to  civilization, 
43 ;  as  defined  by  Smith,  Carey, 
Bastiat,  Roscher,  Fawcett,  Mill, 
Jevons,  Sidgwick,  Smith  again, 
Roscher,  and  "  Wealth,"  41-43  ; 
Carey's  definition  reviewed,  43- 
47 ;  relation  of,  to  want,  45  ; 
need  not  have  exchange  value, 
46  ;  relation  to  subordination 
and  coercion,  47  ;  savage  life  is 
absence  of,  47  ;  Fawcett,  Smith 
and  Carey  agree  on  this,  48 ; 
ownership  of  property  in  com- 
mon retards  growth  of,  49-54  ; 
social,  60-65  ;  of  nations,  65-69  ; 
of  India,  66 ;  Evanescence  of, 
69  ;  destruction  of,  in  maintain- 
ing government,  70 ;  disap- 
pearance of  values  of  land,  71  ; 
reproductive  and  enjoyable,  72  ; 
social  endures  longest,  72  ;  vital 
most  essential,  72  ;  relation  of 
owner  to  social  wealth  is  custody 
only,  93  ;  consumers'  and  pro- 
ducers', 94  ;  Jevons,  Gossen  and 
Sidgwick  on  forms  of,  94  ;  also 
Senior  and  Baufield,  94  ;  distri- 
bution of,  and  of  products,  196  ; 


GENERAL  INDEX. 


781 


consists  in  inequality  of  means, 
201  ;  it  paralyzes  its  own  power 
■when  equalized,  201  ;  equal  dif- 
fusion of  enjoyable,  depends  on 
unequal  accumulation  of  repro- 
ductive, 204  ;  redistribution  of, 
by  investment,  ostentation,  lux- 
ury and  waste,  212-214  ;  shriuk- 
agein  value  of  reproductive,  pro- 
duces less  suffering  if  held  by 
large  owners,  222  ;  consumption 
of,  by  rich  and  poor,  225-226  ; 
loss  of,  may  protluce  crisis,  378  ; 
and  w^ant  are  the  steam  and 
vacuum  in  the  social  engine, 
401  ;  makes  a  people  aesthetic, 
poverty,  quarrelsome,  402  ;  gov- 
ernment by  the  rich,  405  ;  vot- 
ing according  to,  in  Rome,  412  ; 
increasing  power  of,  in  America, 
414  ;  the  chief  foe  to  crime,  442  ; 
but  inequalities  of  fortune 
(Quetelet)  tend  to  crime,  442 

Weapons,  early  manufacture  of, 
645 

Wearing  apparel,  export  of,  611 

Weaving,  inventions  in,  681,  684- 
685 

Weighing  machines,  superiority  of 
American  abroad,  596,  611,  614 

Weight  of  products  lessens  as  their 
values  increase,  518-521 

West  Indies,  culture  of  silk  in,  631 ; 
England's  trade  with,  689  ;  pur- 
chases from,  bear  no  proportion 
to  sales  to,  600 

Wheat,  prices  and  scarcity  in  En- 
gland, 116  ;  effect  of  free  trade 
in,  118-119  ;  rate  of  growth  of, 
under  seed  selection  and  thin 
planting,  231  ;  cost  of  produc- 
tion in  Iowa  and  England  as  af- 
fected by  rent  and  transporta- 
tion, 243-257  ;  average  crop  per 
acre  in  England,  254  ;  prices  in 
war  of  1812-15.  380  ;  German 
imports  and  exports  of,  519; 
protective  duties  on  in  Victoria, 
530  ;  prices  not  reduced  in  En- 
gland by  repeal  of  protective 
duties,  558  ;  quantity  of  wiuiut 
crop,  559;  deelincof  eiiitivation 
in  England,  559  ;  in  Scotland 
and  Ireland  one;  half,  559 

Wheeling,  Va.,  glass,  643 


Window  glass,  W'hen  and  where 
first  made,  639 

Wines,  taxes  on,  475  ;  English 
revenue  from,  480 ;  manufac- 
ture of,  in  France,  497  ;  duties 
on  in  England,  500  ;  in  France, 
503  ;  Germany,  520  ;  export  of 
American,  611  ;  import  and  rev- 
enue, 614 

Wisconsin,  woolen  manufacture 
in,  666 

Women,  wages  of,  325-328;  voting, 
435-437  ;  crime,  442  ;  of  seden- 
tery,  443  ;  large  number  of 
work  in  France,  497  ;  in  Ger- 
many, 524, 525  ;  large  proportion 
withdrawal  from  labor  in  United 
States,  525  ;  relative  wages  of, 
to  men  in  Massachusetts  and  En- 
gland, 582  ,  in  strikes,  328  ; 
causes  of  large  American  de- 
mand for  silks,  633  ;  shoes  of 
women  exported,  697-698 

Wood,  519  ;  wages  of  work  in  in 
Great  Britain  and  Massachusetts, 
580  ;  wood,  lumber  and  timber, 
export  of  and  duties  on  import, 
611 ;  import  and  revenue  from, 
614 

Wool,  trade  between  Belgium  and 
France,  27  ;  Great  Britain  and 
France,  27  ;  conditions  of  weav- 
ing at  a  profit,  319  ;  tariff  of 
1824-28  as  to,  383 ;  change  in 
German  wool  and  woolen  trade 
under  protection,  515  ;  trade  of 
wool  for  cloth  between  Germany 
and  England,  518-520 ;  revenue 
on  imports  of,  into  United 
States,  not  paid  by  consumers, 
586 ;  this  point  more  fully 
shown,  679-682 ;  see  also  chart 
of  prices,  ib.;  antiquity  of  wool- 
growing,  668  ;  a  finished  pro- 
duct in  what  sense,  671  ;  quali- 
ties of  wool,  672  ;  and  wool- 
ens, 672  ;  (juantities  required 
for  consumption  rt^latively  to 
population,  672  -  673  ;  protec- 
tive duties  on,  since  1824, 
676;  "free  wool"  would  mean 
great  cry  and  liltle  wool,  676  ; 
cxjMtrt  of,  from  Australia,  676  ; 
iiKTcased  yield  of,  in  United 
States,   since  1850,  677  ;    duties 


182 


GENERAL  INDEX. 


on,  were  based  on  sound  princi- 
ples, 677  ;  approved  by  all  pro- 
ducers, 677  ;  over  periods  of 
moderate  length,  interests  of 
producers  and  consumers  the 
same,  677;  "cotton  wool,"  684 

Woolens,  manufacture  of,  returns 
to  labor  and  capital  in,  312;  wool- 
en manufacturers  of  England 
seeking  the  suppression  of  those 
of  Ireland,  491  ;  in  France,  503  ; 
trade  in,  between  Germany  and 
England,  518-520  ;  manufacture 
in  Canada,  531  ;  statutes  to  pro- 
tect in  England  555 ;  wages 
in,  in  England,  and  Massachu- 
setts, 580,  582  ;  woolen  blankets, 
Perry's  error  as  to  duties  being 
a  tax  on  consumer  stated,  589  ; 
refuted,  590,  679;  identity  of 
prices  in  England  and  America, 
590 ;  export  of,  611  ;  imports 
and  revenue,  614  ;  protection  to 
woolen  manufacture  in  Canada 
and  effects  of,  665,666;  extraordi- 
nary prices  of  ancient  woolens, 
669  ;  manufacture  of  closely  de- 
pendent on  iron  and  steel,  677 

Wool-sack,  why  so  called,  670 

Work,  difficulties  of  beginning, 
233 ;  at  first  despised,  234  ;  at 
first  an  adjunct  to  hunting  or 
war,  234 ;  cost  in  work  not 
identical  with  cost  in  money, 
573,574 ;  work  only  exists 
where  employers  make  profits, 
625 

Workmen  (see  Labor,  Wages, 
Strikes);  number  of  employed,  a 
reason  (Smith)  for  protection, 
556 ;  wages  reduced  by  cut- 
ting   them  off  from  the  land, 


574 ;  should  be  attracted  to 
where  their  effort  will  win 
largest  returns,  574  ;  moral  value 
of  an  extra  dollar  to,  583  ;  re- 
duced by  free  trade,  635,  637  ; 
number  of  discharged  and  suf- 
fering, in  1816-19,  in  United 
States,  642  ;  employed  in  Cana- 
dian manufactures,  667,  668  ; 
decline  of,  in  English  silk  manu- 
facture, 635, 637 ;  decline  of 
numbers  in  woolen,  673 ;  in- 
crease of  number  in  Europe, 
674  ;  large  proportion  of  work- 
ers in  cotton  in  Manchester,  685; 
in  cotton  manufacture,  689 

World,  relative  incomes  of  nations, 
36  ;  products  of  iron,  steel,  and 
coal,  650 

Worsted,  wages  of  work  in  Massa- 
chusetts and  England,  582  ; 
wools  for,  672 

Wrought  iron,  English  and  Ameri- 
can prices  of,  590 

Wurtemburg,  515,  523,  524 

Y. 

Yarn,  import  and  export  of  Ger- 
many, 519,520 
Yen,  338 

Z. 

Zemstvo,  530 

Zinc,  exports  and  imports  of  and 
revenue,  611,  614 

ZoUverein,  inception  and  work  of, 
514-521  ;  population  of  and 
movement  of  German  states  in- 
to, 515  ;  what  it  could  do  for 
profits  and  wages,  517 


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